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[House Report 111-115]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    111-115
======================================================================
 
      ENHANCED OVERSIGHT OF STATE AND LOCAL ECONOMIC RECOVERY ACT

                                _______
                                

  May 18, 2009.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Towns, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2182]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 2182) to amend the American 
Recovery and Reinvestment Act of 2009 to provide for enhanced 
State and local oversight of activities conducted pursuant to 
such Act, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Legislative History..............................................     3
Section-By-Section...............................................     4
Explanation of Amendments........................................     4
Committee Consideration..........................................     4
Roll Call Votes..................................................     4
Application of Law to the Legislative Branch.....................     4
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     5
Statement of General Performance Goals and Objectives............     5
Constitutional Authority Statement...............................     5
Federal Advisory Committee Act...................................     5
Unfunded Mandates Statement......................................     5
Earmark Identification...........................................     5
Committee Estimate...............................................     5
Budget Authority and Congressional Budget Office Cost Estimate...     6
Changes in Existing Law Made by the Bill, as Reported............     7

                          Purpose and Summary

    H.R. 2182, the ``Enhanced Oversight of State and Local 
Economic Recovery Act,'' was introduced by Oversight and 
Government Reform Committee Chairman Edolphus Towns and Ranking 
Member Darrell Issa on April 29, 2009. The bill makes a number 
of changes to the American Recovery and Reinvestment Act of 
2009 (P.L. 111-5) to assist state and local governments in 
their efforts to oversee the spending directed by that Act.
    The bill directs Federal agencies to adjust the 
administrative cost associated with grants and contracts 
awarded to or through state and local governments to include 
costs associated with auditing, contract and grant planning and 
management, and investigations of waste, fraud, and abuse, 
subject to guidance from the Office of Management and Budget. 
This would allow state and local governments to use a greater 
portion of grant or contract funds for these purposes. The bill 
also authorizes state and local governments to use up to 0.5 
percent of funds awarded under the Recovery Act, in addition to 
any funds already allocated to administrative expenditures, to 
conduct planning and oversight to prevent and detect waste, 
fraud, or abuse of stimulus dollars.
    H.R. 2182 would also allow state and local governments to 
use the Federal supply schedules of the General Services 
Administration to purchase goods and services that are funded 
by the Recovery Act. The Federal supply schedules are a series 
of schedules comprised of contracts for commonly-used supplies 
and services available to government agencies at specified 
prices. By law, the prices offered must be no greater than the 
lowest commercially-available price. Use of the schedules may 
allow state and local governments to acquire covered items 
without engaging in time-consuming contracting procedures, 
while guaranteeing the lowest prices for such items.
    Finally, the bill requires the Director of the Office of 
Management and Budget to issue guidance to ensure that the 
reporting by state and local governments of ``jobs created'' 
and ``jobs retained'' is accurate and consistent.

                  Background and Need for Legislation

    The need for legislation to assist state and local 
governments in implementing the oversight and accountability 
requirements of the American Recovery and Reinvestment Act was 
demonstrated at Oversight and Government Reform Committee 
hearings on the economic stimulus. (See, e.g., House Committee 
on Oversight and Government Reform, Hearing on The American 
Recovery and Reinvestment Act of 2009: The Role of State and 
Local Governments, 111th Cong. (April 21, 2009) (held in 
Brooklyn, NY); House Committee on Oversight and Government 
Reform, Hearing on Preventing Stimulus Waste, Fraud, and Abuse: 
Who are the Watchdogs, 111th Cong. (March 19, 2009)).
    At the hearings, state and local officials responsible for 
overseeing spending of stimulus dollars explained that their 
auditors are already under tremendous pressures to conduct 
normal oversight work, and are therefore having difficulty 
coping with the increased transparency and accountability 
requirements from the Recovery Act. For example, William J. 
Holland, the Illinois Auditor General, speaking on behalf of 
the National Association of State Auditors, Comptrollers, and 
Treasurers, explained that federal departments and agencies, 
such as the Government Accountability Office and the Recovery 
Accountability and Transparency Board, received substantial 
dollars for the purpose of maintaining accountability of 
Recovery Act funds. However, while ``state auditors already 
bear significant responsibility for oversight of federal 
program spending by state agencies,'' no comparable Recovery 
Act appropriations were made to compensate for the increased 
burden on these agencies. Similarly, Mr. Jerome Heer, Director 
of Audits for Milwaukee County, Wisconsin, on behalf of the 
Association of Local Government Auditors (ALGA), noted that the 
economic downturn had already resulted in budget reductions at 
most local government auditing organizations. He explained that 
these organizations are ``carrying out important, innovative 
work, [but] they do not currently have the ability to take on 
additional tasks.''
    These hearings made clear that state and local governments 
need additional resources to monitor the large infusion of 
funds that the Recovery Act directed to state-administered 
federal programs. H.R. 2182 addresses this omission by 
providing state and local governments with the flexibility they 
need to set aside a portion of stimulus funds for auditing, 
contract and grant planning and management, and investigations 
of waste, fraud, and abuse. The Committee also believes that a 
critical approach to planning and oversight is project and 
program management. State and local agencies should have in 
place strong and effective project and program management 
processes so that opportunities for fraud, waste, and abuse are 
limited.
    The bill will also assist state and local governments by 
permitting them to use the federal supply schedules of the 
General Services Administration (GSA) for stimulus projects. 
The GSA schedules are pre-negotiated federal contracts for a 
range of common goods and services. This will allow state and 
local governments to acquire certain items without engaging in 
time-consuming contracting procedures, while guaranteeing the 
lowest prices for such items.
    Lastly, in response to requests from state and local 
compliance officials for clarifications in this area, H.R. 2182 
requires the Office of Management and Budget to give detailed 
guidance to state and local governments to ensure consistency 
in their reporting of job creation data.
    The Committee recognizes that state and local governments 
are on the front lines of the effort to fight mismanagement of 
Recovery Act dollars. Their success is vital to making the 
stimulus work for the American people.

