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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
American Recovery and
Reinvestment Act Site Visit
of Combined Sewer
Overflow Detention Facility,
City of Goshen, Indiana
Report No. 13-R-0092
January 7, 2013
Scan this mobile
code to learn more
about the EPA OIG.

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Report Contributors:
Michael Rickey
Larry Brannon
Patrick Mclntyre
Abbreviations
CFR	Code of Federal Regulations
EPA	U.S. Environmental Protection Agency
OIG	Office of Inspector General
Cover photo: Flushing gates at Goshen, Indiana, Combined Sewer Overflow Detention
Facility. (EPA OIG photo)
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail: OIG Hotline@epa.gov	write: EPA Inspector General Hotline
phone: 1-888-546-8740	1200 Pennsylvania Avenue, NW
fax:	202-566-2599	Mailcode 2431T
online:
http://www.epa.gov/oiq/hotline.htm
Washington, DC 20460

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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
13-R-0092
January 7, 2013
Why We Did This Review
The U.S. Environmental
Protection Agency, Office of
Inspector General, conducts
site visits of American
Recovery and Reinvestment
Act of 2009 (Recovery Act)
clean water and drinking water
projects. The purpose of this
visit was to address a hotline
complaint involving compliance
with the Recovery Act's Buy
American requirements by the
City of Goshen, Indiana. We
also reviewed contract
procurement.
The City of Goshen received a
$36.1 million loan from the
Indiana Finance Authority.
The loan included $5 million in
Recovery Act funds. The city
used these funds to construct a
new combined sewer overflow
detention facility.
American Recovery and Reinvestment Act Site Visit
of Combined Sewer Overflow Detention Facility,
City of Goshen, Indiana
What We Found
We conducted a site visit of the Recovery Act project to build a new combined
sewer overflow detention facility in the City of Goshen, Indiana, in December
2011. As part of our site visit, we toured the project, interviewed city officials and
engineering personnel, and reviewed documentation maintained by the city
related to both the Buy American requirements of the Recovery Act and contract
procurement.
The equipment identified in the hotline complaint was produced in the United
States and complied with the Buy American requirements, as set out in Section
1605 of the Recovery Act. However, the city could not demonstrate that a
positive displacement blower used in the project was manufactured in the United
States, as required by the Recovery Act. Since Goshen cannot demonstrate that
all equipment items used on the project complied with the Buy American
requirements, the project is not eligible for the $5 million of Recovery Act funds
authorized by the state unless the U.S. Environmental Protection Agency
exercises a regulatory option.
Recommendation
We recommend that the Regional Administrator, Region 5, employ the
procedures set out in the Code of Federal Regulations (CFR) at 2 CFR § 176.130
to ensure compliance with Buy American requirements. If the region decides to
retain the foreign manufactured goods in the project under 2 CFR §176.130
(c)(3), the region should either "reduce the amount of the award by the cost of the
[foreign] steel, iron, or manufactured goods that are used in the project" or "take
enforcement or termination action in accordance with the agency's grants
management regulations."
The city did not agree with our conclusion or recommendation.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2013/
20130107-13-R-0092.pdf

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< rJK-7 5	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
| Wl/V ®	WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
January 7, 2013
MEMORANDUM
SUBJECT: American Recovery and Reinvestment Act Site Visit of
Combined Sewer Overflow Detention Facility, City of Goshen, Indiana
Report No. 13-R-0092
FROM: Arthur A. Elkins, Jr.
TO:	Susan Hedman
Regional Administrator, Region 5
Nancy Stoner
Acting Assistant Administrator for Water
This is our report on the subject site visit conducted by the Office of Inspector General (OIG) of
the U.S. Environmental Protection Agency (EPA). This report contains a finding on possible
noncompliance with the Buy American requirements of the American Recovery and
Reinvestment Act of 2009 (Recovery Act) and recommended corrective action.
We are forwarding the report to the Office of Water for information purposes because it authored
substantial transformation guidance that affects decision-making by Region 5. The OIG has
raised concerns that the substantial transformation guidance is inconsistent with legal precedence
and may lead to incorrect determinations of Buy American compliance.
This report represents the opinion of the OIG and does not necessarily represent the final EPA
position. Final determinations on matters in this report will be made by EPA managers in
accordance with established audit resolution procedures.
