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Stimulus Money -- Strings Attached

Posted by: Michael Orey on March 31, 2009

hp_Flag.jpgThe giant gravy train of the American Recovery and Reinvestment Act (aka the stimulus package) is leaving the station. Just check out the special Recovery section of the federal government’s business opportunities Web site and you’ll find it filling up with solicitations for projects ranging from flood control in Texas to helium refrigeration systems in Maryland.

A business feeding frenzy is inevitable, but before companies line up at the trough, lawyers and other experts in government contracting are suggesting a bit of caution. A Webinar presented this afternoon by nonprofit Ethics Resource Center, detailed a host of compliance issues that firms will need to navigate when they sign on for stimulus funds. Work as a government contractor has long meant submitting to a slew of regulations relating to everything from procurement procedures to wage requirements to accounting. But the stimulus act will impose a host of new requirements, many of which are being drafted on the fly. Today alone, new regulations were issued on whistleblower protections and buy-America mandates.

The point is, with opportunity comes potential risk. “Relatively small amounts of this money comes without strings attached,” says Terree A. Bowers, a former prosecutor now in private practice at the Howrey law firm in Los Angeles. Besides the potential to trip up on arcane aspects of the Federal Acquisition Regulations, Bowers notes, Recovery Act contractors need to be aware of the current political environment. “You may be subjected to political scrutiny or public pressure to change the way you’re spending [federal funds] or even to give the money back,” he notes, pointing to the recent examples of AIG and the automakers. “It’s a whole new era in the relationship with the government.”

Indeed, listen to Bowers or others talk about the risks of taking government money (“Then of course you’re always going to be subject to prosecution and Congressional oversight,” said Ethics Resource Center staffer Paula J. Desio during the Webinar) and one begins to wonder if some might think twice before queuing up for funds. On the other hand, in these difficult times, it’s pretty hard for anyone to turn down a dollar. Or $787 billion.

Reader Comments

Thomas Huynh

April 1, 2009 1:17 AM

Although this sounds like a lot of red tape, I can't help but feel as a taxpayer that some businesses no longer can view the government only as a source of profit (look at how the big banks profited from student loans despite the government shouldering all the risks of default), but also one of helping to invest in the infrastructure of America and in turn create decent-paying jobs as well. These jobs promote spending and ultimately real, sustainable stimulus and healthy growth. With the lack of regulation for over a decade due to an ideology pushed to its extremity, any type of regulation (and in many respects, accountability) may seem daunting. Thomas

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