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Federal stimulus rules handcuff some agencies

- The Washington Times - Monday, February 22, 2010

The small town of Stanley, Va., figured on spending its nearly $40,000 share of federal stimulus funds to start replacing its aging fleet of four police cars.

But Stanley learned last summer that the federal government wouldn't release the town's stimulus money. The U.S. Department of Agriculture was worried that the town's plans to buy Dodge, Ford or Chevrolet police cars assembled in Canada could violate the "Buy American" provisions of the American Recovery and Investment Act, records show.

"The situation has put our town of Stanley in an extreme hardship trying to provide public safety to our community," Police Chief Tim Foster later wrote in letters to Congress.

The situation in Stanley, though later resolved in the town's favor according to Chief Foster, illustrates a broader problem facing federal agencies and local and state governments. Tasked with spending hundreds of billions of dollars on "shovel ready" projects, officials are finding that a host of rules governing where, when and how money is spent can lead to significant delays.

The aim of the Buy American provisions, for example, is to keep the nearly $1 trillion in stimulus money in the U.S. With a few exceptions, the rules require that the raw materials and other goods used for stimulus-funded projects be made in the U.S.

But in practice, the rules can delay projects as contractors spend time to find alternate suppliers and even change their design plans, according to a government report.

USDA spokesman Caleb Weaver said the department has required that any vehicles purchased with stimulus funds be manufactured in the U.S.

"However, in the event the rule is prohibitive, there exists an exception process," he said.

In Chicago, the city's housing authority found that the only security cameras compatible with their existing system were made outside the U.S., forcing officials to delay the project as they sought a federal waiver to the Buy American rules, according to a review by the Government Accountability Office (GAO).

At the Department of Homeland Security, an airport screening project costing hundreds of millions of dollars was slowed as officials awaited a waiver from the Buy American provisions to allow contractors to use foreign-made components, the GAO found.

Homeland Security spokesman Bobby Whithorne said the department gave a waiver to a project in September to expedite airport security projects funded by the stimulus through the Transportation Security Administration. The waiver guarantees that at least 95 percent of TSA's stimulus funding goes toward buying American-made materials for the in-line baggage machines funded through the project, he said.

"All TSA in-line baggage system projects are currently on track and we do not expect delays," Mr. Whithorne said.

The Energy Department's office of energy and renewable energy has disclosed in a notice that some of its stimulus grantees have "encountered difficulties in procuring certain manufactured goods in compliance with the Buy American provisions."

Kenneth Baer, communications director for the Office of Management and Budget, said in a statement e-mailed to The Washington Times that officials are focused on implementing the Recovery Act "quickly and effectively." He said Congress "wanted to ensure that all possible Recovery Act opportunities are available for American workers and American companies."

"We'll continue to strive to do that, expanding opportunities and jobs for the American people," he said.

Congress enacted the $787 billion stimulus package through the American Recovery and Reinvestment Act last year.

Overall, five of 27 federal agencies contacted by GAO reported that Buy American rules were affecting project selection and startups. Other agencies encountered problems from different sets of government rules.

Four federal agencies and officials in 10 states and three local agencies told the GAO about delays related to compliance with the Davis-Bacon Act, which mandates prevailing wages for federally funded jobs.

The GAO said one such delay involved a program to weatherize homes: As of Dec. 31, work on about 9,100 homes, out of a planned 593,000, had been completed.

But Energy Department officials said the GAO figures are nearly five months out of date and that more than 125,000 homes were weatherized by the end of 2009.

"In fact, since September 2009, we have tripled the pace of Recovery Act-funded home weatherization," said Energy spokeswoman Jen Stutsman, adding that the goal of the program wasn't to weatherize 593,000 homes in 2009, but rather by 2012.

"We are on track to meet that goal," she said.

Officials at the Texas Department of Housing & Community Affairs told congressional auditors of delays while they provided training to grantees on the Davis-Bacon Act requirements and hired enough staff to monitor compliance.

In addition, the U.S. Department of Transportation reported delays tied to clearance of projects by state historic preservation offices. The work included projects to improve security at train stations, bridges and tunnels.

The Department of Commerce also found that some state historic preservation offices were slow to issue clearances for projects because of the increased workload stemming from stimulus-funded projects, according to the GAO.

The town of Stanley applied for and received a stimulus-funded grant through the USDA for two police cars for $37,500, with the town matching $12,500. The town's four-car police fleet included one car with 158,000 miles taken out of service for safety reasons and another car with 140,000 miles that wasn't far behind, records show.

But as Chief Foster later wrote in a letter to Rep. Eric Cantor, Virginia Republican, the USDA told the town that the stimulus funds could not be released because of the "Buy American" language in the grant award.

In response, Mr. Cantor sent a letter to the USDA asking officials for help in September. Two weeks later, the USDA responded, saying a final legal interpretation of the Buy American provision hadn't been completed.

"We share your concern about this matter which potentially impacts police departments across the country," wrote Tammey Trevino, an administrator at the USDA.