Recovery Act:

Contract Oversight Activities of the Recovery Accountability and Transparency Board and Observations on Contract Spending in Selected States

GAO-10-216R: Published: Nov 30, 2009. Publicly Released: Dec 1, 2009.

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The American Recovery and Reinvestment Act of 2009 (Recovery Act) was enacted on February 17, 2009, to help stimulate the United States economy by creating new jobs, as well as saving existing ones, and investing in projects that will provide long-term economic benefits. Estimates show that the Recovery Act's combined spending and tax provisions will cost $787 billion over 10 years--about $207 billion in tax reductions plus about $580 billion in additional federal spending. These funds are being provided directly to federal agencies and also distributed to states, localities, other entities, and individuals through a combination of formula and competitive grants and direct assistance. About $280 billion of the funds will be administered through state and local governments. The Recovery Act delineates an important set of responsibilities for the accountability community. The inspectors general across government are expected to audit the programs, grants, and projects funded under the Recovery Act, both within their particular agency or department and collectively. To address the collective oversight at the federal level, the Recovery Act established the Recovery Accountability and Transparency Board to help prevent waste, fraud, and abuse. In addition, the Recovery Act requires the Government Accountability Office (GAO) to perform bimonthly reviews of the use of funds by selected states and localities and to comment on estimates of jobs created or retained in the quarterly reports of Recovery Act fund recipients. GAO was asked to report on the activities of the Recovery Accountability and Transparency Board (the Board), as well as on contract-related information collected from the work GAO has completed thus far in 16 states and the District of Columbia. This report provides GAO's observations to date on the extent to which (1) the Board is monitoring federal agency contract spending on Recovery Act-related contracts and (2) selected states are using competitive procedures in awarding contracts using Recovery Act funds. To determine the actions taken by the Board, GAO met with representatives of the Board to discuss the initiatives they have taken to monitor the number and types of contracts issued by federal agencies for the Recovery Act and their plans to assess the extent to which laws and regulations are being complied with or circumvented. GAO reviewed available documentation related to the Board's initiatives. The agency also reviewed data reported by federal agencies and states through the Federal Procurement Data System-Next Generation and http://www.recovery.gov (Recovery.gov) related to federal contracts awarded using Recovery Act funds. To provide observations on selected states' use of competitive procedures in awarding contracts for Recovery Act funds, GAO met with state procurement officials to discuss the contract award process for a sample of contracts in 16 states and the District of Columbia. The contracts GAO discussed with state officials GAOre selected based on a combination ofseveral factors--such as dollar value, program risk, and project status--that varied among the states; therefore, information reported about contracts cannot be generalized. GAO conducted this performance audit from August 2009 through November 2009 in accordance with generally accepted government auditing standards. The standards require that GAO plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for its findings and conclusions based on its audit objectives. GAO believe the evidence obtained provides a reasonable basis for its findings and conclusions based on its audit objectives.

The Board, both through its staff and through the working group's inspectors general, has implemented a number of initiatives since the Recovery Act was enacted that are focusing on issues critical to the success of Recovery Act contracting at the federal level. These issues include monitoring the use of competition and fixed-price contracts, targeting high-risk contracting areas and programs, and eliciting the help of taxpayers in identifying potential fraud and waste in the use of Recovery Act funds. GAO believe the activities of the Board, and in particular the predictive analysis effort, are a positive step in coordinating and marshalling the resources of the inspector general community to strengthen the oversight of federal spending. While the Board initiatives are promising, much work remains to be done and the effectiveness of the initiatives is still to be determined. GAO will continue to monitor the Board's efforts--in particular, the results of the predictive analysis tool. Additionally, the state and local levels of government appear to be emphasizing competition and the use of fixed-price contracts in their use of Recovery Act funds. This overall observation is based on GAO's initial observations of a limited sample of contracts, but, thus far, the contract awards at the state and local levels of government appear to be consistent with the federal goal of using competition. A more definitive assessment can be made by each of the state auditors for their respective states. As a part of GAO's ongoing oversight of Recovery Act spending, the agency worked and will continue to work closely with state auditors on their oversight of Recovery Act spending and will be reporting on the results of their oversight of procurement spending at both the state and local level. GAO will continue to focus on these issues in our future Recovery Act work.

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