Stimulus rules | What you need to know if your construction biz goes for Recovery money
The American Recovery and Reinvestment Act of 2009 (a.k.a. the stimulus act) could have unexpected consequences for Maine businesses. The stimulus act places several requirements on the federal, state and local government agencies using the funds as well as on contractors and subcontractors receiving the funds. Companies that either do business directly with the government or that do business with a company that does business with the government should be familiar with the basic provisions of the stimulus. Not only are new “buy American” preferences included, but also new impositions are placed on contractors and subcontractors.
For instance, a company that receives stimulus funds directly or indirectly could be subject to government audits, inspections and hearings, and the results of those proceedings could posted on a public website. It is therefore incumbent upon any Maine business that might be involved in receiving stimulus funds to be familiar with what receiving that money entails. Here are a few key points:
- Section 604 of the stimulus act forbids the U.S. Department of Homeland Security from purchasing certain goods “if the item is not grown, reprocessed, reused, or produced in the United States.” Covered goods include clothing and clothing materials and components; tents, tarpaulins, covers, textile belts, bags, protective equipment, sleep systems, load carrying equipment, textile marine equipment, parachutes or bandages; cotton and other natural fiber products, woven silk or woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric, canvas products or wool; and any item of individual equipment manufactured from or containing such fibers, yarns, fabrics or materials.
- Section 902 of the stimulus act expands the traditional audit and inspection powers of the Government Accountability Office, or GAO, over government contractors and subcontractors. The GAO is now allowed to interview officers and employees and examine company records. Inspectors general are likewise empowered to examine records of contractors, subcontractors or any state or local government agency administering a covered contract, and also may interview any officer or employee. The results of the reviews must be posted on the Office of the Inspector General website and linked to the Recovery Accountability and Transparency Board website.
- The stimulus act establishes a Recovery Accountability and Transparency Board to coordinate and conduct oversight of covered funds to prevent fraud, waste and abuse. The board is required to report to Congress and the president any possible misuse of covered funds, including making “flash reports” regarding “potential management and funding problems that require immediate attention.” All reports submitted to Congress or the president must be posted on the board’s website. The board is empowered to conduct its own “audits and reviews of spending of covered funds” and has the power to subpoena documents and individuals.
- There are several contracting restrictions attached to the stimulus funds. In an apparent attempt to limit no-bid contracts, the act provides that to “the maximum extent possible,” all contracts “shall be awarded as fixed-price contracts through the use of competitive procedures.” Any contracts awarded without competitive procedures or that are not fixed-price must be posted on the board’s website. None of the funds appropriated may be used by an executive agency to enter into any federal contract unless the contract is in accordance with the Federal Property and Administrative Services Act.
- All construction projects directly or indirectly funded by stimulus funds must comply with the Davis-Bacon Act, which is a prevailing-wage statute passed in 1931. Covered entities must pay their laborers and mechanics no less than the prevailing wage rates and fringe benefits as determined by the Secretary of Labor for corresponding classes of laborers and mechanics employed on similar projects in the area. There are also certain overtime and payroll frequency and reporting requirements.
Because these requirements affect not only companies contracting directly with the federal government for stimulus funds, but also those who contract with state and local governments or private companies that happen to be using stimulus funds, the scope of these requirements could be unexpectedly far-reaching.
Maine businesses, therefore, best beware of whether they are involved in a contract that relates to stimulus funds in order to comply with the act’s requirements.
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