Federal procurement rules not applicable to certain ARPA-funded projects

By now, Ohio municipalities, counties, and townships are well aware that the federal government passed significant coronavirus relief funding in the American Rescue Plan Act (ARPA).[1] Specifically, Ohio’s political subdivisions have access to federal grant funding made available through ARPA’s State and Local Fiscal Recovery Fund (SLFRF). Use of these federal funds, however, requires the recipient to take additional steps to ensure compliance.

Ordinarily, federal funds trigger two critical compliance pieces related to the procurement of purchases:  (1) for nearly all purchases, the federal Uniform Guidance on Procurement[2] must be followed; and (2) for construction projects exceeding $2,000, the project must comply with the Davis Bacon and Related Acts (DBRA).[3] The U.S. Treasury had indicated as far back as the Interim Final Rule that compliance with the DBRA is not required for “projects funded solely with award funds from the SLFRF program,” and that guidance was retained in the Final Rule.[4] 

In a continuation of this trend, the U.S. Treasury has indicated in its most recent update to the guidance that compliance with certain provisions of the Uniform Guidance is not required for purchases categorized as “revenue replacement.”[5]^,[6] Under the new guidance, recipients are not required to follow the federal procurement methods and contracting procedures. Note, however, that recipients must still comply with certain provisions in Subpart D (provisions related to financial management and reporting) and Subpart E (cost principles), and a full list of provisions that remain applicable is included in the Treasury’s FAQ. 

Note also that this exception only applies to purchases that are categorized as “revenue replacement.” Other purchases, such as infrastructure improvements or those made to respond to the public health emergency, would still be subject to the entire Uniform Guidance. But, considering that the Treasury has given a $10 million standard allowance for “revenue replacement” use, this development should streamline many recipients’ compliance obligations using SLFRF funds.