[Senate Report 111-56]
[From the U.S. Government Publishing Office]
Calendar No. 121
111th Congress } { Report
1st Session } SENATE { 111-56 _______________________________________________________________________
ENHANCED OVERSIGHT OF STATE AND LOCAL ECONOMIC RECOVERY ACT
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1064
TO AMEND THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 TO PROVIDE
FOR ENHANCED STATE AND LOCAL OVERSIGHT OF ACTIVITIES CONDUCTED UNDER
SUCH ACT, AND FOR OTHER PURPOSES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
July 22, 2009.--Ordered to be printed
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri LINDSEY GRAHAM, South Carolina
JON TESTER, Montana
ROLAND W. BURRIS, Illinois
MICHAEL F. BENNET, Colorado
Michael L. Alexander, Staff Director
Kevin J. Landy, Chief Counsel
Holly A. Idelson, Counsel
Troy H. Cribb, Counsel
Brandon L. Milhorn, Minority Staff Director and Chief Counsel
Amanda Wood, Minority Director for Governmental Affairs
Lisa M. Nieman, Minority Counsel
Trina Driessnack Tyrer, Chief Clerk
C O N T E N T S
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Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis......................................3
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimate........................4
VII. Changes in Existing Law Made by the Bill, as Reported............5
Calendar No. 121
111th Congress } { Report
1st Session } SENATE { 111-56
======================================================================
ENHANCED OVERSIGHT OF STATE AND LOCAL ECONOMIC RECOVERY ACT
_______
July 22, 2009.--Ordered to be printed
_______
Mr. Lieberman, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 1064]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1064) to amend the
American Recovery and Reinvestment Act of 2009 to provide for
enhanced State and local oversight of activities conducted
under such Act, and for other purposes, having considered the
same, reports favorably thereon with amendments and recommends
that the bill, as amended, do pass.
I. Purpose and Summary
S. 1064 would amend the American Recovery and Reinvestment
Act of 2009 (``ARRA'' or ``the Recovery Act'') to provide for
enhanced state and local oversight of activities conducted
under Recovery Act programs. ARRA imposed unprecedented
transparency and oversight requirements upon state and local
governments that spend Recovery Act funds at the very time when
many of those governments were being forced to cut back on the
personnel who perform such work. S. 1064 would facilitate state
and local compliance with ARRA's mandates by enabling state and
local governments to set aside up to 0.5 percent of ARRA funds
to conduct necessary management, transparency, and oversight
work. These funds would be in addition to amounts the
underlying law already allocates for administrative costs for
specific ARRA programs. In addition, the bill would allow
states and local governments to use GSA purchasing schedules
when using Recovery Act funds. The legislation would also
require OMB to issue guidance on the definition of ``jobs
created'' and ``jobs retained'' under reporting requirements of
ARRA.
II. Background and Need for the Legislation
The Homeland Security and Governmental Affairs Committee
has held four hearings to discuss the oversight of the American
Recovery and Reinvestment Act. All of these hearings have
highlighted the importance of state and local governments in
implementing the Recovery Act's oversight and accountability
requirements. The unprecedented oversight at the federal level
is simply not enough to ensure that the taxpayers' money is
being properly spent; rigorous state and local management and
oversight is also necessary. (See, e.g., Senate Committee on
Homeland Security and Governmental Affairs, Hearing on Follow
the Money: Transparency and Accountability for Recovery and
Reinvestment Spending, 111th Cong. (March 5, 2009); Senate
Committee on Homeland Security and Governmental Affairs,
Hearing on Recovery and Reinvestment Spending: Implementing A
Bold Oversight Strategy, 111th Cong. (April 2, 2009); Senate
Committee on Homeland Security and Governmental Affairs,
Hearing on The American Recovery and Reinvestment Act: Making
the Economic Stimulus Work for Connecticut, 111th Cong. (April
7, 2009 in Hartford, CT); Senate Committee on Homeland Security
and Governmental Affairs, Hearing on Follow the Money: State
and Local Oversight of Stimulus Funding, 111th Cong. (April 23,
2009)).