We performed this site visit as part of our responsibility under the Recovery Act. The purpose of
our site visit was to determine the city's compliance with Buy American requirements under
Section 1605 of the Recovery Act pertaining to the Clean Water State Revolving Fund program.
The Indiana Finance Authority loaned the city $36.1 million, including $5 million in Recovery
Act funds, to complete the project.

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Action Required
In accordance with EPA Manual 2750, you are required to provide us your proposed
management decision for resolution of the findings contained in this report before any formal
resolution can be completed with the recipient. Your proposed decision is due in 120 days, or on
May 7, 2013. To expedite the resolution process, please e-mail an electronic version of your
proposed management decision to adachi.robert@epa.gov.
Your response will be posted on the OIG's public website, along with our memorandum
commenting on your response. Your response should be provided as an Adobe PDF file that
complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as
amended. The final response should not contain data that you do not want to be released to the
public; if your response contains such data, you should identify the data for redaction or removal.
We have no objection to the further release of this report to the public. This report will be
available at http://www.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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American Recovery and Reinvestment Act	13-R-0092
Site Visit of Combined Sewer Overflow
Detention Facility, City of Goshen, Indiana
	 Table of C	
Purpose 		1
Background 		1
Scope and Methodology		1
Results of Site Visit		2
Buy American Requirements		2
Contract Procurement		6
Recommendation 		6
City of Goshen Response to Draft Report		7
OIG Comment		7
Status of Recommendations and Potential Monetary Benefits		8
Appendices
A City of Goshen Response to Draft Report and OIG Evaluation	 9
B Distribution	 13

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Purpose
The purpose of this site visit was to determine whether the City of Goshen,
Indiana, complied with the Buy American requirements, Section 1605, of the
American Recovery and Reinvestment Act of 2009 (Recovery Act), P.L. 111-5,
pertaining to the combined sewer overflow detention facility project jointly
funded by the Recovery Act and the Indiana Finance Authority's Wastewater
Revolving Loan Program. We conducted this review as a result of a hotline
complaint questioning whether an equipment item for the project met Buy
American requirements. We also reviewed the procurement process used to award
the construction contract.
Background
In October 2009, the city accepted a $36.1 million loan from the Indiana Finance
Authority to construct a new combined sewer overflow detention facility. The
terms of the loan were based on an annual fixed loan rate of 2.33 percent on a
20-year note. The loan included $5 million in Recovery Act funds that will be
forgiven. The loan balance was funded by the state's Wastewater Revolving Loan
Program. The city used these funds to construct a new combined sewer overflow
detention facility.
In August 2011, the U.S. Environmental Protection Agency (EPA) Office of
Inspector General (OIG) received a complaint about a sole source equipment
specification for the Goshen project. Goshen's Project Manual (bid specifications)
listed a Canadian company as the only manufacturer for the flushing gate
assemblies. Since the Goshen project received Recovery Act funds, the project
was subject to the Recovery Act's Buy American requirements.
Scope and Methodology
Because our objective was limited to assessing compliance with Buy American
requirements of the Recovery Act and reviewing the procurement process, 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 city's internal controls and any previously
reported audit concerns. As a result, we do not express an opinion on the adequacy
of the city's internal controls or compliance with all federal, state, or local
requirements.
We made a site visit to the combined sewer overflow detention facility project
located in the City of Goshen, Indiana, on December 21, 2011. During our visit, we:
1.	Toured the proj ect
2.	Interviewed city personnel, the city's consulting engineer, and Indiana
Finance Authority personnel
13-R-0092
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3. Reviewed documentation maintained by the city and its engineer on the
following matters:
a.	Buy American requirements under Section 1605 of the Recovery
Act
b.	Contract procurement
Results of Site Visit
The equipment identified in the hotline complaint complied with the Buy
American requirements of the Recovery Act. However, the city could not
demonstrate that a positive displacement blower used in the project was
manufactured in the United States, as required by the Recovery Act. As a result,
the city's project to construct a combined sewer overflow detention facility was
not eligible for Recovery Act funds. We did not identify any other issues. We
have summarized our results below.
Buy American Requirements
Section 1605 of the Recovery Act prohibits the use of Recovery Act funds for a
project unless all of the iron, steel, and manufactured goods used in the project are
produced in the United States. Section 1605 also requires that this prohibition be
consistent with U.S. obligations under international agreements, and provides for
a waiver under three circumstances:
1.	Iron, steel, or relevant manufactured goods are not produced in the United
States in sufficient and reasonably available quantities and of a
satisfactory quality.
