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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Site Visit Report
American Recovery and
Reinvestment Act Site Visit of the
Comprehensive Sewer System
Rehabilitation, Subsystem PS-5,
Saugus, Massachusetts
Report No. 11-R-0192
March 29, 2011
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RECOVERY.GOV
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Report Contributors: lantha Maness
Bill Spinazzola
John Trefry
Cover photo: Service lateral connection pipe liner, Saugus, Massachusetts. (EPA OIG photo)
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
11-R-0192
March 29, 2011
Catalyst for Improving the Environment
Why We Did This Review
The U.S. Environmental
Protection Agency's Office of
Inspector General conducts
site visits of American
Recovery and Reinvestment
Act of 2009 (Recovery Act)
clean water and drinking water
projects. We selected a project
in Saugus, Massachusetts, for
review.
Background
Project costs for the Saugus
sewer system rehabilitation
project totaled $2,504,691.
The town received a
$2,290,239 loan from the
Massachusetts Clean Water
State Revolving Fund to fund
the project. Using funds
provided under the Recovery
Act, the Clean Water State
Revolving Fund provided
principal forgiveness of
$210,702. The town is
required to repay the
remaining loan amount of
$2,079,537.
American Recovery and Reinvestment Act
Site Visit of the Comprehensive Sewer System
Rehabilitation, Subsystem PS-5, Saugus,
Massachusetts
What We Found
We conducted an unannounced site visit of the Comprehensive Sewer System
Rehabilitation, Subsystem PS-5, in Saugus, Massachusetts, in December 2009. We
toured the project site; interviewed town representatives, engineering personnel,
and contractor personnel; and reviewed documentation related to Recovery Act
requirements.
Based on our visit, no significant issues or concerns came to our attention that
would require immediate action by the U.S. Environmental Protection Agency, the
State of Massachusetts, or the Town of Saugus.
For further information,
contact our Office of
Congressional, Public Affairs
and Management at
(202)566-2391.
The full report is at:
www.epa.qov/oiq/reports/2011/
20110329-11-R-0192.pdf
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I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
S WASHINGTON, D.C. 20460
^ ^
THE INSPECTOR GENERAL
March 29, 2011
MEMORANDUM
SUBJECT: American Recovery and Reinvestment Act Site Visit of the
Comprehensive Sewer System Rehabilitation, Subsystem PS-5,
Saugus, Massachusetts
Report No. ll-R-0192
FROM: Arthur A. Elkins, Jr.
Inspector General
TO: Curt Spalding
Regional Administrator, Region 1
U.S. Environmental Protection Agency
This is our report on the subject site visit conducted by the Office of Inspector General of the
U.S. Environmental Protection Agency. The report summarizes the results of our site visit of the
Town of Saugus, Massachusetts, sewer system rehabilitation, subsystem PS-5.
We conducted an unannounced site visit of the Comprehensive Sewer System Rehabilitation,
Subsystem PS-5 in Saugus, Massachusetts, in December 2009. The purpose of our site visit was
to determine the town's compliance with selected requirements of the American Recovery and
Reinvestment Act of 2009 (Recovery Act) pertaining to the Clean Water State Revolving Fund
program. The Massachusetts Clean Water State Revolving Fund loaned $2,290,239 to the town
to help fund the project. The total project costs were $2,504,691. The Recovery Act provided
principal forgiveness of $210,702.
The estimated direct labor and travel costs for this report are $92,317.
Action Required
Because this report contains no recommendations, you are not required to respond to this report.
The report will be made available at http ://epa. gov/oig. If you or your staff have any questions
regarding this report, please contact Melissa Heist, Assistant Inspector General for Audit, at
(202) 566-0899 or heist.melissa@epa.gov: or Robert Adachi, Product Line Director, at
(415) 947-4537 or adachi.robert@epa.gov.
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Purpose
The purpose of our review was to determine whether the Town of Saugus,
Massachusetts, is in compliance with selected requirements of the American
Recovery and Reinvestment Act of 2009 (Recovery Act) under the Clean
Water State Revolving Fund Program.
Background
The town received a $2,290,239 loan from the Massachusetts Clean Water
State Revolving Fund to help fund the Saugus Comprehensive Sewer
System Rehabilitation, Subsystem PS-5, project. The total project costs
were $2,504,691. The Recovery Act provided principal forgiveness of
$210,702. The town will repay the remaining loan of $2,079,537.
