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Posted by on Mar 25, 2009

“Imprudent” Projects Will Not be Funded Under the Recovery Act

The American Recovery and Reinvestment Act specifically prohibits funds from being used to support any gambling establishment, aquarium, zoo, golf course, or swimming pool. But according to President Obama and Vice President Biden, similar projects also will be on the forbidden list. Speaking to members of the National Conference of State Legislatures, Obama said “whenever a project comes up for review, we will ask a few simple questions: Does it advance the core mission of the Recovery Act? Does it jumpstart job-creation? Does it lay the foundation for lasting prosperity?” Biden added, “There is the letter of the law and then there is the spirit of the law. And we intend to make sure the spirit of the law is what’s actually followed here, in addition to the letter.”

So, no Recovery Act funding for dog parks or skateboard parks. And no funding for new lights in the White House. The president went on to provide an example of what he considers an imprudent project. He said the East Wing, where the first family lives, needs repairs to the electrical and heating systems. However, the work would not meet the economic recovery goals of the new law, so Recovery Act funding will not be used for the project.

Obama issued a memo to the heads of federal agencies on March 20, outlining specific steps that should be taken when reviewing and funding Recovery Act projects. It requires the creation of merit-based review criteria and outlines agencies’ and grantees’ responsibilities for ensuring funds are not used for imprudent or prohibited projects. But it goes even further: recipients who use funds for excluded projects and activities face specified penalties such as additional reporting and oversight requirements, rescission of funds, and even possible suspension and debarment.

To view the memo, click here.

Management Concepts’ Federal Grants Update 2009 course offers a discussion of the Recovery Act and its impact on grants management. For information about upcoming sessions, click here.

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