[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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                               WASHINGTON : 2009 

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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

                              ----------                              
                                                                   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.

                                  
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