If  

 

 

 

   

       

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 8, 2013 

Scan this mobile 

code to learn more 

about the EPA OIG. 
 

Report Contributors: Michael Rickey 

 Larry Brannon 

 Patrick McIntyre 

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: 

fax: 

1-888-546-8740 

202-566-2599 

1200 Pennsylvania Avenue, NW 

Mailcode 2431T 

online: http://www.epa.gov/oig/hotline.htm Washington, DC 20460 
 

 

 

U.S. Environmental Protection Agency 13-R-0092 

January 8, 2013 Office of Inspector General 

At a Glance 

Why We Did This Review American Recovery and Reinvestment Act Site Visit 

of Combined Sewer Overflow Detention Facility, The U.S. Environmental City of Goshen, Indiana Protection Agency, Office of 

Inspector General, conducts 

site visits of American What We Found 

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. 

For further information, contact 

our Office of Congressional and 

Public Affairs at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2013/ 

20130108-13-R-0092.pdf 

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. 
 

 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

January 8, 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. 
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 8, 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. 
 

 

 

American Recovery and Reinvestment Act 13-R-0092 

Site Visit of Combined Sewer Overflow 

Detention Facility, City of Goshen, Indiana 

Table of Contents 

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 
 

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 project 

2.	 Interviewed city personnel, the city’s consulting engineer, and Indiana 

Finance Authority personnel 

13-R-0092 1 
 

 

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 
 

 

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 Actfunded 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. 

Kaeser positive displacement blower 

marking plate. (EPA OIG photo) 

13-R-0092 3 
 

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? 

13-R-0092 4 
 

 

 

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, casehardened, 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 5 
 

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 6 
 

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 7 
 

 

 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed-To 

Amount 

1 6 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.” 

U Regional Administrator, 

Region 5 

$5,000 

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 8 

1 
 

 

 

Appendix A 

City of Goshen Response to Draft Report 

and OIG Evaluation 

August 20, 2012 

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 American 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. 

Table 1 – OIG ARRA 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 

1 See Part C for explanation 

13-R-0092 9 
 

 

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 nonconcurrence 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 

13-R-0092 10 
 

 

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. 

13-R-0092 11 
 

 

 

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)(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. 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 ewehmeyer@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 

13-R-0092 12 
 

 

Appendix B 

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 

13-R-0092 13