Agencies Prepare to Spend Stimulus Funds in Rapid Fashion

The American Recovery and Reinvestment Act (ARRA) signed by President Obama last week boosts the spending demands for several federal departments and agencies by a significant amount. For example, the National Institutes of Health (NIH) will be receiving $10.4 billion to spend on research activities, scientific instrumentation, and facility improvements. This compares to a FY2008 budget of almost $30 billion for NIH. Similarly, the National Science Foundation is set to distribute $3 billion from the stimulus, while the NSF's budget was just over $6 billion in FY08.

A few federal entities have provided insight into how they will procedurally target and expedite their stimulus spending. Last week, Energy Secretary Steven Chu released guidelines to improve his department's ability to issue direct loans, loan guarantees, and other forms of funding. As a recipient of $39 billion in stimulus funds (compared to a FY08 budget of $24 billion), the DOE has a goal to disperse 70 percent of its stimulus funds by the end of next year. Some of Secretary Chu's reform items include:

• Institute rolling appraisals of applications, reviewing them soon after submission;
• Offer applicants the ability to pay up-front fees after a loan is approved;
• Restructure credit subsidies to enable payment over the life of the loan;
• Hire additional staff to process applications; and,
• Produce a website to both provide transparency and guide applicants though the process.

Earlier today, the NIH's Acting Director Raynard Kington released a statement that the agency expects "to spend as much as possible" of the stimulus funds in the current fiscal year. Additionally, Kington stated research funds will be distributed by the NIH in several ways: funding previously submitted grant applications judged to be highly meritorious, but ultimately not funded; awarding new R01 grants that can make progress within a two-year period; supplementing existing grants either to "competitively expand the scope of current research awards or supplement an existing award with additional support for infrastructure"; and, offering new challenge grants to support cross-cutting research.

Last Wednesday, February 18, Peter Orszag, Director of the White House Office of Management and Budget (OMB) released his office's first installment of guidelines to all agencies and departments receiving funds from the stimulus bill, as well as sections of the executive branch involved in the administration of stimulus funds. The OMB document calls for a number of timely actions, which include:

• Starting immediately, all funds from the stimulus must be distinguishable from non-recovery funds for reporting and financial reasons;
• By February 25, affected agencies must have a dedicated page on their website for monitoring recovery efforts;
• Starting March 3, agencies must submit weekly reports to the OMB, which include major actions taken to date, planned actions, and a breakdown of funding;
• By May 1, agencies must provide a "Recovery Plan" that outlines the agency's road recovery goals and coordinating efforts, and a "Recovery Program Plan" for their components within the stimulus;
• Starting on May 8, detailed monthly financial reports on obligations, expenditures, and award data must be submitted.

Regarding the determination of grant recipients from the stimulus, the OMB makes clear that awards should be made on a competitive basis, even though the funds are to be distributed as quickly as possible. State agencies may wish to conduct limited competitions among high-performing projects instead of full and open competitions. Additionally, because of the drive for greater transparency and tracking. OMB recommends the exclusion of supplements to existing grants NIH's intent to award some supplements seems to conflict with OMB's guidance.

The first round of OMB guidelines regarding the stimulus can be accessed at: http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-10.pdf

DOE Secretary Chu's announcement on spending reform can be accessed at: http://www.energy.gov/news2009/6934.htm

Today's statement from the Acting Director of the NIH can be accessed at: http://www.nih.gov/about/director/02252009statement_arra.htm