Only three of five construction contracts were awarded at the time of our
site visit. Contract 10-09, for pipe lining and spot replacement of sewers,
was substantially complete. Contract 11-09, for service lateral connection
lining, was active. Contract 12-09, for manhole rehabilitation, was also
active. Vendors were selected for contracts 15-09 and 16-09, but the
contracts had not been finalized.
Scope and Methodology
Due to the time-critical nature of Recovery Act requirements, we did not
perform this assignment in accordance with generally accepted
government auditing standards. Specifically, we did not perform certain
steps that would allow us to obtain information to assess the town's
internal controls and any previously reported audit concerns. As a result,
we do not express an opinion on the allowability of costs incurred, the
adequacy of internal controls, or compliance with all federal, state, or local
requirements.
We conducted our site visit on December 1-3, 2009. During our visit, we:
1. Toured the proj ect
2. Interviewed town representatives, representatives of the
town's engineering firm, and the prime contractor and
subcontractor
3. Reviewed documentation maintained by the town and its
contractors on the following matters:
a. Buy American requirements under Section 1605 of
the Recovery Act
b. Wage rate requirements (Davis-Bacon Act) under
Section 1606 of the Recovery Act
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c. Reports on Use of Funds under Section 1512 of the
Recovery Act
d. Contract procurement
Results of Site Vis it
Based on our visit, no significant issues or concerns came to our attention
that would require immediate action by the U.S. Environmental Protection
Agency, the State of Massachusetts, or the Town of Saugus. The results of
our procedures are summarized below.
Buy American Requirements
We did not identify any significant issues regarding Buy American
requirements. The town and its contractors are fully aware of the Buy
American requirements under Section 1605 of the Recovery Act. Based on
our physical observations of the site, materials used for the project comply
with Buy American requirements.
With the exception of one contract, the Buy American requirements were
included in the original bid specifications and contract documents. The
Buy American requirements were excluded from the original bid
specifications for contract 12-09. The original bid specifications for
contract No. 12-09 were dated July 31, 2009, 5 months after the Recovery
Act became law. The specifications were advertised on August 5, 2009,
bids were opened on August 19, 2009, and a contract was signed on
October 26, 2009. On October 19, 2009, the Buy American requirements
were added to the contract as a no-cost change order.
Wage Rate Requirements
We did not identify any significant issues in our review of wage rate
requirements. Saugus and its construction contractor, National Water Main
Cleaning Co., are complying with the wage rate requirements of Section
1606 of the Recovery Act. Saugus included the wage rate requirement of
the Recovery Act in its construction contracts. We compared labor rates
on the contractor's certified payroll to the labor rates of the National Water
Main Cleaning Co. employees that we interviewed during our site visit.
We did not note any significant exceptions. We also compared labor rates
on the certified payroll to the Massachusetts and New Jersey Davis-Bacon
Wage Decision for heavy construction types. We noted that the employees
are paid wages in excess of the required wages.
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Financial Management and Reporting
We did not identify any issues regarding the town's ability to meet
Recovery Act financial management and reporting requirements. We
determined that the town can provide accounting and financial information
required by the Recovery Act Section 1512 and Office of Management
and Budget guidance M-09-21.
Contract Procurement
We did not identify any issues regarding the procurement of the
construction contracts. The town is complying with its stated procurement
practices for construction contracts and procured its contracts
competitively. The town advertises requests for bids in local newspapers
and a state-maintained database. The construction contract was
competitively awarded based on public advertisement. Based on the
recommendation of its engineering firm, the town awarded contracts to the
lowest bidder. Unsuccessful bidders confirmed their participation in the
bidding process.
Recommendations
We have no recommendations.
Response and Office of Inspector General Comment
Because there were no recommendations, the town and the region did not
provide comments to the draft report and did not require an exit
conference.
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Status of Recommendations and
Potential Monetary Benefits
POTENTIAL MONETARY
RECOMMENDATIONS BENEFITS (in $OOOs)
Planned
Rec. Page Completion Claimed Agreed-To
No. No. Subject Status1 Action Official Date Amount Amount
No recommendations
0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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Appendix A
Distribution
Office of the Administrator
Regional Administrator, Region 1
Director, Grants and Interagency Agreements Management Division,
Office of Administration and Resources Management
Agency Followup Official (the CFO)
Agency Followup Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for External Affairs and Environmental Education
Audit Followup Coordinator, Region 1
Public Affairs Officer, Region 1
Director, Division of Municipal Services, Massachusetts Department of
Environmental Protection
Town Manager, Town of Saugus, Massachusetts
11-R-0192
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