COVID-19 Federal Assistance e311



What does the ARP say about the costs pertaining to enhancing/incorporating procurement opportunities for minority business enterprises (“MBE”) to expand diversity and inclusion?

The statutory language of the ARP references disenfranchised populations in the context of several of the program descriptions. Subtitle B, Section 3204,[1] and Subtitle C, Section 3301,[2] which detail appropriations for housing counseling and small business credits, respectively, are two examples where the ARP specifically discusses requirements to prioritize MBEs through programs and funding. Recently, the Office of Management and Budget released OMB Memorandum M-21-20. This memorandum, dated March 19, 2021, and titled: “Promoting Public Trust in the Federal Government through Effective Implementation of the American Rescue Plan Act and Stewardship of the Taxpayer Resources,”[3] speaks directly to this issue. In particular, the memorandum established the requirement for federal agencies, when implementing any new programs authorized and appropriated by the ARP, to submit their proposed implementation plans for approval before publishing. The OMB memo also recommends that agencies apply equity-oriented guidelines outlined in the Code of Federal Regulations, Grants, and Agreements.[4] 

The ARP expressly identifies four broad categories of permissible uses of funds by state and local governments, and the Treasury Department issued guidance on May 10, 2021 that further clarifies the authorized uses of ARP funds. Since Fiscal Recovery Funds are subject to 2CRF200[5], the non-Federal entity must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible[6]. Minority Business Enterprises (MBEs) are often first-time or non-traditional recipients of federal funding and often lack experience with applying for and/or managing such funding and the pandemic disproportionately impacted many[7].  Pending Treasury’s issuance of this guidance, municipalities can consider leveraging their experiences with CARES Act funding to appropriately plan to resource ARP funding in support of MBEs in the future. Based on our experience with the CARES Act and other federal funding programs, this could include the enhancement or implementation of procurement systems that are intuitive and user friendly, making procurement opportunities available to the widest audiences possible. Other potential activities include developing training and professional development resources to make accessible the information necessary for MBEs to successfully compete for and win contract and grant opportunities made available with ARP funds. Finally, municipalities may consider dedicating existing staffing resources to provide the appropriate levels of support necessary to realize the equity goals outlined in OMB Memorandum M-21-20. 

Last Revised: May 28, 2021

[1] American Rescue Plan Act (H.R. 1319 Subtitle B Section 3204).

[2] American Rescue Plan Act (H.R. 1319 Subtitle C Section 3301).

[4] Id.

[5] Fiscal Recovery Funds as a general matter will be subject to the provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200) (the Uniform Guidance), including the cost principles and restrictions on general provisions for selected items of cost, at 85-86.

[6] 2 CFR 200.321(a)

[7] Federal Reserve Bank of Cleveland, An Uphill Battle: COVID-19’s Outsized Toll on Minority-Owned Firms,