2.	Inclusion of iron, steel, or manufactured goods produced in the United
States would increase the overall project costs by more than 25 percent.
3.	Applying the domestic preference would be inconsistent with public
interest.
The Code of Federal Regulations (CFR), in 2 CFR §176.140(a)(1), defines a
manufactured good as a good brought to the construction site for incorporation
that has been processed into a specific form and shape, or combined with raw
materials to create a material that has different properties than the properties of
the individual raw materials. There is no requirement with regard to the origin of
components in manufactured goods, as long as the manufacture of the goods
occurs in the United States (2 CFR §176.70(a)(2)(ii)).
Flushing System
The hotline complaint identified a Canadian firm as the manufacturer or supplier
for the flushing system, which included the flushing gates and frame assemblies, a
hydraulic power pack, and control panel. The Canadian firm entered into an
agreement with a United States manufacturer in Plattsburgh, New York, to
produce the flushing system in the United States. Based on the documents
13-R-0092
2

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provided, we concluded that the flushing system was produced in the United
States and met the Buy American requirements of the Recovery Act.
Kaeser Positive Displacement Blower
Goshen installed one Kaeser Omega
Com-Pak Plus CB 130C positive
displacement blower that was marked as
"MADE IN GERMANY." To support
compliance with Buy American
requirements, the city provided a single
electronic file that included the
following documents: (1) two letters
from Kaeser Compressors, Inc., dated
February 4, 2010, and October 13, 2011;
(2) answers to EPA's substantial
transformation questions; and (3) a copy
of the positive displacement blower invoice.
The February 4, 2010, letter from the company's vice president claimed that the
Kaeser blowers were assembled in Fredericksburg, Virginia, and they complied
with the Recovery Act through substantial transformation. The October 13, 2011,
letter signed by Kaeser's Omega project manager stated that for Recovery Act-
funded projects, the company purchases a base chassis of proprietarily designed
components from the parent company, Kaeser Kompressoren, GmbH, located in
Germany. This chassis consists of components such as the blower block, silencer
base, and enclosure. The items added in the United States include the electric
motor, pulleys, belts, relief valves, and expansion joints. The letter described the
building process as mounting and aligning the motor and v-belt pulley drive;
adjusting and installing the pressure relief valve(s); and assembling and installing
check valves, fan motors, gauges, and switches.
Further, the letter goes on to state that depending on the size and complexity of
the specification, additional wiring and setting of ancillary devices may be
required. Each unit requires 16 to 20 hours to build, and the assembly procedures,
combined with the U.S.-sourced items, account for 35 to 50 percent of the
package's total value. None of the information regarding hours or value was
supported by verifiable documentation.
In addition to the two letters, the electronic document provided to us by the city
included answers to the three substantial transformation questions described in
EPA guidance 1 These answers state that the Kaeser Omega Blower packages
comply with the substantial transformation test based on the answers to the test
questions. According to these answers, Kaeser claimed that the blower was
1 Determining Whether "Substantial Transformation " of Components into a "Manufactured Good" Has Occurred
in the U.S.: Analysis, Roles, and Responsibilities, dated October 22, 2009.
Fredericksburg, VA Z2404
Tel. (540) 898-5500
FAX (540) 898-5520
CBC.1C
Pert No
Model CB 130 C
Serial No
Year 2010
free Air
381 ctm
Sev; v\
raaauro (Q*flC Pr) ^
Prewure
ftotei	4-ZT®
Motor Hz/HPM
Motor FLA
MACE IM
Kaeser positive displacement blower
marking plate. (EPA OIG photo)
13-R-0092
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substantially transformed in the United States and thereby compliant with the Buy
American requirements of the Recovery Act, based on affirmative answers to
question numbers two and three. These two questions inquired about changes in
character or use of a product or component and about the complexity of processes
that occurred in the United States.
Question 2 asked if there was a change in character or use of the good or
component in America, and included three sub-questions:
a.	Was there a change in the physical and/or chemical properties or
characteristics designed to alter the functionality of the good?
b.	Did the manufacturing or processing operation result in a change of a
product(s) with one use into a product with a different use?
c.	Did the manufacturing or processing operation result in the narrowing of
the range of possible uses of a multi-use product?
