To what extent can a municipality use IIJA funds to hire employees/create departments to record and report federal fund usage and manage fraud, waste, and abuse?

Municipalities should, when considering award administration and allocation, operate under the assumption that Infrastructure Investments and Jobs Act (“IIJA”) recipients will be required, at a minimum, to adhere to the guidance set forth in the Uniform Guidance.[1] That is, municipalities will still be held responsible for ensuring federal funds are used for their intended purposes with regard to the effectiveness and efficiency of their operations; reliability of reporting for internal and external use; and compliance with any/all applicable laws and regulations, including but not limited to those concerning fraud, waste and abuse.[2]

While there are sections in the IIJA that discourage waste, fraud, and abuse (including but not limited to Title I – Broadband Grants[3], Title IV – Enabling Middle Mile Broadband Infrastructure,[4] Title IV – Minority Business Development Grants,[5] and Title VII – Administrative Powers of the Agency).[6] The law does not provide explicit  guidance on how recipient municipalities should prevent such issues or if funding can be used in the managing of mitigation.

At a minimum, however, recipient municipalities should consider the following non-exhaustive list of factors to maintain compliance with the IIJA:

• Municipalities should consider the fact that the receipt and use of IIJA funds could add additional administrative and reporting requirements for staff;
• Municipalities should confirm their existing capacity (employees/resources) and expertise with regard to federal awards when allocating and administering funding and their ability to monitor awards for waste, fraud, and abuse;
• Municipalities should factor in the capacity of any outside resources that may be available for assistance in allocating and administering funding and monitoring awards for waste, fraud, and abuse;
• Municipalities should be aware of, and prepared for, IIJA funding awards to be reviewed as part of the federal single audit process;
• Municipalities can use IIJA funding for cyber projects to assess potential threats that may impact critical operations and technology infrastructure; and
• Municipalities should proactively identify and allocate resources to ensure that IIJA spending can be administered in accordance with all relevant regulations and guidance, properly tracked, and well-documented as transparency for constituents, the federal government, internal and external audiences, leadership, and other stakeholders will be imperative.