On June 22, 2009 the Office of Management and Budget (OMB) released a memo entitled “Implementing Guidance for the Report on Use of Funds Pursuant to the American Recovery and Reinvestment Act of 2009,” which provides detailed guidance regarding the reporting obligations associated with grants, loans and other financial assistance funded by the American Recovery and Reinvestment Act (ARRA or Recovery Act). This alert summarizes some of the key points outlined in OMB’s most recent guidance – including specific responsibilities and data elements required of recipients, sub-recipients and vendors who receive Recovery Act funds.

Background. Section 1512 of the Recovery Act requires “recipients” of Recovery Act funds to submit detailed quarterly reports on the use of those funds, so that information regarding the use of those funds may be made available for public inspection. Among other things, the Act and its implementing rules require reports on the amount of Recovery Act funds received, the number of jobs created or retained, as well as the “names and total compensation of the five most highly compensated officers” of the recipient. On March 31, 2009, detailed rules were published in the Federal Acquisition Regulation (FAR) to address reporting obligations under federal contracts awarded using Recovery Act funds. See New FAR Rule Requires Reports on Executive Compensation, Use of Funds By Contractors and Subcontractors Who Receive Recovery Funds.” On April 23, 2009, OMB issued a separate, less detailed rule addressing the reporting obligations associated with grants, loans and other forms of financial assistance. In response to questions and comments raised in connection with its April 23 guidance, OMB on June 22 issued more detailed guidance regarding reporting obligations associated with Recovery Act grants, loans and financial assistance.

Applicability. The reporting obligations in Section 1512 of the Act apply to any “recipient” of Recovery Act funds, which is broadly defined as “any entity that receives recovery funds directly from the Federal Government (including recovery funds received through grant, loan or contract) other than an individual.” In its June 22 guidance, OMB has attempted to provide more specific instructions regarding the application of these reporting obligations to prime recipients, sub-recipients and vendors:

  • Prime Recipient Responsibilities. For purposes of the reporting obligations in Section 1512, a “prime recipient” is defined as any “non-Federal entit[y] that receive Recovery Act funding as Federal awards in the form of grants, loans, or cooperative agreements directly from the Federal government.” According to OMB’s June 22 guidance, the prime recipient is ultimately responsible for reporting all data required by Section 1512 of ARRA, including data regarding payments made to sub-recipients and vendors. However, the prime recipient may delegate responsibility for reporting certain data elements to the sub-recipient.
  • Sub-Recipient Responsibilities. A “sub-recipient,” for purposes of the ARRA reporting requirements, is any “non-Federal entit[y] that [is] awarded Recovery funding through a legal instrument from the prime recipient to support the performance of any portion of the substantive project or program for which the prime recipient received the Recovery funding.” Under OMB’s guidance, a sub-recipient may report directly to the Federal Government if the prime recipient has delegated responsibility to the sub-recipient. In the absence of such a delegation, the prime recipient must develop a process for gathering the sub-recipient’s information in time to meet the reporting obligations of the Act – including, for example, information regarding the names and total compensation paid to the sub-recipient’s “top five officers.”
  • Vendor Responsibilities. Based on OMB’s latest guidance, recipients and sub-recipients are required to provide limited information regarding payments to “vendors” involved in a Recovery Act project. Of note, there is no requirement to report on the total compensation paid to a vendor’s top five officers. For purposes of these requirements, OMB has defined a “vendor” as a “dealer, distributor merchant or other seller providing goods or services that are required for the conduct of a Federal program.” Unlike a recipient, a vendor is “not subject to the terms and conditions of the federal financial assistance award.” In addition, OMB has identified the following factors for distinguishing a vendor from a sub-recipient, for reporting purposes: A vendor “provides the goods and services within normal business operations”;
    • A vendor “provides similar goods or services to many different purchasers”;
    • A vendor “operates in a competitive environment”;
    • A vendor “provides goods or services that are ancillary to the operation of the Federal program”; and
    • A vendor “is not subject to compliance requirements of the Federal program.”

Required Data. Pursuant to OMB’s guidance, the following data elements are required to be reported for recipients, sub-recipients and vendors:

  • Prime Recipient Data:
    • Federal Funding Agency
    • Award identification
    • Recipient D-U-N-S
    • Parent D-U-N-S
    • Recipient CCR information
    • Catalog of Federal Domestic Assistance (CFDA) number
    • Recipient account number
    • Project/grant period
    • Award type, date, description, and amount
    • Recovery funds expended
    • Activity code and description
    • Project description and status
    • Jobs created (narrative and number)
    • Infrastructure expenditures and rationale, if applicable
    • Recipient primary place of performance
    • Recipient area of benefit
    • Recipient officer names and compensation (Top 5)
    • Total number and amount of sub-awards less than $25,000
  • Sub-Recipient Data:
    • Sub-recipient D-U-N-S
    • Sub-recipient CCR
    • Sub-recipient type
    • Amount received by sub-recipient
    • Amount awarded to sub-recipient
    • Sub-award date
    • Sub-award period
    • Sub-recipient place of performance
    • Sub-recipient area of benefit
    • Sub-recipient officer names and compensation (Top 5)
  • Vendor Data (Recipient vendors):
    • D-U-N-S (or name and zip code)
    • Expenditure amount, description
  • Vendor Data (Sub-Recipient vendors):
    • D-U-N-S (or name and zip code)

Jobs Created or Retained. OMB’s latest guidance includes more detailed instructions for estimating the number of “jobs created” or “jobs retained” as a result of the Recovery Act. According to these instructions, recipients are not required to report on “indirect jobs” – including, for example, employees “who are not directly charged to Recovery Act supported projects/activities, who nonetheless provide critical indirect support, e.g., clerical/administrative staff preparing reports, institutional review board staff members, [and] departmental administrators . . . .” Instead, recipients are instructed to calculate the number of jobs created or retained based on the “total number of hours worked that are funded by the Recovery Act” divided by “the number of hours in a full time schedule for a quarter.”

Reporting Mechanisms and Deadlines. To facilitate reporting, an online reporting tool is being created at www.FederalReporting.gov. Prime recipients, as well as sub-recipients who have been delegated responsibility for reporting, must enter their data into the tool no later than the 10th day after each quarter. Because of delays in standing up this online tool, the initial deadline for submitting reports has been extended from July 10, 2009 until October 10, 2009. Nevertheless, OMB has advised recipients of Recovery funds that the initial October 10 report “will include funding from February 17, 2009 (the date the Act was enacted by Congress) through September 30, 2009.” Therefore, recipients are advised to collect and maintain data from the first quarter, to be included in the October 10 report.

Penalties for Non-Compliance. According to OMB, non-compliance with the reporting requirements established under Section 1512 of ARRA is considered a violation of the award agreement, and can result in a range of penalties, including withholding funds, termination, suspension and disbarment, or even civil or criminal liability in the case of “intentional reporting of false information.”