When answering question 2.a., Kaeser supported its "yes" answer with the
following explanation:
With U.S. sourced and purchased components such as motors,
pulleys, belts, pressure relief valves etc. form, fit and function had
to be considered. Considerable re-engineering by Kaeser U.S.
engineering department was required to make sure that the form,
fit and function still met the package intent, performance and
quality.
For question 2.b., Kaeser stated that the manufacturing or processing operation
did not change a product with one use into a product with a different use. For
question 2.c., Kaeser supported its "yes" answer with the following:
Due to the limited availability of certain components in the U.S.
the product range that can be offered per the ARRA [American
Recovery and Reinvestment Act of 2009] requirement would be
limited.
Question 3 asked if the process performed in the United States, including but not
limited to assembly, were complex and meaningful. Question 3 included five
sub-questions:
a.	Did the process take a substantial amount of time?
b.	Was the process costly?
c.	Did the process require particular high level skills?
d.	Did the process require a number of different operations?
e.	Was substantial value added in the process?
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Kaeser answered "yes" to all five sub-questions but provided general explanations
for each answer. For example, when describing "complex and meaningful"
processes, the answer states:
Considerable re-engineering to identify, design, and source U.S.
components was required. The design and manufacturing of test
stands was required to verify and to performance test the packages.
For questions 3.a and 3.b, about time and costs, Kaeser stated:
Additional time was required to engineer, source, purchase, and
test components and package. Additional time was required to
handle individual components and repackage.... Kaeser incurred
additional costs associated with the time required to engineer,
assemble, test and repackage for shipping.
EPA guidance2 states that answers must be documented by meaningful,
informative, and specific technical descriptions of the activities in the actual
process asked about in each question. The guidance also states that design,
planning, procurement, and component production, or any other step prior to the
process of physically working on and bringing together the components into the
item incorporated into the project, cannot constitute or be a part of substantial
transformation.
As previously noted, a manufactured good is something that has been processed
into a specific form and shape, or combined with other raw materials, that has
different properties than the properties of the raw materials.3 There is no
requirement regarding the origin of components as long as the manufacturing
occurs in the United States.4 When describing the concept of substantial
transformation in its guidance, EPA refers to 2 CFR § 176.160, which defines
substantial transformation as the process in the United States that transforms
materials from foreign countries into a new and different manufactured good
distinct from the materials from which it was transformed.
According to the Kaeser's October 13, 2011, letter and visual inspection, the core,
complex, blower component and the enclosure for the product were manufactured
in Germany. The motor, a v-belt pulley drive, and valves were attached in the
United States. With regard to the foreign-made blower component, the
manufacturer's literature states that the German state-of-the-art heavy
manufacturing process results in a "durable design that includes rigid casings, cast
bearing supports, and one-piece rotors"—with "precision machined, case-
hardened, spur-type timing gears and oversized cylindrical roller bearings" along
2	Determining Whether "Substantial Transformation " of Components into a "Manufactured Good" Has Occurred
in the U.S.: Analysis, Roles, and Responsibilities, dated October 22, 2009.
3	2 CFR § 176.140 (a)(1).
4	2 CFR § 176.70 (a)(2)(ii).
13-R-0092
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with "piston-ring seals." The literature also discusses the sophisticated
instrumentation, controls, and sensors that are part of the device.
The information provided does not explain how the properties or character of the
imported CB130C, 15HP Blower changed in the United States when combined
with other materials, or how the blower's use was limited. The information did
not provide a meaningful and specific technical description of the assembly
process in the United States that would enable us to determine whether the
CB130C blower was manufactured or substantially transformed in the United
States, as required by 2 CFR Part 176, Subpart B. The documentation did not
explain how the addition of the drive system (motor, pulley, and belts)
substantially changed or transformed the character or use of the blower chassis
manufactured in Germany and imported into the United States. There is no
detailed description of the assembly processes performed in the United States
with supporting documentation such as photographs or other records to support
the transformation. The claimed assembly time and added value were not
supported by any verifiable documentation such as time records, affidavits, or
accounting schedules. Therefore, the documentation provided did not establish
that the blower complied with the Buy American requirements of the Recovery
Act.
Contract Procurement
We did not identify any issues of concern related to contract procurement.
