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*. U.S. Environmental Protection Agency	12-R-0601
*	Office of Inspector General	Juiy25,20i2
I 77 9
At a Glance
Why We Did This Audit
The U.S. Environmental
Protection Agency (EPA)
Office of Inspector General
audits projects funded by the
American Recovery and
Reinvestment Act of 2009
(Recovery Act). We selected
the Gilt Edge Mine Superfund
Site project in Lawrence
County, South Dakota, for
audit. The purpose of this audit
was to determine compliance
with selected Recovery Act
EPA provided $2,935,228 in
Recovery Act funding for
Pacific Western Technologies
(PWT) to hire a subcontractor
to perform the drilling and
grouting portion of the
diversion ditch repair at the
site. The funding was provided
through a work assignment
under PWT's existing remedial
action contract.
American Recovery and Reinvestment Act Site Visit
of the Diversion Ditch Repair Project at the Giit Edge
Mine Superfund Site, Lawrence County, South Dakota
What We Found
PWT did not have adequate controls to ensure that its subcontractors and vendors
complied with the Buy American and Davis-Bacon Act (DBA) provisions of the
Recovery Act. Non-American-made steel grouting pipes were used in the project.
As a result, we questioned $349,635 in costs incurred under the project,
consisting of ineligible pipe costs of $88,712 and unsupported field inspection
costs of $260,923. Also, PWT did not verify whether subcontract vendor
employees who worked at the site were paid according to DBA requirements.
These Recovery Act requirements were incorporated into both the prime contract
and the subcontract, and apply to not only the contractor and subcontractor but to
second-tier subcontractors and vendors.
The lack of control was due to PWT employees not being trained on contract
terms and conditions, including Recovery Act requirements. PWT representatives
also said that the company did not have policies and procedures to require
inspection of all materials for Buy American compliance, and PWT employees
did not understand that DBA requirements applied to vendor employees.
PWT subsequently established material inspection procedures in response to the
Buy American noncompliance. PWT also started the review process to verify
subcontractor and vendor compliance with DBA requirements.
PWT accurately reported the number of jobs created and retained due to
Recovery Act funding, and PWT's procurement of the subcontractor for the
project was in accordance with the federal requirements and contract terms and
Recommendations and Planned Corrective Actions
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
20120725-12-R-0601 .Pdf
We recommend that EPA's Director, Office of Acquisition Management, Office
of Administration and Resources Management, advise the contracting officer to
designate the grouting pipe cost of $88,712 as ineligible costs and to reduce the
funding for the project accordingly. We also recommend that the Director
disallow and recover PWT field inspection costs.
PWT indicated it is working with the contracting officer to deobligate $88,712
from the project. The contactor proposed, and EPA accepted, $2,551 as the
amount of ineligible field supervision costs relating to Buy American compliance
monitoring. However, while this is all that can be collected based on EPA's
actions, we do not believe the contracting officer's determination identified all
ineligible field supervision costs.