Media Center

Utilizing Federal ARPA Funds for Construction

October 13, 2022

by Ryan Gonder and Amanda Kraft

Are your school district or municipal clients spending federal ARPA dollars,
including ESSER money, on a construction and/or capital improvement contract?
Do your clients rely on industry standard forms or engineers to draft
bid and construction documents?
Have your clients considered the additional compliance requirements
necessary to lawfully utilize federal ARPA funds for procurement or construction?

When was the last time your client revised their procurement contracts?

Now is the time for school districts and municipalities across the Commonwealth to develop bid documents that are tailored to address the additional compliance requirements necessitated by a school district or municipality’s use of federal money.  McNees can work with solicitors and their clients to design documents to adequately protect the school district or municipality’s special interests.  We find all too often that construction documents are reused from prior procurements or from the project’s design professional, which can lend to contract documents that miss important provisions designed to protect taxpayers and the school district or municipality.  Even worse, those documents may not be designed to appropriately distribute risk amongst the project participants or account for concerns related to procurement of materials and cost escalation.  Moreover, those documents just may not include the necessary information for compliance with the applicable federal Uniform Guidance requirements.

The implications for noncompliance with federal ARPA and ESSER regulations and guidance are severe.  In certain cases, the failure to comply and/or an expenditure over a certain amount may result in a federal audit of the school district or municipality’s finances.  In addition, noncompliance may result in the federal government forcing the school district or municipality to pay back the funds, lose the grant, and/or the loss of eligibility for future federal funding, or in extreme cases, there could be a waiver of governmental immunity and a finding of criminal fraud.

Notwithstanding the above, and the serious repercussions for noncompliance, it is best practice to conduct a comprehensive, periodic review of procurement-related documents, because the chance for error or provisions that go missing is quite high.  The McNees team can review and offer comments on the current draft documents and/or prepare documents specifically tailored to whatever project your clients have in mind, in consideration of the revenue source that will be used to pay for that project.  Because of our experience, we can do this in an efficient and cost-effective way.

A comprehensive review will include the following:

  • Review of the standard Form of Request for Proposal
  • Review of the proposed Form of Contract
  • Review for compliance with state procurement law requirement
  • Review for compliance with federal procurement law requirements
  • Review for overall risk mitigation, including insurance, indemnification, limitation and/or waiver of liability
  • Establish standard requirements for construction compared to procurement of equipment or materials

For example, recently we worked with a school district before the district went out for bids on a capital project.  We uncovered that construction documents the district was using were not compliant with additional state and federal procurement requirements.  Moreover, those construction documents were drafted in a way that did not protect the district should something go awry during the construction project.  Our team worked closely with the district team to develop a set of documents that both met the new federal requirements applicable to ESSER funds and included much stronger language important for any construction project to protect the district.

We believe we can offer the same service for your school district or municipality clients.  For more information on how we can help your school district, please give us a call, or send an e-mail to Ryan Gonder or Amanda Kraft

© 2022 McNees Wallace & Nurick LLC
McNees Advocate Alert is presented with the understanding that the publisher does not render specific legal, accounting or other professional service to the reader. Due to the rapidly changing nature of the law, information contained in this publication may become outdated. Anyone using this material must always research original sources of authority and update this information to ensure accuracy and applicability to specific legal matters. In no event will the authors, the reviewers or the publisher be liable for any damage, whether direct, indirect or consequential, claimed to result from the use of this material.