The construction contract was competitively awarded to Bowen Engineering
Corporation of Indianapolis, Indiana, based on public advertisement. Buy
American requirements were included in the Project Manual that was used by the
bidders to prepare their bids. Goshen received nine bids on the project and, based
on the engineer's recommendation, Goshen awarded the contract to the lowest
responsible and responsive bidder. We reviewed the bid tabulation and contacted
several of the unsuccessful bidders to obtain their feedback on the bidding
process. We did not identify any inappropriate or unfair bidding practices.
Recommendation
We recommend that the Regional Administrator, Region 5:
1. Employ the procedures set out in 2 CFR § 176.130 to ensure compliance
with Buy American requirements. If the region decides to retain the
foreign manufactured goods in the project under 2 CFR §176.130 (c)(3),
the region should either "reduce the amount of the award by the cost of the
[foreign] steel, iron, or manufactured goods that are used in the project" or
"take enforcement or termination action in accordance with the agency's
grants management regulations."
13-R-0092
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City of Goshen Response to Draft Report
In its August 20, 2012, response, the city stated that it has diligently worked to
demonstrate compliance with Buy American requirements throughout the course
of the combined sewer overflow detention facility project. Based on the revised
submissions, the city now believes that all three of the items noted in the OIG's
draft report are fully documented to meet Buy American requirements. The city
indicated it has provided detailed documentation from these three manufacturers
that it believes satisfactorily demonstrates Buy American compliance through
substantial transformation. Therefore, the city does not concur with the OIG's
recommendation that the Recovery Act funds be rescinded from the Goshen
combined sewer overflow detention facility project.
OIG Comment
We agree that the additional documentation for the actuators and flowmeters
supports compliance with Buy American requirements and have removed these
previously questioned items from the final report. However, we continue to
disagree that the documentation provided for the positive displacement blower
supports substantial transformation in the United States.
The city clarified that Kaeser's answers to EPA's three substantial transformation
questions were part of an e-mail that also included Kaeser's October 13, 2011,
letter. Both of these documents were considered during our field work and were
discussed in the draft report. We concluded that the letters and the answers to the
substantial transformation questions did not demonstrate that the blower was
manufactured or substantially transformed in the United States. Accordingly, our
overall conclusion that the project is not eligible for Recovery Act funds because
compliance with Buy American requirements cannot be confirmed remains
unchanged. We continue to recommend that the Regional Administrator exercise
authority under 2 CFR § 176.130.
13-R-0092
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Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed
Amount
Ag reed-To
Amount
Employ the procedures set out in 2 CFR § 176.130
to ensure compliance with Buy American
requirements. If the region decides to retain the
foreign manufactured goods in the project under
2 CFR §176.130 (c)(3), the region should either
"reduce the amount of the award by the cost of the
[foreign] steel, iron, or manufactured goods that are
used in the project" or "take enforcement or
termination action in accordance with the agency's
grants management regulations."
Regional Administrator,
Region 5
$5,000
1 O = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is unresolved with resolution efforts in progress
13-R-0092
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Appendix A
City of Goshen Response to Draft Report
and OIG Evaluation
Goshen
*
August 20, 2012
Engineering Department
CITY OF GOSHEN
204 East Jefferson Street, Suite
Goshen, IN 46528-3405
Phone|(574) 534-220! • Fax (574) 533-8626 - TDD (574) 534-3 185
engineering@goshenctty.com » www.goshenindiana.org
Mr. Robert Adachi
Director of Forensic Audits
Office of Inspector General
Environmental Protection Agency
75 Hawthorne Street (Mail Code IGA-1-1)
San Francisco, CA 94105
This correspondence is the City of Goshen's response to address the findings presented by the U.S.
Environmental Protection Agency, Office of Inspector General Draft Report entitled, ^American
Recovery and Reinvestment Act Site Visit of Combined Sewer Overflow Detention Facility, City of
Goshen, Indiana."
The findings of the aforementioned report by the U.S. Environmental Protection Agency Office of
Inspector General (OIG) claim that three (3) products utilized by the City of Goshen CSO Detention
Facility Project lack sufficient documentation to meet the American Recovery and Reinvestment Act
(ARRA) Section 1605 Buy Amencan requirements and do not meet the criteria outlined in the EPA
guidance for determining substantial transformation of goods and equipment. It is the City's position that
all three (3) products do comply with Buy American requirements. The City has provided additional
documentation to demonstrate this compliance via substantial transformation.
