Recovery Act reporting reaches highest level of disclosure

Nearly 100 percent of all prime recipients of Recovery Act funds filed mandatory spending reports with the government last quarter -- the highest compliance rate since the stimulus was signed into law in February 2009.

In the most recent filing quarter, ending June 30, more than 74,000 prime recipients of Recovery Act contracts, grants and loans were required to report their spending to the Recovery Accountability and Transparency Board. Only 352 recipients failed to report their spending, a participation rate of 99.5 percent, according to the Office of Management and Budget.

"This is a pioneering transparency effort and, while there may have been some initial skepticism that it could be pulled off, last quarter nearly 100 percent of recipients required to report did so," OMB Interim Director and Chief Performance Officer Jeffrey Zients wrote in a recent blog post. "This unprecedented level of disclosure has been lauded by government watchdogs and transparency groups as a significant achievement for open government."

Nearly 90 percent of the noncompliers last quarter -- a total of 312 -- were first-time offenders, OMB found. In the past, one-time nonfilers have attributed the omissions to technical problems. In the majority of these cases, Zients wrote, the recipient quickly resolved the issues and filed correctly the next quarter.

A handful of prime recipients, however, have repeatedly failed to file reports. Thirty-two recipients have failed to report twice; four have failed to comply three times and four others have ignored the requirements during four consecutive reporting periods.

"Each of these cases is aggressively pursued by the relevant agency with punitive action ranging from withholding or rescinding funds to litigation, if necessary," Zients wrote. "We take these cases seriously, but overall, they represent 0.1 percent of Recovery Act recipients and involve less than 0.001 percent of total Recovery Act funding."

Among the serial nonreporters is Eyak Technology, an Alaska native corporation that has failed to file spending reports with the Customs and Border Protection bureau for four consecutive quarters. A spreadsheet OMB supplied indicated that Eyak "has chosen not to report. They are disputing whether there is a requirement to report under their contract."

Eyak argued it was not legally required to file the spending report because the government failed to follow its own rules, according to the company's attorney, Kathy Potter of Washington law firm Benton, Potter & Murdock. The dispute centers on a delivery order for communications supplies and services that Eyak won from CBP in 2008. The bureau later used the existing contract to spend Recovery funds.

The Alaskan firm claims the Recovery Act directed CBP to insert a clause from the Federal Acquisition Regulation into the existing contract that would have required the company to file the spending reports. The clause was never added, Potter said. The case is currently before the Civilian Board of Contract Appeals, where a trial is expected to begin in early February 2011.

Eyak appears to be the only Recovery Act recipient to suggest openly that it does not have to file a spending report. Most of the other nonreporting cases OMB highlighted appear to be caused by technical errors, or confusion over the reporting rules. OMB has sent warning letters to several of the recipients, but in only one case involving the Death Valley Timbisha Shoshone tribe, a grantee, has the agency frozen its stimulus payment.

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