At the Committee's April 23, 2009 hearing, witnesses
emphasized the need to ensure adequate funding for state and
local management and oversight of Recovery Act programs. Gene
Dodaro, Acting Comptroller General of the United States,
discussed the strain that ARRAs oversight requirements will
place on state auditors and other officials responsible for
ensuring that the money is properly spent. In order for states
to have the management and oversight capacity to properly
oversee all aspects of the spending, down to sub-recipients in
program areas, he stated, ``additional funding is very
appropriate, commensurate with the amount of additional federal
resources that are going to go there.'' ARRA includes more than
$250 million to hire additional federal investigators and
inspectors to monitor the federal program, but there is no
comparable new funding for state and local governments to
administer and oversee ARRA spending even though approximately
$300 billion of Recovery Act funds will be under direct
supervision of these governments. Ray Scheppach, the Executive
Director of the National Governors Association, testified that
state budget shortfalls for fiscal years 2009 and 2010 would
exceed $230 billion as a result of falling revenues. Scheppach
warned that such shortfalls are forcing states to cut back on
personnel who can ensure accountability for Recovery Act funds,
and that money could be needed for data collection and
management to comply with the law's transparency requirements.
While states are facing budget deficits and layoffs, it is
crucial that there be adequate personnel and systems to monitor
the spending of ARRA funds at the state and local levels.
Federal stimulus money should be available to cover
administrative and oversight costs so that states can maintain
necessary personnel and put in place necessary tracking
systems.
The bill in some respects parallels guidance issued by the
Office of Management and Budget on May 11, 2009, regarding this
cost recovery issue and would go further in assuring that ample
funds are available for these administrative and oversight
duties. The House passed companion legislation, H.R. 2182, on
May 19, 2009.
III. Legislative History
On May 18, 2009, S. 1064 was introduced by Chairman
Lieberman and referred to the Senate Committee on Homeland
Security and Governmental Affairs. The bill's original co-
sponsors were Ranking Minority Member Collins, Senator Burris,
and Senator McCaskill. Additional cosponsors are Senator
Feingold and Senator Bennet. On May 20, 2009, the Committee
considered S. 1064 at its business meeting, where the bill was
reported favorably by voice vote as amended by the Collins-
Lieberman Amendment, Coburn Amendment 1, and Lieberman Second-
Degree Amendment to Coburn Amendment 1. Members present for the
vote on the bill were Senators Lieberman, Akaka, Carper, Pryor,
McCaskill, Burris, Collins, Coburn, and Voinovich.
The Collins-Lieberman Amendment would require the General
Services Administration (GSA) to provide necessary schedule
ordering guidance for state and local users; allow access to e-
Buy online electronic Request for Quote system to maximize
competition; and make available, free of charge, necessary
training. Coburn Amendment 1 would require that information on
federal spending in ARRA be included and clearly identified on
USAspending.gov, the website created under the Federal Funding
Accountability and Transparency Act of 2006, in addition to the
website created under ARRA. The Lieberman Second-Degree
Amendment to Coburn Amendment 1 would clarify that the
requirements to include and differentiate ARRA information on
USAspending.gov would not expand existing reporting
requirements under the Federal Funding Accountability and
Transparency Act.
IV. Section-by-Section Analysis
Sec. 1. Short title
The short title of the bill is the Enhanced Oversight of
State and Local Economic Recovery Act.
Sec. 2. Requirements for funding for state and local oversight under
American Recovery and Reinvestment Act of 2009
This section would amend the American Recovery and
Reinvestment Act to require Federal agencies, subject to
guidance from the Director of the Office of Management and
Budget, to adjust applicable limits on administrative
expenditures for Federal awards to help award recipients defray
the costs of data collection requirements, auditing, contract
and grant planning and management, and investigations of waste,
fraud, and abuse.
