The Office of Management and Budget (OMB) just issued a memo telling federal agencies to, in effect, up their game on monitoring contractors receiving Recovery Act funds. OMB Director, Peter Orszag, directed federal agencies to take several steps immediately including identifying non-compliant recipients of Recovery Act funds. What does this mean to contractors receiving Recovery Act funds?
Well, the Act contains a number of oversight, accountability, and transparency provisions aimed at preventing waste, fraud, and abuse of funds received by federal contractors. Section 1512 of the Act requires recipients of Recovery Act funds to comply with certain reporting requirements with oversight of spending delegated to the Recovery Accountability and Transparency Board (RATB). Recipients of Recovery Act funds must report quarterly on the use and economic impact of those funds at the local level.
OMB is now requiring each federal agency to compile a verified and detailed list of recipients who were required to report in the October period but failed to do so. Recipients who have failed to submit a Section 1512 report as required by the terms of their award or that are persistently late or negligent in their reporting obligations are considered to be non-compliant, the memo says. Non-compliant recipients are subject to federal action, "up to and including the termination of federal funding or the ability to receive federal funds in the future."
The memo also calls on agencies to determine an appropriate outreach method and establish contact with each recipient that failed to report by the quarterly deadline. As part of this effort, agencies are to: determine the specific reasons a recipient failed to submit a report as required; provide assistance to recipients who experienced technical challenges in understanding coding or other situations and describe in plain language the consequences of current and continued non-compliance.
From this assessment, Federal departments and agencies are to determine the need, if any, for future action regarding each non-filing recipient, including but not limited to: enforcement of terms and agreement provisions, sanctions and other appropriate enforcement action. If the non-compliance appears to be fraudulent, Federal Departments and agencies are to refer the matter to other appropriate agency officials such as the officer responsible for criminal investigation.
OMB has already indicated in earlier memos that other Recovery Act matters under consideration for FAR coverage or other governmentwide guidance include:
Special Buy American Act requirements;
Additional requirements for contractor reporting; and
Expanded GAO/OIG access to contractor records.
On a case-by-case basis, OMB has stated that negative findings on a contractor's compliance with the Act by a Federal agency can result in termination of Federal funding and/or initiation of suspension and debarment proceedings of either the recipient or sub-recipient, or both. Further, in some cases, intentional reporting of false information can result in civil and/or criminal penalties.
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