Table 1 provides a summary of the items that, according to OIG, did not include the necessary detail and
or documentation to demonstrate compliance with Section 1605 of the Recovery Act.
OIG ARK
.A Buy American Deficiency Summary
Section
Item
Manufacturer
Vendor
A
Electric Actuators
Rotork
BL Anderson
B
Positive Displacement Blowers
Kaeser
BL Anderson
C
Flowmeters
Endress & Hauser/
Pulsafeeder1
BL Anderson
See Part C for explanation
13-R-0092

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Specifically, the draft report states that "EPA's substantial transformation guidance states that answers
must be documented by meaningful, informative, and specific technical descriptions of the activites in the
actual processes asked about in each question. These descriptions of the activities must be sufficiently
detailed and clearly written to inform the reviewer about the activities that have occurred in the process,
enough to understand their nature and purpose. The (product's) sic does not meet this requirement."
The draft report references the document "Determining Whether "Substantial Transformation ' of
Components Into a "Manufactured Good" has occurred in the US: Analysis, Roles, and Responsibilities",
which was not yet available when the CSO Detention Facility Project was bid. The delayed and
piecemealed guidance issued by EPA after the bidding and awarding of the construction contract for the
Goshen CSO Detention Facility Project created an environment in which obtaining comprehensive
documentation from manufacturers was very difficult and time intensive. The City of Goshen
acknowledges that Section 1605 of the Recovery Act was in place at the time the project was bid, but
practical examples were not available at this time and resulted in confusion on acceptable documentation
The City, its consulting engineer (Donohue & Associates, Inc.), and the contractor (Bowen Engineering,
Inc.), and many equipment representatives worked, and continue to work, to make every effort to obtain
adequate documentation based on the guidance supplied after the project was bid. The City has proceeded
with due diligence in gathering the documentation throughout the project and after its substantial
completion.
Apart from the issue described above, each item in Table 1 is individually addressed in the remaining
portions of this letter. The findings and factual accuracies of the draft report and concurrence or non-
concurrence of the City of Goshen are stated and summarized.
Part A - Rotork Electric Actuators
1.	OIG Comment - "The actuator's marking plate identified the items as "MADE IN ENGLAND"
by Rotork Gears."
Goshen Response - The marking plate mentioned by the
draft report is on the gear box, which is a component of
the actuator. The marking plate of the actuator, shown
below, shows the actuator as manufactured in Rochester,
New York. According to documentation provided by
Rotork, the actuator was fully assembled in Rochester,
NY and arrived at the Goshen site as one piece.
2.	OIG Comment - EPA's substantial transformation
guidance states that answers must be documented by
meaningful, informative. and specific technical
descriptions of the activities in the actual processed asked
The actuators 'substantial transformation certification did
not meet this requirement."
Goshen Response - The City has requested that Rotork
provide further information regarding the actual
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13-R-0092
10

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manufacturing/assembly process. The City will provide said additional information upon receipt
from Rotork.
OIG Response 1: Based on the additional documentation provided, we agree that the Rotork gears
manufactured in England were a component of the actuator assembly. Title 2 CFR § 176.70 (a)(2)(ii)
states that there is no requirement with regard to the origin of components or subcomponents in
manufactured goods used in a project, as long as the manufacturing occurred in the United States. We
agree that Rotork Controls manufactured the complete actuator assembly in the United States, as required
by Section 1605 of the Recovery Act. We removed the actuator issue from the final report.	
Part B - Kaeser Positive Displacement Blowers
1.	OIG Comment - "Goshen installed one Kaeser Omega Com-Pak Plus CB 130C positive
displacement blower that was marked as "MADE IN GERMANY"
Goshen Response - The City agrees that the blower is marked "MADE IN GERMANY" but
believes that Kaeser has submitted the necessary documentation to prove substantial
transformation.
2.	OIG Comment - "The February 4th letter from the company's vice president claimed that the
Kaeser blowers were assembled in Fredricksburg, Virginia, and they complied with the Recovery
Act through substantial transformation. The letter referred to a substantial transformation
checklist enclosure. However, it was not clear if this checklist was included in the single
electronic file provided to us by the city. Neither the city nor the consulting engineer could
confirm if the answers to EPA's substantial transformation questions (item 2 in the preceding
paragraph) were an enclosure to either Kaeser letter.
Goshen Response - Stacy Cooke, of Donohue & Associates, Inc., received the October 13, 2011
letter and the substantial transformation checklist attached to a single email on October 14, 2011.