The section further amends the Recovery Act to allow state
and local governments receiving funds under the Recovery Act to
set aside an amount up to 0.5 percent of such funds, in
addition to any funds already allocated to administrative
expenditures, to conduct planning and oversight to prevent and
detect waste, fraud, and abuse.
Sec. 3. Authorization for acquisition by state and local governments
through Federal supply schedules
This section amends section 502 of title 40, United States
Code, by providing the Administrator of the General Services
Administration with the authority to provide for the use by
state or local governments of the Federal supply schedules for
goods or services that are funded by the Recovery Act.
Participation by a firm that sells to the Federal Government
through the supply schedule shall be voluntary. The section
also includes provisions to ensure proper usage of GSA
schedules by state and local users by offering guidance,
availability of the Request for Quote and Request for Proposal
system, and training related to proper schedule usage, free of
charge.
Sec. 4. Definition of jobs created and jobs retained
This section amends section 1512(g) of the Recovery Act by
requiring the Director of the Office of Management and Budget
to issue guidance to state and local government agencies and
other funding recipients to ensure accurate and consistent
reporting of ``jobs created'' and ``jobs retained'' through
Recovery Act projects.
Sec. 5. Federal awards under the American Recovery and Reinvestment Act
of 2009
This section amends Section 2 of the Federal Funding
Accountability and Transparency Act of 2006 to require that the
Office of Management and Budget ensure that the website created
under that Act differentiates projects that are funded under
the ARRA from other Federal awards, and allows users to search
the website for Federal awards under the ARRA.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill. The
Congressional Budget Office states that S. 1064 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act.
VI. Congressional Budget Office Cost Estimate
May 21, 2009.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental
Affairs, U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1064, the Enhanced
Oversight of State and Local Economic Recovery Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 1064--Enhanced Oversight of State and Local Economic Recovery Act
S. 1064 would allow state and local governments to purchase
certain goods and services at the same discounted prices
charged to the federal government. Eligible purchases under the
bill would include those funded through grants provided in
Public Law 111-5, the American Recovery and Reinvestment Act
(Recovery Act). The legislation also would allow state and
local governments to use a portion of their Recovery Act funds
to monitor and account for those funds. CBO estimates that
enacting S. 1064 would increase offsetting collections and
associated spending of fees charged by the General Services
Administration (GSA), but the net effect on the federal budget
would be negligible. The bill would have no effect on revenues.
Under current law, state and local governments are able to
use GSA's federal supply schedule to purchase goods from
willing commercial vendors if those purchases are related to
law enforcement, fire fighting, disaster recovery, or
information technology. GSA charges a 0.75 percent fee on all
purchases to recover the administrative costs of maintaining
the supply schedule.
S. 1064 would temporarily expand the program to include any
purchase made by those governments using Recovery Act funds.
Based on information from GSA on the anticipated additional
demand by the state and local governments, CBO estimates that
additional purchases would increase GSA's offsetting
collections by about $15 million annually over the next few
years. Because such fees are spent by GSA without further
appropriation, the net budgetary impact would be negligible.
In addition, section 2 would allow funds previously
appropriated by the Recovery Act to state and local governments
to be used for planning and auditing activities as well as
investigations of waste and fraud. CBO expects that provision
would not change the amount or the timing of expenditures to
state and local governments. We therefore estimate that
implementing that provision would have no significant effect on
direct spending.
S. 1064 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act. The
bill would benefit state and local governments by allowing them
to use the federal supply schedule to purchase additional goods
and services.
On May 12, 2009, CBO provided a cost estimate for H.R.
2182, the Enhanced Oversight of State and Local Economic
Recovery Act, as ordered reported by the House Committee on
Oversight and Government Reform on May 6, 2009. The two pieces
of legislation have similar provisions, and the CBO cost
estimates are identical.
