|
Search News and Views By:
|
|
|
|
OR by |
|
Keywords |
|
|
|
|
|
|
|
|
|
Alerts
LITIGATION: The Stimulus Package and Its Impact
February 13, 2009
The U.S. economy is about to receive a massive cash transfusion, with hundreds of billions of federal dollars being invested in many sectors. The recipients will be of broad scope – state and local governments; companies which are direct recipients, as well as subcontractors on road and other infrastructure projects; and individuals who receive tax benefits.
At the outset, the primary focus will be on spending and putting people back to work. But, a word of caution: Any entity intending to participate in American Recovery and Reinvestment Act programs should focus from the very beginning on compliance and accountability. That has been true for every entity that seeks or receives federal money, but it will be especially important now.
The enormous amount of money to be spent, the public demand that it accomplish its purpose, be spent free of corruption and not be wasted, plus the opposition of the Republicans to the Act, all guarantee that expenditure of ARRA funds will be scrutinized for many years for waste and misuse. By whom? Congress, through Committee hearings and reports, the General Accountability Office, and the Department of Justice, its many U.S. Attorneys Offices, the individual agency Inspectors General, and a new Recovery Act Accountability and Transportation Board,, to name a few. And, in many cases, their audits, investigations and findings are to be made public.
The Act reflects this. It has a separate title on transparency and accountability. With respect to funds received by state or local governments under the Act, either the governor, mayor or chief executive must certify that the project has received a full review and vetting required under the law and is an appropriate use of taxpayer dollars. Additionally, reporting requirements are imposed upon governments and organizations receiving funds from the Federal government under the Act. Further, the inspectors general shall review any concerns raised by the public regarding how the funds under this Act are being made available.
The Act also imposes compensation restrictions on recipients of TARP funds, and it applies the Federal Acquisition Regulation to all direct contracts entered into by the Federal Government using funds made available by the Act. It also requires all contractors and grantees receiving funds directly from the Federal Government to file a quarterly report with their Federal contracting agency, which is required to much make of the information in the report public. The Federal Acquisition Regulation has recently been expanded to require government contractors to report fraudulent conduct to the government when the contractor has a reasonable basis to believe that fraud might have been committed. And, the procurement and expenditure of federal money are subject to federal anti-fraud, anti-corruption statutes, particularly the civil and criminal sanctions of the False Claims Act.
Participants in the ARRA programs and contracts will be well served to conduct a comprehensive self audit before seeking and spending this money. That would entail a review of their financial accounting mechanisms, compliance with the tax laws, and steps to prevent the occurrence of anything that could be viewed as a fraudulent or corrupt action in connection with a contract.
For a copy of our full overview, click here. [pdf]
|
|