Category — Infrastructure and Transportation

On March 31, 2009, the Department of Transportation (DOT) OIG issued an audit report providing its analysis of the oversight challenges facing the DOT regarding Recovery Act spending.  The three major oversight challenges noted were ensuring that DOT grantees properly spent Recovery Act funds, implementing new accountability requirements and programs required under the Act and combating fraud, waste and abuse.  Regarding the latter, the OIG cited as two focus areas the need to enhance fraud awareness within the agency and among its contractors and the need to take timely and effective action to suspend and/or debar stimulus fund recipients that defraud DOT programs.  In addressing fraud awareness, the report noted the following key fraud schemes that have plagued past DOT projects:  false claims for materials and labor, bribes related to contracts for materials or labor, product substitution and disadvantaged business enterprise fraud.  The report also provided a list of “red flag” fraud indicators typically associated with fraud schemes.  Regarding suspension and debarment, the report noted that DOT needed to dramatically improve its processes in order to take more timely actions.

See the audit report here.

The stimulus package, signed into law on February 17 by President Obama, will have a dramatic impact on businesses and investors, reshaping different sectors of our economy. The Obama administration and Democratic Party-led Congress are poised to implement many additional measures that will influence the investment climate. A panel of Akin Gump lawyers recently participated in a roundtable discussion, addressing the strategies and opportunities these new policy realities present for investors. The discussion covered a wide range of sectors, including—

• transportation and infrastructure
• traditional and alternative energy and the environment
• broadband, FCC and communications
• health care.

The program was co-hosted by Public Strategies, Inc. and moderated by Prakash Mehta.  Akin Gump presenters included Tom Davidson, Susan Lent, Hank Terhune and Jorge Lopez.

Click here to review the presentation materials.

Not since World War II has the federal government sought to spend so much money in so little time, with such a sense of urgency. The American Recovery and Reinvestment Act of 2009 (the “Recovery Act” or the “Act”) presents tremendous opportunities for companies involved in infrastructure, including engineering, construction and supply contractors. At the same time, the sprawling Act includes many specific requirements and compliance risks that companies need to understand. There are also many downstream oversight and enforcement risks associated with the funds provided by the Recovery Act. We have identified and summarized the most important opportunities and risks.

Section I: Opportunities

Section I is a table that provides a summary of the principal sections of the Act that provide funding for infrastructure and construction projects. We identify the amounts available, the method by which the funds are to be disseminated and the purposes for which the funds are intended. This table is intended as a useful guide to the Act, not an exhaustive summary.

Section II: Restrictions and Compliance Issues

Section II identifies and analyzes provisions in the Act that restrict uses of the funds, including the controversial Buy American provision, award preferences and environmental requirements. We also identify several compliance issues, including reporting requirements, and compliance program and mandatory disclosure provisions imposed by the Federal Acquisition Regulation.

Section III: Oversight and Enforcement Risks

Section III identifies and summarizes the risks that companies will face downstream after projects are awarded. These risks include inspector general audits, oversight by the newly constituted Recovery Accountability and Transparency Board, potential antitrust actions, lawsuits alleging fraud under the False Claims Act and congressional oversight and investigations.

Read the full report here.