                          Legislative History

    On March 19, 2009, the House Committee on Oversight and 
Government Reform held a hearing on ``The American Recovery and 
Reinvestment Act of 2009: The Role of State and Local 
Governments.'' On April 21, 2009, the Committee held a field 
hearing in Brooklyn, New York, on ``Preventing Stimulus Waste, 
Fraud, and Abuse: Who are the Watchdogs.'' The Oversight and 
Government Reform Committee held a markup session on the bill 
on May 6, 2009. The Committee ordered the bill to be reported 
by voice vote.

                           Section-by-Section

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.

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.

                       Explanation of Amendments

    No amendments were offered by Committee Members.

                        Committee Consideration

    On Wednesday, May 6, 2009, the Committee met in open 
session and favorably ordered H.R. 2182 to be reported to the 
House by a voice vote.

                            Roll Call Votes

    No roll call votes were taken.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of P.L. 104-1 requires a description of 
the application of this bill to the legislative branch where 
the bill relates to terms and conditions of employment or 
access to public services and accommodations.
    H.R. 2182 amends the American Recovery and Reinvestment Act 
by providing additional resources to state and local 
governments for oversight of Recovery Act projects, and for 
other purposes. This bill does not relate to employment or 
access to public services and accommodations in the legislative 
branch.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report, including the need to increase the availability of 
oversight funds for use by state and local governments.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report, including the need to increase the availability 
of oversight funds available to state and local governments.

                   Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by H.R. 2182. Article I, Section 8, Clause 18 of the 
Constitution of the United States grants the Congress the power 
to enact this law.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                      Unfunded Mandates Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement on 
whether the provisions of the report include unfunded mandates. 
In compliance with this requirement the Committee has received 
a letter from the Congressional Budget Office included herein.

                         Earmark Identification

    H.R. 2182 does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e), or 9(f) of rule XXI.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 2182. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 2182 from the Director of 
the Congressional Budget Office:

                                                      May 12, 2009.
Hon. Edolphus Towns,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2182, 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.

H.R. 2182--Enhanced Oversight of State and Local Economic Recovery Act

    H.R. 2182 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 H.R. 2182 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.
    H.R. 2182 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.
    H.R. 2182 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.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

             AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009

           *       *       *       *       *       *       *
TITLE XV--ACCOUNTABILITY AND TRANSPARENCY

           *       *       *       *       *       *       *

Subtitle A--Transparency and Oversight Requirements

           *       *       *       *       *       *       *

SEC. 1512. REPORTS ON USE OF FUNDS.

  (a)  * * *

           *       *       *       *       *       *       *

  (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).

           *       *       *       *       *       *       *

Subtitle D--Additional Accountability and Transparency Requirements

           *       *       *       *       *       *       *

[SEC. 1552. SET-ASIDE FOR STATE AND LOCAL GOVERNMENT REPORTING AND 
                    RECORDKEEPING.]

SEC. 1552. FUNDING FOR STATE AND LOCAL GOVERNMENT OVERSIGHT.

  (a) 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] data collection requirements, 
auditing, contract and grant planning and management, and 
investigations of waste, fraud, and abuse initiated pursuant to 
this Act.
  (b) 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

  (a) * * *

           *       *       *       *       *       *       *

  (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) Definitions.--The definitions in subsection 
        (c)(3) shall apply for purposes of this subsection.

           *       *       *       *       *       *       *

                                  
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