In responding to the deepest recession since the end of World War II, the Recovery Act employs a combination of tax relief and government spending. The Recovery Act’s purposes are to preserve and create jobs and promote economic recovery; assist those most impacted by the recession; provide investments needed to increase economic efficiency by spurring technological advances in health and science; invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and stabilize the budgets of state and local governments. About one-third of the funds provided by the act is for tax relief to individuals and businesses; one-third is in the form of temporary increases in entitlement programs to aid people directly affected by the recession and provide some fiscal relief to states; and one-third falls into the category of grants, loans, and contracts, which generally fund projects and activities. 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. As of June 30, the percentage of funds obligated ranged from a high of 98 percent for the Department of Treasury ($98 million) to a low of about 1 percent (about $8.3 million) for the National Aeronautics and Space Administration (NASA). 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). Regarding expenditures, the agencies reported that, as of June 30, 2009, they had spent about 5 percent (about $15 billion) of their appropriated Division A Recovery Act funds; about 12 percent ($38 billion) as of September 30, 2009; and 20 percent ($61 billion) as of December 31, 2009. 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, as we reported in July 2009, although funding has been obligated for more than 5,000 Federal Highway Administration projects, it may be months before the federal government is billed for completed work. Contractors have to complete work before receiving payments from the state, which, in turn, invoices the cognizant federal agency. Agencies generally have until September 30, 2010, to obligate funds appropriated by the Recovery Act; some agencies have chosen to obligate and spend funds over time to ensure they will have a steady stream of funds for program activities. For example, Department of Health and Human Services officials noted that some agency projects involved social service activities, for which funding is intentionally spent over time. Consequently, outlays for such service-based projects may be uneven throughout the year, depending on program needs. Table 1 provides data on agencies’ Division A obligations and expenditures as of June 30, September 30, and December 31, 2009. Table 2 shows the percentage of Division A funding that each agency had obligated and spent as of June 30, September 30, and December 31, 2009. Officials at some of the 27 agencies said federal requirements had affected their ability to implement Recovery Act projects. For example, Davis- Bacon, Buy American, and National Historic Preservation Act requirements slowed some project selection and starts. Other factors unrelated to federal requirements also affected the timing of some projects, according to federal and state officials. 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. First, the award processes for some Recovery Act projects were not substantially different from the processes agencies use for non- Recovery Act projects. Second, to expedite the use of Recovery Act funds, some federal agencies selected projects that had already satisfied key federal requirements, such as NEPA, that need to be met before a federal project can start. Officials from some agencies cited certain federal requirements that had affected their ability to select or start some Recovery Act projects. Figure 1 shows the factors that federal officials most often cited as affecting their ability to select or start projects, and figure 2 shows the factors most often cited by state and local officials. As figures 1 and 2 show, federal, state, and local agency officials identified several factors affecting their ability to select or start projects. For example: Davis-Bacon requirements. 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. Similarly, officials from 10 states and 3 local agencies said Davis- Bacon requirements had caused delays in implementing Recovery Act 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. In July 2009, the departments of Energy and Labor issued a joint memorandum to Weatherization Assistance Program grantees authorizing them to begin weatherizing homes using Recovery Act funds, provided they pay construction workers at least Labor’s wage rates for residential construction, or an appropriate alternative category, and compensate workers for any differences if Labor establishes a higher local prevailing wage rate for weatherization activities. On September 3, 2009, Labor completed its determinations; later that month, we reported that Davis- Bacon requirements were a reason why some states had not started weatherizing homes. 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. These officials explained that they wanted to avoid having to pay back wages to weatherization workers who started working before the prevailing wage rates were known. 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 data available to Energy, as of December 31, 2009, about 9,100 homes had been weatherized out of a planned 593,000. Moreover, Housing and Urban Development officials told us that until passage of the Recovery Act, one of its Office of Healthy Homes and Lead Hazard Control grant programs had never been subject to Davis-Bacon requirements. Therefore, agency staff, grantees, and contractors needed to establish and implement new administrative procedures, which delayed the start of construction projects. In another case, Texas Department of Housing and Community Affairs officials told us that Davis-Bacon’s administrative requirements affected their ability to start projects in two ways. First, the state had to wait until late December 2009 for wage rates for a particular county. Second, officials experienced delays of 30 to 45 days to (1) provide training to ensure an understanding of the Davis-Bacon Act at the grantee, subrecipient, and subcontractor levels, and (2) have sufficient staff to collect, monitor, and document that data and check its reliability through payment verifications and employee interviews. Buy American provisions. 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. Moreover, officials from 3 additional federal agencies said Buy American provisions may affect their ability to select or start projects. At the state level, 2 states and 1 local entity said that Buy American provisions had affected the timing of Recovery Act projects. In some cases, federal agencies had to develop guidance for compliance with Buy American provisions, including issuing guidance on waivers to recipients that were unable to comply. For example, according to Environmental Protection Agency officials, developing Buy American guidance was particularly challenging because of the need to establish a waiver process for Recovery Act projects. Likewise, Homeland Security officials told us that a project under the Transportation Security Administration’s Electronic Baggage Screening Program was slowed as officials awaited a Buy American waiver to allow contractors to use foreign-made components. The waiver became necessary when the contractor learned that U.S.-made components would have hindered the integration of an airport’s security systems. At the local level, officials from the Chicago Housing Authority (CHA) reported that the only security cameras that are compatible with the existing CHA system and City of Chicago police systems are not made in the United States. CHA worked with Housing and Urban Development to determine how to seek a waiver for this particular project. Moreover, an industry representative told us that the Buy American provisions could interrupt contractors’ supply chains, requiring them to find alternate suppliers and sometimes change the design of their projects, which could delay project starts. The National Historic Preservation Act. 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. Officials from 7 states identified this act as a factor that did or could impact the timing of their Recovery Act projects. At the federal level, Transportation officials said that projects to improve the security of train stations, bridges, and tunnels have been delayed because Amtrak must obtain clearances for its projects through the various state historic preservation offices before starting work.