POLITICS

Millions in stimulus spending violated Buy America Act, inspector general says

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Politics,Beltway Confidential,Michal Conger,Fiscal Policy

Environmental Protection Agency officials overseeing a stimulus-funded wastewater treatment plant bought $3.8 million in foreign-made parts and won’t return the money or  change the rules for using foreign parts in Recovery Act projects, according to the EPA Office of the Inspector General.

A two-year dispute between the EPA and the OIG has left the question unresolved long after the money was spent.

In March 2011, the OIG inspected the wastewater plant in Ottawa, Ill., and determined several European and Korean-made parts didn’t satisfy the Buy America Act that requires parts to be purchased or “substantially transformed” in the U.S.

The EPA for the past two years has refused to either eliminate the rule or return the stimulus funds spent on the foreign equipment, saying the purchase didn’t violate its own rules.

“In the event that the region decides to retain foreign-manufactured goods in the Ottawa project… 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,’ the OIG said. “Neither the region nor the city agreed with our conclusion that the documentation was not sufficient to support Buy American compliance for some items.”

The EPA instead blamed its Office of Water for establishing a flimsy test for whether products met the Buy America act. The agency admitted the rule isn’t a good test, but described it as “inartful” rather than wrong.

The OIG took issue with this excuse, and said the rule isn’t legally supported.

“This might be an  acceptable argument when large amounts of Recovery Act funds are not at stake, but here the size and importance of the multibil!ion-dollar stakes demanded and still demands artfulness and accuracy,” the inspector general responded.

The EPA maintains that the guidance was reasonable, and that relying on different tests would be “unworkable,” forcing the review of 3,300 projects more than 3 years after they were started.

“Ultimately it is for the agency to decide how best to remedy the concerns raised here, but difficulty in correcting an error is not a defense to a conclusion that there is an error,” the OIG replied.

The two agencies have been unable to come to a resolution since the 2011 report, and have asked acting EPA Administrator Bob Perciasepe to resolve the disagreement.

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