Government funding of construction projects has always come with strings attached. Never have the reporting requirements been as stringent as they are when a contractor accepts funding through the American Recovery and Reinvestment Act (ARRA). Through the end of March 2010, the government reports that approximately $61 billion (of a total of $203 billion awarded) has been paid out to recipients.

Who must report, when they must report and what they must report varies depending on where a contractor is in the chain of distribution. In every case, it is safe to assume that there is some level of accountability required of every organization that receives ARRA funds.

Who is Receiving ARRA Funds?

Once ARRA dollars are apportioned to a federal agency (the Department of Transportation or Housing and Urban Development, for example), grants, loans, awards and other funding is given to two types of recipients: prime recipients and sub-recipients. 

Prime Recipients-These are non-federal entities that receive ARRA funding as federal awards, loans and grants. This could be a state government agency, a commercial business or a tax-exempt organization. The prime recipient is responsible for the reporting of all data required by Section 1512 of ARRA.

Sub-recipients-These are non-federal entities that are awarded ARRA funds by a prime recipient. Sub-recipients typically receive a contract, grant or loan from a prime recipient to support performance of a portion of a project or program funded with ARRA dollars.

Who Must Report Data on ARRA Funds? 

Prime recipients and sub-recipients are required to submit data on a quarterly basis for all grants, loans and federally awarded contracts under the ARRA. A prime recipient may delegate responsibility for collecting data to a sub-recipient, but the prime recipient is responsible for confirming the validity of that data. The prime recipient may also report data on the sub-recipient's behalf.

Where Do Recipients Report Data on ARRA Funds? 

The central data collection point for federal agencies and recipients of federal awards under Section 1512 of ARRA is Recipients must first register at the website. They are then given access to submit reports, manage their account, view and comment on other reports and update or correct reports when appropriate. Only registered federal agency and recipient users can submit and/or review data through

Reporting began on Oct. 1, 2009. Since then, recipients have been required to report data within ten days of the end of each calendar quarter. After review, updates and corrections, the information is made available to the public at

What Data Should Recipients Report? 

Contractors receiving awards funded in whole or in part by ARRA, must use to report information including, but not limited to:

  • The dollar amount of all contractor invoices
  • The supplies delivered and/or services performed
  • An assessment of the completion status of the work
  • An estimate of the number of jobs created or retained as a result of the project or program
  • Names and total compensation of each of the entity's five most highly compensated officers for the calendar year in which the contract is awarded if all the below conditions are met: 
  • In the recipient's preceding fiscal year the recipient received both:
  • 80 percent or more of its annual gross revenues from federal contracts and subcontracts, loans, grants, sub-grants and cooperative agreements
  • Gross annual revenue of $25 million or more from federal contracts and subcontracts, loans, grants, sub-grants and cooperative agreements
  • The public did not have access to information about the compensation of senior executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.

Buy American Act 

ARRA also implements the Buy American Act (FAR Subpart-25.202) requirements for federal buildings and public works. With certain exceptions, it prohibits the use of stimulus funds for the construction, alteration, maintenance or repair of a public building or work, unless all of the iron, steel and manufactured goods used in the project meet the Buy American provisions for U.S. content.

Other Regulations to Consider

Even experienced contractors should get their house in order before jumping into the ARRA pool. It's a good idea to examine accounting procedures, reporting methods and internal controls in light of regulations like:

  • Federal Acquisition Regulations (FAR)

The Federal Acquisition Regulation (FAR) Contractor Code of Business Ethics prescribes policies and procedures that contractors must adopt in order to do business with the federal government. It also prescribes cost principles that establish strict guidelines and place limits on certain normal business costs as they pertain to government contracts. Contractors are required to structure their cost accounting systems to identify and segregate such costs from costs charged to the government.   

  • Defense Contract Audit Agency

The Defense Contract Audit Agency (DCAA) is responsible for performing contract audits for the Department of Defense and other government agencies, including pre-award and post-award audits in connection with negotiation, administration and settlement of contracts and subcontracts.


As a part of a pre-award audit, DCAA will, among other things, evaluate the following aspects of a contractor's accounting systems:

  • Capability to properly segregate direct, indirect and unallowable costs
  • Job cost accounting
  • Indirect cost pools and allocation bases
  • Indirect rate computations
  • Timekeeping system and labor distribution requirements

  • Truth In Negotiations Act


Post-award audits are often performed to determine a contractor's compliance with the Truth In Negotiations Act (TINA). Under TINA, a government contractor or subcontractor is required to submit so-called "cost or pricing data" if a negotiated contract, subcontract, or modification to an existing contract or subcontract, is expected to exceed $500,000.

Under certain circumstances, the government has the right to audit a contractor's price proposal prior to negotiations and to directly audit pertinent records at any time up to three years after final contract payment.

  • 2009 False Claims Act Amendment


The Fraud Enforcement and Recovery Act of 2009 implemented significant changes and expanded the scope of the False Claims Act (FCA). As amended, the law removes the requirement to prove that false records and statements were submitted with the "intent" to get false claims paid. Liability instead hinges on whether the false records and statements "materially" contributed to the receipt of payment. The law defines materiality as "having a natural tendency to influence or capability to influence." The law includes any false claims for government money or property, regardless of whether the claim was submitted directly to government officials or employees.

  • E-Verify

The Federal Contractor E-Verify Rule requires all contractors and subcontractors that are engaged in direct contracts with the federal government to use the Department of Homeland Security's E-Verify system to verify the work authorization of their employees. Contractors must confirm the employment eligibility of all new employees hired during the contract term and all current employees assigned to work on federal jobs in the United States.

Know Your Responsibilities, Manage the Risk

Even experienced government contractors should approach ARRA funding with the assumption that "you don't know what you don't know."  Not knowing can be costly in dollars and it could effect your chances at receiving future government work.


Construction Business Owner, July 2010