The email, the letter, and the substantial transformation checklist are shown in Attachment A.
It is the City's belief that the Kaiser Blowers were assembled in the United States and therefore
the blowers do comply with the Buy American requirements.
OIG Response 2: The city clarified the source of certain documentation used to evaluate Buy American
compliance of the positive displacement blower used on the project. However, as noted in the results
section of the final report, the documentation did not establish that the blower complied with Buy
American requirements. We did not include attachment A of Goshen's response because the Kaeser
documents included in the attachment are discussed in the report on page 3.	
Part C - Endress & Hauser Flowmeters
1. OIG Comment - The City did not provide any documentation to support that the four Endress &
Hauser ProMag50 flowmeters were manufactured in the United States. The city's consulting
engineer determined that these metering devices were not compliant with Buy American
requirements. The engineer stated that the cost per device was about $1,500 and the city plans to
include these item's in their de minimus waiver.
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Goshen Response - There was a misunderstanding as to which flowmeters were in question
during the time when OIG was gathering information. The flowmeters shown in the picture in the
draft report were installed on the chemical pumping skid by Pulsafeeder in their factory. This skid
was delivered to the site in one piece and therefore, they are a component of the chemical
pumping equipment. A revised Substantial Transformation checklist and explanation is shown in
Attachment B. This explanation not only shows the meters on the skid in the factory but also
explains that they were installed by Pulsafeeder. This is shown on the bottom of Page 1 of the
document shown in Attachment C. Thus, the Endress & Hauser flow meters do meet the Buy
American requirement because they are a component of the Chemical Feed skid.
OIG Response 3: We agree that the ProMag50 flowmeters were components on the Chemical Feed skid
and that the skids were manufactured in the United States. Title 2 CFR § 176.70 (a)(2)(h) states that there
is no requirement with regard to the origin of components or subcomponents in manufactured goods used
in a project, as long as the manufacturing occurred in the United States. Accordingly, we removed the
question concerning the flowmeters from the final report. We also removed attachment B from the report
because the issue is not included in the final report.	
Conclusion
The City of Goshen has diligently worked to demonstrate compliance with Buy American requirements
throughout the course of the CSO Detention Facility Project. Based on the revised submissions, the City
now believes that all three (3) of the items noted in the Office of Inspector General Site Visit Draft Report
dated August 2012 are fully documented to meet the ARRA Buy American requirements. The City has
provided detailed documentation from these three manufacturers which satisfactorily demonstrate Buy
American compliance through Substantial Transformation. Therefore, the City of Goshen does not concur
with OIG's recommendation that the ARRA funds be rescinded from the Goshen CSO Detention Facility
Project.
The City appreciates this opportunity to respond to the "American Recovery and Reinvestment Act Site
Visit of Combined Sewer Overflow Detention Facility, City of Goshen, Indiana" draft report dated
August 2012. If you have any further questions or concerns, please contact Emily Wehmeyer at Donohue
& Associates, Inc. via email at ewehmever@donohue-associates.com or by phone at (317) 267-8200.
Sincerely,
Honorable Allan Kauffman
Mayor, City of Goshen, Indiana
Cc: Michael Rickey, EPA OIG Project Manager
John Trefey, EPA OIG
Larry Brannon, EPA OIG
Dustin K. Sailor, City of Goshen
Rich Ziemba, State of Indiana Finance Authority
Amy Henninger, State of Indiana Finance Authority
James R. Miller, Donohue & Associates
Emily J. Wehmeyer, Donohue & Associates.
Enc: Attachment A - Kaeser Blower
Attachment B - Pulsafeeder
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Distribution
Office of the Administrator
Regional Administrator, Region 5
Deputy Regional Administrator, Region 5
Assistant Administrator for Water
Principal Deputy Assistant Administrator for Water
Agency Follow-Up Official (the CFO)
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for External Affairs and Environmental Education
Director, Grants and Interagency Agreements Management Division,
Office of Administration and Resources Management
Audit Follow-Up Coordinator, Region 5
Public Affairs Officer, Region 5
Director, Water Division, Region 5
Chief, State and Tribal Programs Branch, Region 5
Public Finance Director, Indiana Finance Authority, Indiana
Mayor, City of Goshen, Indiana
City Utility Engineer, City of Goshen, Indiana
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