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*. U.S. Environmental Protection Agency	12-r-0789

|	\ Office of Inspector General	September 12, 2012
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At a Glance
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 our
visit was to address a hotline
complaint involving compliance
with the Recovery Act's Buy
American requirements. The
city received a $4,875,000 loan
from the Indiana Finance
Authority (IFA) under the
Indiana Wastewater State
Revolving Fund Loan Program.
The loan included $1,769,000
in Recovery Act funds. The city
used these funds to rehabilitate
and improve its wastewater
treatment plant.
This report addresses the
following EPA Goal or
Cross-Cutting Strategy:
• Protecting America's waters
American Recovery and Reinvestment Act Site Visit
of Wastewater Treatment Plant Improvements Project,
City of Nappanee, Indiana
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/2012/
20120912-12-R-0789.pdf
What We Found
In September 2010 and May 2011, we visited the Wastewater Treatment Plant
Improvements Project in the City of Nappanee, Indiana. As part of our site visit,
we toured the project, visually inspected equipment and materials, interviewed
IFA and city officials and their employees, reviewed manufacturers' substantial
transformation supporting documentation, and reviewed documentation related to
Buy American requirements.
We noted in our draft report 7 of 32 instances where the city could not
demonstrate compliance with Buy American requirements as set out in Section
1605 of the Recovery Act. In response, the city provided documentation and
agreed to take corrective actions to replace two items with products that meet the
Buy American requirements. We agree that six of the seven items now comply
with the requirements. For the one remaining item, the city could not demonstrate
that it was manufactured in the United States, as required by the Recovery Act.
As a result, the project is not eligible for the $1,769,000 of Recovery Act funds
authorized by the state unless the U.S. Environmental Protection Agency
exercises a regulatory option.
Recommendations and Planned Agency Corrective Actions
We recommend that Region 5 employ the procedures set out in Title 2 of the
Code of Federal Regulations (CFR) to ensure compliance with the Buy American
requirements. If the region decides to retain the foreign manufactured goods in
the Nappanee project under 2 CFR §176.130 (c)(3), the region should either
"reduce the amount of the award by the cost of the 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." We also
recommend that the region require IFA to verify the city's corrective actions taken
and ensure the replaced items meet the Buy American requirements.
Neither the region nor the city agreed with our conclusion that the documentation
was not sufficient to support Buy American compliance. The Agency agreed with
our recommendation to verify the city's corrective actions, and indicated the
Agency visited the project and verified the agreed-to removal and replacement of
items.

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