March 26, 2009
On March 20, 2009, President Obama issued an executive memorandum "Ensuring Responsible Spending of Recovery Act Funds" requiring executive departments and agencies to develop certain selection criteria when committing, obligating or expending funds under the Recovery Act for grants and other forms of federal financial assistance, to monitor compliance with the Recovery Act’s prohibition on funding "imprudent" projects and to limit and document communications with registered lobbyists regarding the expenditure of such funds and Recovery Act policy issues.
The Memorandum requires federal agencies to develop merit-based selection criteria for grants and other forms of federal financial assistance to ensure that Recovery Act funds further the purposes of the Recovery Act which include job creation and economic recovery. Specifically, the Memorandum provides that the selection criteria should be designed to support projects, applications and applicants for funding that have "to the greatest extent, a demonstrated or potential ability" to:
- deliver programmatic results;
- achieve economic stimulus by optimizing economic activity and the number of jobs created;
- or saved in relation to the federal dollars obligated;
- achieve long-term public benefits by, for example, investing in technological advancesin science and health to increase economic efficiency and improve quality of life; investing in transportation, environmental protection, and other infrastructure that will provide long- term economic benefits; fostering energy independence; or improving educational quality; and
- satisfy the Recovery Act’s transparency and accountability objectives.
In this regard, in addition to existing federal agency criteria for the award of grants and federal financial assistance, agencies will now be required to specifically consider, among other things, the number of jobs directly attributable to the award.
In addition, the Memorandum reiterates the prohibition on the use of Recovery Act funds for "imprudent" projects, which include casinos or other gambling establishments, aquariums, zoos, golf courses and swimming pools. The Memorandum requires federal agencies to monitor compliance with this prohibition by contractors, grantees and other recipients of federal financial assistance, report any noncompliance to the Recovery Accountability and Transparency Board and take corrective action, which may include disallowing or recovering improperly spent amounts, imposing additional compliance requirements and initiating proceedings for administrative civil penalties, suspension and debarment.
Finally, in an apparent attempt to continue his public denouncement of special interests, the Memorandum significantly restricts the activities of registered lobbyists by prohibiting any such lobbyist from attending or participating in a telephonic or in-person contact with an executive department or agency official concerning "particular projects, applications, or applicants for funding under the Recovery Act." The Memorandum requires all such communications to be submitted in writing and posted publicly by the receiving agency on its recovery website within 3 days after receipt of such communication. While registered lobbyists may communicate orally with executive department or agency officials regarding "general Recovery Act policy issues," the agency official must document in writing:
- the date and time of the contact on policy issues;
- the names of the registered lobbyists and the official(s) between whom the contact took place; and
- a short description of the substance of the communication.
This report must also be posted publicly by the agency on its recovery website within 3 days after the communication.
Gibson Dunn & Crutcher’s lawyers are available to assist clients in addressing any questions they may have regarding this issue. Please contact the Gibson Dunn attorney with whom you work, or government contracts partners Joseph D. West (202-955-8658, [email protected]), Karen L. Manos (202-955-8536, [email protected]), or Christyne K. Brennan (202-955-8685, [email protected]) in the firm’s Washington, D.C. office.
© 2009 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.