The Coronavirus Aid, Relief and Economic Security Act (Act), an unprecedented spending package aimed at alleviating the economic impact of the coronavirus pandemic, passed Congress today. We focus here on the Act’s oversight provisions, designed to ensure that the disbursement of federal funds is administered fairly and without preferential treatment. These provisions provide for the establishment of the following:
- Special Inspector General for Pandemic Recovery: The Act establishes a Special Inspector General within the Treasury Department to conduct oversight over stimulus spending. The Special Inspector General will be responsible for conducting, supervising and coordinating audits and investigations related to the making, purchase, management and sale of loans, loan guarantees, and other obligations and expenditures made by the Treasury Department. The position is presidentially appointed and authorized for five years.
- Pandemic Response Accountability Committee: The Pandemic Response Accountability Committee will be made up of independent Inspectors General who will be responsible for conducting and coordinating audits and investigations to provide accountability and identify waste, fraud, and abuse in spending under the Act and the response to the coronavirus crisis. The committee is also responsible for ensuring that Inspectors General have the authorities and funding necessary to conduct oversight, including access to documents and testimony from government officials and private sector entities.
- Congressional Oversight Commission: The Act authorizes the creation of a bipartisan Congressional Oversight Commission responsible for the oversight of the Treasury Department and Federal Reserve as they work to provide economic stability in the wake of the COVID-19. The Commission will be tasked with evaluating issues such as the impact of loans, loan guarantees, and investments made under the Act on U.S. citizens, economy, financial markets, and financial institutions. It may hold hearings, take testimony, and make requests for information (with subpoena power). It will be required to submit reports to Congress every 30 days, and will terminate on September 30, 2025.
- $20 Million for Government Accountability Office: The Act allocates $20 million to enable the independent Government Accountability Office (GAO) to help Congress conduct oversight of the spending of federal monies and other efforts to respond to the pandemic. GAO will have the ability to conduct oversight and inspections of private entities receiving funding under the Act to protect against fraud.
With such vast sums of federal monies to be disbursed, an effective oversight mechanism will be crucial to ensure that government money goes toward relieving the brunt of the economic fallout from the pandemic. Looking ahead, one can be certain that those responsible for these new oversight functions will aggressively seek to reveal companies (and individuals) that attempt to abuse the Act’s disbursement programs (as we wrote in the March 17 alert False Claims and Coronavirus: Prevent the Spread of Fraud, similar events are already underway). Any recipient of such funds should therefore closely adhere to the terms of their agreements and the laws under which those agreements were made; carefully account for their use of funds; avoid making promises they do not intend to keep; and avoid engaging in other conduct that may be illegal, among other best practices. It is also vitally important that compliance programs be put into place before receiving funds – such proactive measures will mitigate the risk that bad actors will engage in wrongdoing and avoid difficulties down the road.
With a broad understanding of these and other related issues, Ballard Spahr’s White Collar Defense/Internal Investigations Group and Government Relations Group—along with its Securities Enforcement and Corporate Governance Litigation and Health Care Groups—are uniquely positioned to assist in achieving regulatory compliance and, if the need arises, respond to government inquiries.