White House turns up heat on noncompliant Recovery Act recipients

Federal contractors and grantees that fail to file mandatory Recovery Act spending reports could lose their funding and even risk suspension or debarment from future awards, according to a White House memorandum released on Tuesday.

The presidential memo directs agencies to intensify their efforts to identify and punish prime recipients of stimulus funds that do not report back to the government on how they are spending the money.

Agencies now are authorized to begin terminating the awards of noncomplying recipients and reclaiming unspent funds, according to the memo. Contractors also risk suspension, debarment and other punitive actions.

"Any prime recipient that has failed to report is not living up to the standards set by [the Obama] administration and must be held accountable by all agencies to the fullest extent permitted by law," the memo stated. "Our efforts to ensure timely, comprehensive and accurate recipient reporting must succeed if we are to effectively meet the transparency and accountability objectives of the Recovery Act."

The administration also instructed agencies to give the Office of Management and Budget the names of noncomplying recipients and inform officials of any enforcement actions.

"We are here to send an unambiguous message that not reporting is not acceptable," Vice President Joe Biden said during a morning meeting at the headquarters of the Recovery Accountability and Transparency Board in Washington. "These are public funds; taxpayer funds."

The memo is the administration's second attempt to improve stimulus reporting oversight. In a November 2009 memorandum to agency heads, OMB Director Peter R. Orszag threatened noncompliers with the loss of Recovery dollars and said they could be barred from receiving federal funds in the future.

An amendment to the Senate's unemployment and tax extender bill, sponsored by Sens. Mark Warner, D-Va., and Mike Crapo, R-Idaho, would authorize the attorney general to pursue civil penalties of up to $250,000 against grant recipients who knowingly and consistently fail to report their stimulus spending. The bill is awaiting action in the House after Congress returns next week from its recess.

The Recovery Act requires contractors, grantees and loan recipients to submit to FederalReporting.gov quarterly information on how they are spending the funds. During the most recent quarter -- the final three months of 2009 -- more than 1,000 recipients failed to file the reports. More than 300 of those recipients made the board's "two-time loser" list for also neglecting to file during the initial reporting cycle last October.

"I have been a strong advocate of compliance measures that would encourage recipients of Recovery funds to submit their spending reports to the Recovery Board, as required by the Recovery Act," said board chairman Earl Devaney. "The president's decision to issue a memorandum to the senior officials of executive departments and agencies will go a long way toward helping the board achieve our goal of 100 percent compliance."

While the stimulus bill does not authorize sanctions for failure to meet reporting requirements, the terms and conditions of certain funding streams and contracts could allow for punishments, Ed DeSeve, special adviser to the president for the Recovery Act said in December.

Within the next 30 days, Orszag will review and, as necessary, update the administration's Recovery Act reporting guidance to include additional agency actions and oversight strategies, the latest memo said.

The current reporting period began on April 1 and ends this Saturday. Recipients will have until April 29 to make corrections to their reports. The third batch of recipient data will be published on Recovery.gov on April 30.