Program

COVID-19 Federal Assistance e311

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Procurements, Program Administration

Are enhancements to a municipality’s procurement systems, including IT costs, eligible for ARP funding?

Section 603(c)(1)(C) of the American Rescue Plan Act (ARP) of 2021 establishes the new Coronavirus Local Fiscal Recovery Fund (CLFRF). The covered period for the CLFRF is from March 3, 2021, until December 31, 2024,[1] which will provide local governments almost four years to develop and implement projects and initiatives. A recipient must return any funds not obligated by December 31, 2024, and any funds not expended to cover such obligations by December 31, 2026.[2] 

The ARP’s text allows for upgrades to infrastructure.[3] “Sections 602(c)(1)(C) and 603(c)(1)(C) of the Act provide recipients with broad latitude to use the Fiscal Recovery Funds for the provision of government services. Government services can include, but are not limited to, maintenance or pay-go funded building of infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure.”[4]

The U.S. Department of Treasury’s (Treasury) May 10, 2021 ARP guidance states, “In general. A recipient may only use funds to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, for one or more of the purposes enumerated in sections 602(c)(1) and 603(c)(1) of the Social Security Act, as applicable, including those enumerated in section § 35.6, subject to the restrictions outlined in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable. (b) Costs incurred. A cost shall be considered to have been incurred for purposes of paragraph (a) of this section if the recipient has incurred an obligation with respect to such cost by December 31, 2024.”[5]

Additionally, on May 10, 2021, the Treasury released the Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions (FAQ).[6] FAQ number 32 addresses this specific question:

May construction on eligible water, sewer, or broadband infrastructure projects continue past December 31, 2024, assuming funds have been obligated prior to that date?

Yes, the Treasury Department interprets the requirement that costs be incurred by December 31, 2024, to only require that recipients have obligated the funds by such date. The performance period will run until December 31, 2026, which will provide recipients a reasonable amount of time to complete projects funded with Fiscal Recovery Funds.[7]

Last Revised: May 28, 2021

[1] American Rescue Plan Act (H.R. 1319 Subtitle M Section 602(a)(1))

[2] U.S. Department of the Treasury, Interim Final Rule (31 CFR Part 35) American Rescue Plan (Coronavirus State and Local Fiscal Recovery Funds) page 138, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[3] American Rescue Plan Act (H.R. 1319 Subtitle M Section 602(c)(1)(D))

[4] U.S. Department of the Treasury, Interim Final Rule (31 CFR Part 35) American Rescue Plan (Coronavirus State and Local Fiscal Recovery Funds) page 53, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[5] U.S. Department of the Treasury, Interim Final Rule (31 CFR Part 35) American Rescue Plan Act (Coronavirus State and Local Fiscal Recovery Funds) page 122, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[6] Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions, May 10, 2021, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[7] U.S. Department of the Treasury, Interim Final Rule (31 CFR Part 35) American Rescue Plan Act (Coronavirus State and Local Fiscal Recovery Funds) page 99, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.