Agencies Had Obligated a Total of $194 Billion of Division A Funds as of December 31, 2009

The 27 agencies that we reviewed reported that they had obligated a total  of about $194 billion of the approximately $309 billion in Division A  Recovery Act funds by the end of 2009; $173 billion as of September 30,  2009; and $106 billion as of June 30, 2009. By December  31, the percentage of funds obligated ranged from nearly 100 percent for  the National Endowment for the Arts ($50 million) to 18 percent for the  Social Security Administration ($183 million). Although expenditure data provide some indication of when funding was  spent, officials from several agencies told us that payment for federal  projects generally occurs after work on a given project is completed. As a  result, although work may have been substantially completed, the  expenditure data would not reflect this fact because the recipient would  not have submitted an invoice for payment. For example, Davis- Bacon, Buy American, and National Historic Preservation Act  requirements slowed some project selection and starts. On the other hand,  officials from some agencies and certain programs within other agencies  said they were able to implement Recovery Act projects quickly for two  main reasons. Some Agencies Reported That Certain Federal Requirements Affected the Timing of Project Selection and Starts

Officials from some agencies cited certain federal requirements that had  affected their ability to select or start some Recovery Act projects. As figures 1 and 2 show, federal, state, and local agency officials identified  several factors affecting their ability to select or start projects. Officials in 4 of the 27 federal agencies—the  Departments of Commerce and Energy and Housing and Urban  Development, as well as the Environmental Protection Agency—cited  these requirements as affecting project timing, and officials from another 2  federal agencies said Davis-Bacon requirements may affect the timing of  projects. In particular, Energy’s Weatherization Assistance Program  became subject to the Davis-Bacon requirements for the first time after  having been previously exempt from those requirements. Thus, the  Department of Labor had to determine the prevailing wages for  weatherization workers in each county in the United States. Specifically, 7 out of 16 states and the District of  Columbia decided to wait to begin weatherizing homes until Labor had  determined county-by-county prevailing wage rates for their state. States used only a small percentage of their available  funds in 2009, mostly because state and local agencies needed time to  develop the infrastructures required for managing the significant increase  in weatherization funding and for ensuring compliance with Recovery Act  requirements, including Davis-Bacon requirements. According to officials from 5 of the 27 federal  agencies—the Departments of Commerce, Education, Homeland Security,  Housing and Urban Development, as well as the Environmental Protection  Agency—these provisions had affected their ability, or their grantees’  ability, to select or start some Recovery Act projects. At the state level, 2 states and  1 local entity said that Buy American provisions had affected the timing of  Recovery Act projects. According to officials from 2 of  the 27 federal agencies—the Departments of Commerce and  Transportation—NHPA requirements affected some Recovery Act project  selection and starts, and officials at another 6 federal agencies stated that  the NHPA may affect the timing of project implementation. Factors Other than Federal Requirements Have Also Affected the Timing of Project Selection and Starts

Officials also told us that factors other than federal requirements have  affected the timing of project selection or starts. Seasonal issues or weather. These preapproved loans accounted for more than 75 percent of the  funding made available through the Recovery Act. We also  provided a copy of the relevant sections to GAO teams responsible for  reviewing Recovery Act work in the states mentioned in this report.
Why GAO Did This Study

The American Recovery and Reinvestment Act of 2009 (Recovery Act) aims to stimulate the economy. It provided $787 billion in spending and tax provisions; more than a third of the money was slated for projects and activities, including construction and certain research projects. To implement a project using federal funds, agencies and funding recipients must comply with federal laws and regulations. GAO was asked to identify key federal requirements that apply to Recovery Act projects and to assess the extent to which (1) selected agencies have obligated and spent funds for Recovery Act projects and (2) federal requirements and other factors have affected, or are expected to affect, project selection and start dates. GAO requested data from 27 agencies that received appropriations under the act. We also spoke with officials responsible for implementing Recovery Act projects in 16 states and the District of Columbia, which together are estimated to receive about two-thirds of the intergovernmental federal assistance available under the act. We also spoke with organizations representing state and local officials and the private sector, as well as private sector contractors. Although GAO is not making recommendations in this report, these findings may be helpful in considering and designing legislation with similar objectives.

What GAO Found

As of December 31, 2009, the 27 federal agencies GAO reviewed had obligated a total of $194 billion (63 percent) of the approximately $309 billion that was appropriated by the Recovery Act for projects and activities, according to data provided by agency officials. By this date, the percentage of funds obligated ranged from nearly 100 percent for the National Endowment for the Arts ($50 million) to 18 percent for the Social Security Administration ($183 million). As of that same date, the agencies reported they had spent 20 percent ($61 billion) of their appropriated funds. However, according to agency officials, the amount reported as spent may not accurately reflect the amount of work done on a given project because payment for federal projects generally occurs after work is completed, and the recipient may not yet have submitted an invoice for payment. Some federal agency officials reported that certain federal requirements and other factors affected their ability to select and start Recovery Act projects. These include the following: (1) Davis-Bacon requirements. Four federal agencies--the Departments of Commerce, Energy, and Housing and Urban Development, and the Environmental Protection Agency--told us that Davis-Bacon requirements affected the timing of some of their Recovery Act projects. For example, the Department of Energy's Weatherization Assistance Program became subject to the Davis-Bacon requirements for the first time after having been previously exempt from those requirements. Thus, the Department of Labor had to determine the prevailing wages for weatherization workers in each county in the United States, a task it completed on September 3, 2009. Seven out of 16 states and the District of Columbia that GAO has been reviewing said that they had waited to begin weatherizing homes until the Department of Labor had determined county-by-county prevailing wage rates for their state. States used only a small percentage of their available funds in 2009, mostly because state and local agencies needed time to develop the infrastructures required for managing the significant increase in weatherization funding and for ensuring compliance with Recovery Act requirements, including Davis-Bacon requirements. (2) Buy American requirements. Five federal agencies--the Departments of Commerce, Education, Homeland Security, and Housing and Urban Development, as well as the Environmental Protection Agency--told us that Buy American provisions had affected their ability, or their grantees' ability, to select or start some Recovery Act projects. (3) The National Historic Preservation Act. Two federal agencies--the Departments of Commerce and Transportation--told us that this act affected the selection and start of projects. Federal agency officials also stated that factors other than federal requirements affected their ability to quickly select or start projects. These include (1) challenges associated with starting entirely new programs, (2) states' budgeting issues, such as difficulties in providing matching funds, (3) higher staff workloads because of the act, (4) seasonal issues or weather, and (5) lack of clarity on the meaning of "shovel-ready."