£ < 3J \ sf"1' Ml r" PRdrt^ D 2 LU O U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL Catalyst for Improving the Environment Site Inspection Report American Recovery and Reinvestment Act Site Inspection of the Ultraviolet Treatment and Chlorine Disinfection Facility Project, City of Bremerton, Washington Report No. 10-R-0132 May 26, 2010 RECOVERY. ------- Report Contributors: Eileen Collins Michael Owen Abbreviations A/E ARRA DWSRF EPA OIG Architectural and engineering services American Recovery and Reinvestment Act of 2009 Drinking Water State Revolving Fund U.S. Environmental Protection Agency Office of Inspector General Cover Illustration: The logo for the American Recovery and Reinvestment Act of 2009 ------- £ < 73 \ ^tDSX V PRQl^0 o z LU (5 T U.S. Environmental Protection Agency Office of Inspector General At a Glance 10-R-0132 May 26, 2010 Catalyst for Improving the Environment Why We Did This Review The U.S. Environmental Protection Agency (EPA) Office of Inspector General (OIG) conducts site visits of American Recovery and Reinvestment Act of 2009 clean water and drinking water projects. We selected a City of Bremerton, Washington, project for review. Background The City received a $6.06 million loan from the State of Washington under the Drinking Water State Revolving Fund program. The loan terms include a $60,000 loan fee and 100 percent forgiveness on the $6 million principal funded by the Recovery Act. The purpose of the project is to design and construct an Ultraviolet Treatment and Chlorine Disinfection Facility. American Recovery and Reinvestment Act Site Inspection of the Ultraviolet Treatment and Chlorine Disinfection Facility Project, City of Bremerton, Washington What We Found We conducted a site inspection at the City of Bremerton, Washington, in June 2009. As part of our inspection, we toured the future site of the Ultraviolet Treatment and Chlorine Disinfection Facility, conducted interviews of City representatives, and reviewed documentation related to Recovery Act requirements. Based upon our site inspection, nothing came to our attention that would require action from the City. For further information, contact our Office of Congressional, Public Affairs and Management at (202) 566-2391. To view the full report, click on the following link: www.epa.qov/oiq/reports/2010/ 20100526-10-R-0132.pdf ------- ^£0SX ? \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY | | WASHINGTON, D.C. 20460 PRQl^ OFFICE OF INSPECTOR GENERAL May 26, 2010 MEMORANDUM SUBJECT: American Recovery and Reinvestment Act Site Inspection of the Ultraviolet Treatment and Chlorine Disinfection Facility Project, City of Bremerton, Washington Report No. 10-R-0132 yi dL TifJl FROM: For Melissa M. Heist Assistant Inspector General for Audit TO: Dennis McLerran Regional Administrator, EPA Region 10 This is our report on the subject site visit conducted by the Office of Inspector General of the U.S. Environmental Protection Agency. We performed this site inspection as part of our responsibility under the American Recovery and Reinvestment Act of 2009. The purpose of our site inspection was to determine the City's compliance with selected requirements of the Recovery Act pertaining to the Drinking Water State Revolving Fund program. The City received a $6.06 million Drinking Water State Revolving Fund loan. The loan terms include a $60,000 loan fee and 100 percent forgiveness on the $6 million principal funded by the Recovery Act. The estimated cost of this report - calculated by multiplying the project's staff days by the applicable daily full cost billing rate in effect at the time - is $51,176. Action Required Because this report contains no recommendations, you are not required to respond to this report. We have no objection to the further release of this report to the public. This report will be made available at http://epa.gov/oig. If you or your staff have any questions regarding this report, please contact Robert Adachi at (415) 947-4537 or adachi.robert@epa.gov. or Michael Owen at (206) 553-2542 or owen.michael@epa.gov. ------- 10-R-0132 Purpose The purpose of our review was to determine the compliance of the City of Bremerton, Washington, with requirements for subrecipients of American Recovery and Reinvestment Act of 2009 (ARRA) funds under the Drinking Water State Revolving Fund (DWSRF) program. Background The City entered into a loan agreement with the Washington State Department of Community, Trade and Economic Development to design and construct an Ultraviolet Treatment and Chlorine Disinfection Facility. The City received a DWSRF loan for $6.06 million. The loan terms include a $60,000 loan fee and 100 percent forgiveness on the $6 million principal funded by the Recovery Act. The loan fee has a 5-year repayment period at 0 percent interest. Scope and Methodology Due to the time-critical nature of ARRA requirements, we did not perform this assignment in accordance with generally accepted government auditing standards. 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 of Washington (State), or local requirements. We conducted an onsite inspection at the City of Bremerton on June 1 and 8, 2009. During our inspection we: • Conducted interviews of the subrecipient's project and financial managers; • Reviewed the subrecipient's procurement policies and procedures; • Reviewed records maintained by the subrecipient, including procurement documentation; and • Toured the project site. At the time of the onsite inspection, the City's ARRA-funded DWSRF loan with the State of Washington had not been executed. However, the State had informed the City that it would receive the loan and that the funding would cover allowable project costs incurred after March 1, 2009. The loan contract was executed on August 10, 2009. Subsequent to the onsite inspection, we reviewed the loan agreement to determine the specific loan terms and applicable procurement standards. We interviewed State managers and staff to clarify the loan terms and applicable procurement requirements. We also reviewed State procurement regulations and related manuals. 1 ------- 10-R-0132 Results of Site Inspection Based upon our site inspection, nothing came to our attention that would require action from the City. We reviewed the City's procurement of architectural and engineering services (A/E). The City awarded a contract to an A/E firm to provide engineering design and bid support services for the Ultraviolet Treatment Facility and Chlorine Disinfection Facility project. This contract commenced on May 8, 2009. The A/E firm was selected based on qualifications and price negotiation. The City's award of the A/E services contract complied with the applicable State regulation, Revised Code of Washington 39.80. Recommendations We have no recommendations. Subrecipient's Response and Office of Inspector General Comment On May 6, 2010, we held a meeting with the City of Bremerton and EPA Region 10 to obtain their response to the discussion draft report. Neither party had any concerns with the report. Although invited, the State did not attend the meeting. The State informed us on May 14, 2010, that it did not have any comments on the discussion draft. We have no further comments. 2 ------- 10-R-0132 Status of Recommendations and Potential Monetary Benefits RECOMMENDATIONS POTENTIAL MONETARY BENEFITS (In $000s) Rec. No. Page No. Subject Status1 Action Official Planned Completion Date No recommendations Claimed Amount Agreed To Amount 1 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 3 ------- 10-R-0132 Appendix A Distribution Office of the Administrator Regional Administrator, Region 10 (Action Official) Director, Grants and Interagency Agreements Management Division, Office of Administration and Resources Management Agency Follow-up Official (the CFO) Agency Follow-up Coordinator General Counsel Associate Administrator for Congressional and Intergovernmental Relations Associate Administrator for Public Affairs Audit Follow-up Coordinator, Region 10 Public Affairs Officer, Region 10 Mayor, City of Bremerton, Washington Director, Office of Drinking Water, Department of Health, State of Washington Acting Inspector General 4 ------- |