Read the Terms of Your Grant Agreements

If your public agency receives federal grant funds for projects, make sure you carefully read the terms of the grant agreements.  

State Pass-Through Money:  Some state grant funds also include federal requirements, as states often receive funding from the federal government and then award grants from those funds to local agencies.

Common Grant Requirements:  The following are a few of the common federal grant requirements to be aware of:

Debarment:  It's surprising how often public agencies fail to check the federal government's database of firms that are suspended or debarred from doing business with the federal government.  It's a requirement for public agencies to check the EPLS system (and maintain documentation in the contract file) to ensure that a contractor, consultant, or vendor who is paid more than $25,000 is not on the list.

• Audit Findings:  The Washington State Auditor's Office recently issued audit findings against the Snohomish County Health District for failure to check the federal debarment database.  The District spent almost a half million dollars with four vendors for an H1N1 flue vaccination program.  According to the audit, the District failed to check the debarment status of these vendors. In addition, the auditor issued a finding against Skagit County for failure to check federal debarment.  Both agencies indicated in the audit findings that they were unaware of the federal requirement.

Prevailing Wages:  Most federal funding sources require the public agency to ensure that workers employed on a public works construction project are paid at least the federal prevailing wage rate for the type of work performed.  Language must be included in the bidding and contract documents describing this requirement, and that (for most federal funding sources), the contractor and subcontractors are required to pay the highest prevailing wage rate when comparing federal and state prevailing wages for a given classification of labor.

Standard Clauses:  Federal funding grants usually require a public agency to include various clauses in both the bidding and contract documents.  These clauses require the contractor, consultant, or vendor to comply with various federal laws and regulations, and often impose requirements on the public agency to monitor and enforce compliance.

Consequences for Non-Compliance:  The following are some of the potential consequences if a public agency receiving federal funding fails to comply with the terms of a grant agreement:

• Pay the Money Back to the Feds:  Payments made to a business that is suspended or debarred from doing business with the federal government are unallowable.  The federal funding agency may require that these funds be paid back to the federal government.

• Loss of Future Federal Funding:  Future funding grants may be at risk if a public agency has a record or history of non-compliance with the terms of federal grants.

• Audit Findings:  Audit findings from either a federal, state, or local auditor may be issued if a public agency does not comply with the terms of grant agreements. 

• Payment of Prevailing Wages:  If a public agency fails to notify bidders that a construction project is subject to federal Davis-Bacon prevailing wage requirements, the public agency may be found liable for paying back wages due to any construction workers on the project who were not paid the correct prevailing wage rates.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

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