The Cost of Free Money: Compliance Requirements of the Bipartisan Infrastructure Law

Through the Bipartisan Infrastructure Law (BIL),¹ the federal government has committed to funding more than $1 trillion for projects involving construction, manufacturing and energy initiatives. Much of this funding will be distributed through federal grants.

The laws governing federal grants impose a significant compliance burden that recipients should consider and plan for both before and after receiving an award.

BIL funding recipients generally are subject to a number of compliance requirements, including regulatory rules found in the Office of Management and Budget's (OMB) uniform guidance for federal regulations (2 CFR 200), the U.S. Department of Energy's (DOE) grant regulations (2 CFR 910), statutory requirements imposed by the BIL, and the terms and conditions included in DOE's funding agreement document.

The BIL's most significant compliance requirements include rules found in applicable regulations and contract terms related to the following:

Audits

• Recipients that expend $750,000 or more in federal awards for a given fiscal year must arrange for single audit of their company or a program-specific audit. (2 CFR §200.501)
• The OMB issues an annual compliance supplement directing auditors to areas of focus, which generally match the federal grant compliance regulations.

Procurement

• Recipients must institute internal policies promoting competition, documentation and compliance with respect to federal funds used to purchase goods and services. (2 CFR 200.320)

Cost and Accounting

• Spending of federal funds is subject to extensive restrictions related to the allowability of costs submitted for reimbursement, as well as whether those costs are considered reasonable and allocable to the project for which the funds are issued. (2 CFR Subpart E)(2 CFR §910.352)

Domestic Preference

• BIL funding requires recipients to take reasonable efforts to source domestic materials. (2 CFR §200.322)
• For infrastructure projects, recipients are required to use iron and steel produced only in the U.S., and all manufactured products used in the project must be produced in the U.S. (See Build America, Buy America executive order.)

Labor and Employment

• Recipients performing construction projects generally are required to comply with Davis-Bacon Act requirements, including paying a minimum wage to laborers working at construction sites, certifying to paying such laborers through weekly payroll and ensuring compliance of subcontractors. (29 CFR 5)

Internal Controls

• Recipients are required to develop internal control procedures to ensure compliance and guard against fraud, waste and abuse. (2 CFR §200.61)

For additional information or questions on the BIL compliance requirements, contact the authors or another member of Holland & Knight's Government Contracts Group.

Notes

¹ Prior to being enacted into law, the BIL previously was known as the Infrastructure Investment and Jobs Act (IIJA) or the Infrastructure Act.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.