The CBO staff contact for this estimate is Matthew
Pickford. The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
VII. Changes to Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 1064 as reported are shown as follows (existing law proposed
to be omitted is enclosed in [brackets], new matter is printed
in italic, and existing law in which no change is proposed is
shown in roman):
AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009
Pub. L. 111-5, Title XV, 1512, February 17, 2009
SEC. 1512. REPORTS ON USE OF FUNDS
* * * * * * *
(g) Guidance.--Federal agencies, in coordination with the
Director of the Office of Management and Budget, shall provide
for user-friendly means for recipients of covered funds to meet
the requirements of this section. The Director of the Office of
Management and Budget shall issue guidance to ensure accurate
and consistent reporting of ``jobs created'' and ``jobs
retained'' as those terms are used in subsection (c)(3)(D).
* * * * * * *
Pub. L. 111-5, Title XV, 1552, February 17, 2009
SEC. 1552. [SET-ASIDE FOR STATE AND LOCAL GOVERNMENT RECORDING AND
RECORDKEEPING] FUNDING FOR STATE AND LOCAL
GOVERNMENT OVERSIGHT
Federal Agency Requirement.--Federal agencies receiving
funds under this act [may, after following the notice and
comment rulemaking requirements under the Administrative
Procedures Act (5 U.S.C. 500), reasonably] shall, subject to
guidance from the Director of the Office of Management and
Budget adjust applicable limits on administrative expenditures
for Federal awards to help award recipients defray the costs of
data collection requirements, auditing, contract and grant
planning and management and investigations of waste, fraud, and
abuse initiated pursuant to this Act.
State and Local Government Authority.-- Notwithstanding any
other provision of law, State and local governments receiving
funds under this Act may set aside an amount up to 0.5 percent
of such funds, in addition to any funds already allocated to
administrative expenditures, to conduct planning and oversight
to prevent and detect waste, fraud, and abuse.
SECTION 502 OF TITLE 40, UNITED STATES CODE
Sec. 502. Services for other entities
* * * * * * *
(e) Use of Supply Schedules for Economic Recovery.--
(1) In general.--The Administrator may provide for
the use by state or local governments of Federal supply
schedules of the General Services Administration for
goods or services that are funded by the American
Recovery and Reinvestment Act of 2009 (Public Law 111-
5).
(2) Voluntary use.--In the case of the use by a state
or local government of a Federal supply schedule
pursuant to paragraph (1), participation by a firm that
sells to the Federal Government through the supply
schedule shall be voluntary with respect to a sale to
the State or local government through such supply
schedule.
(3) Provisions to ensure proper usage by non-federal
users.--The Administrator shall, for authorized non-
Federal users of Federal Supply Schedules--
(A) review the existing ordering guidance
and, as necessary, prescribe additional
guidance to ensure proper usage and to maximize
task and delivery order competition;
(B) make available the online electronic
Request for Quote (RFQ/Request for Proposal
(RFP) system; and
(C) make available, free of charge, training
related to proper Schedule usage, including
online training courses.
(4) Definition.--The definitions in subsection (c)(3)
shall apply for purposes of this subsection.
FEDERAL FUNDING ACCOUNTABILITY AND TRANSPARENCY ACT OF 2006
Pub. L. 109-282, Sec. 2, Sept. 26, 2006
SEC. 2. FULL DISCLOSURE OF ENTITIES RECEIVING FEDERAL FUNDING
* * * * * * *
(b)(1) * * *
(2) Additional website content.--Not later than 30 days
after the date of enactment of the Enhanced Oversight of State
and Local Economic Recovery Act, the Office of Management and
Budget shall ensure that the website under this subsection--
(A) clearly differentiates between projects funded
under the American Recovery and Reinvestment Act of
2009 (Public Law 111-5) and other Federal awards; and
(B) provides users with the ability to perform
searches for information in the website relating only
to Federal awards funded by the American Recovery and
Reinvestment Act of 2009
[2](3) * * *
[3](4) * * *
[4](5) * * *
* * * * * * *
(h) Weblink.--The website Recovery.gov established under
the American Recovery and Reinvestment Act of 2009 (Public Law
111-5) shall contain a prominently displayed weblink on its
front page to the website under this section.