GAO Recovery Act Report Summary - Feb. 2010

Prepared by the Alliance to Save Energy, February 2010

On February 10, 2010, the Government Accountability Office released a Report on the American Recovery and Reinvestment Act that identifies regulatory barriers to its funded projects and compiles data on rates of spending. The report considers the portion of Recovery Act funding that is disbursed as grants, loans, and contracts for projects and activities, which it estimates to make up roughly one third of funds provided by the Act. Its findings were based on a review of data from twenty-seven federal agencies and discussions with relevant officials in sixteen states and the District of Columbia.

The report was requested by Senate Minority Leader, Mitch McConnell (R-KY) in the lead up to the one-year anniversary of the Recovery Act on February 17, 2010.

By the end of 2009, out of the $309 billion that was appropriated by the Act to projects and activities, 20 percent of total funds had been spent and 63 percent had been obligated to projects. Spending rates varied considerably by agency and program. The report notes that spending figures may not represent the true state of stimulus-funded programs because it is commonplace for such projects to be paid for only upon completion.

Federal agencies identified several federal requirements of funded projects as obstacles to rapid disbursement of stimulus funds. The most significant obstacles were:

• The Davis-Bacon prevailing wage requirement: Federally-funded construction projects are normally required to pay workers ‘locally prevailing wages.’ In many instances, prevailing wages had first to be determined and administrative structures created before projects could begin. Some programs, such as weatherization, were not previously subject to Davis-Bacon requirements, but now are under the Recovery Act.
• Buy American requirements: The Recovery Act requires that most projects use American-made products in projects funded by the stimulus, but in several cases acquiring necessary equipment from American sources proved difficult or impossible. In such cases, projects stalled while waiver applications awaited approval.
• The National Historic Preservation Act: In some cases, programs were delayed while structures that were to be upgraded, repaired, or retrofitted came under historic preservation review requirements.

The significance of each requirement varied by agency. The Department of Energy identified Davis-Bacon requirements and the National Environmental Policy Act as causing delays, while the Environmental Protection Agency cited Davis-Bacon requirements, Buy American requirements, and requirements specific to the Recovery Act itself (e.g. reporting and review of expenditures). At the state level, Davis-Bacon requirements were by far the most cited cause for delays.