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With
stimulus monies flowing, how will the government keep track of it all?
While it's a sophisticated system bound to be fraught with problems, the
Obama administration is nonetheless committed to ensuring that the process
is transparent and above board.
The
American Recovery and Reinvestment Act of 2009 is, in fact, the largest
ever government infusion into the economy. With several dozen avenues from
which the money is released to thousands of recipients that range from
private companies to local jurisdictions, the task before those who will
monitor the situation is enormous.
"Only
through transparency can the public, analysts, and the news media ascertain
whether federal spending has not been wasted on profiteering, pay-to-play
arrangements, or unseemly executive compensation," says the Coalition
of Accountable Recovery, which represents a cross section of ideologies.
According
to Recovery.gov, the website the Obama administration has set up to provide
information that the public will need to make such assessments, about $154
billion of the $787 million allocated under the measure has so far been
committed. However, not all of that has begun matriculating.
The
aim has never been to unleash billions into the marketplace without first
scrutinizing every project to ensure worthiness. And beyond establishing
calm and creating an aura of certainty, the funds are also intended to
build a clean technology-based economy over time -- all without being
wasteful. Toward that end, the auditing process must describe the precise
nature of the projects, the amount of money requested and who gets what.
But it does not require recipients to say what subcontractors that they are
paying.
The
oversight mechanisms involve leadership: People need to be trained and the
resources must be available so that the ideas actually reach fruition.
Outside of the process hurdles, there are the eventual policy questions --
the ones involving business development, tax policy and energy laws. At
stake are job creation and whether the development of green energy
resources will also mean that the associated products are manufactured,
installed and maintained in the areas where the fuel forms are harnessed.
The
vast sums of money involved to make it happen should not be viewed as a
"magic pot of gold," says Chris Rissetto,
partner in the Washington,
D.C., office of the law firm
of Reed Smith. "It's merely another appropriations bill" -- a
vehicle to allow the administration to correct problems in the economy.
Along those lines, he is predicting more such money will come, perhaps as
stand-alone spending measures.
"It
is not just a matter of sending in a postcard and the government will then
send you a check," says Rissetto. "As
the monies are competed and awarded, they will have fiscal, contractual and
accounting obligations tied to them."
Potential
Mandates
Utilities,
understandably, have an innate interest in not just the process but also
the overall objectives of the stimulus measure. About $83 billion in tax
incentives, loan guarantees and government grants for investments in energy
efficient technologies and renewable energy programs are being made
available. An additional $4.5 billion is targeted to intelligent utility
projects that allow for two-way communications between power companies and
their companies as a way to reduce energy consumption and increase
reliability.
Those
government efforts, no doubt, are only the beginning of what many say will
become mandatory investments in the green economy. With the legislative
debate heating up on Capitol Hill over carbon emission reductions,
utilities are looking at those federal incentives and grants as a way to
offset investments in costly infrastructure projects, says a report by
PricewaterhouseCoopers.
The
global consulting firm adds that government anticipates spending $74.5
million to conduct federal and state audits of approved stimulus projects.
An additional $84 million of that stimulus money will be spent on the
oversight activities of the Recovery Accountability and Transparency Board
that has been created to prevent waste, fraud and abuse. Utilities must
therefore understand the relevant compliance and tax procedures.
"Without
the proper compliance structure in place, a utility could be excluded from
receiving (stimulus) grants or risk having grant payments suspended before
a project is complete. Failure to meet any of the complex reporting,
accounting, and compliance requirements could cause an award to be
terminated and result in unwanted publicity," writes the firm's utility
practice leader David Etheridge.
Key
elements of the bidding process involve calculating the allowable costs,
properly estimating labor expenses and ensuring that cost-sharing formulas
are right, he says. The numbers must be furthermore backed by sound historical
data. At the same time, state and local governments need to be able to
properly report the monies they get.
Consider
West Virginia:
It is implementing fresh training procedures as well as a new computer
system to safeguard the nearly $38 million it will receive to weatherize
homes. The funding, which includes about $7,500 for each of the 3,000 homes
that will be made more energy efficient, considers labor, equipment and
vehicle costs, the state says. All items must be accounted for wherever
they are on the supply chain.
It's
a cumbersome process that will invariably have problems. While critics
maintain that the sheer size of the largesse will only compound the issues,
the White House says that it must give the economy a boost while also
carefully considering the most valid ideas -- projects that require a
steady stream of funding in the years to come. The public is paying
attention. But so too is the utility sector, which wants to tap those
federal dollars to offset infrastructure costs.
More
information is available from Energy Central:
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