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Smart Grid Grants Negotiations Web Conference
February 25, 2010
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SGG Tax, Lien, Accounting, RUS Loans and Audit Issues
Russ Wasson Susan Pettit
The Tax Issue
Is the SGIG grant taxable income? DOE and Treasury are working together. We are encouraged by what we hear from
DOE and EEI and hope to have a favorable answer shortly.
EEI is advising their members not to sign any
DOE contract until this issue gets resolved
SLIDE 3 DOE Lien Issue
Will the DOE contracting officer be able to provide
grant awardees with certainty on this issue prior to finalization of contract agreements?
- Yes. An awardee may request that DOE consider
approving encumbrance of property purchased in whole or part with Federal funds under its award, including equipment and real property. DOE will be able to discuss conditions for acceptable encumbrance and negotiate terms. (See 10 C.F.R. §§ 600.132(a), 600.134(c), and 600.321(b)(2))
Accounting For SGIG Grants
RUS has advised NRECA that there will be no
specific accounting guidance forthcoming on the smart grid assets.
RUS requires that smart grid assets be
accounted for in their proper categories, i.e. , meters etc.
It would be good to create subaccounts in each
specific asset category for the smart grid assets.
RUS Matching Loans
RUS can use loan funds for the 50%
match, but not on the initial construction.
The borrower will have to fund
construction from another lender.
The borrower will place the smart grid
assets in their work plan.
RUS will provide loan funds once the work
plan has been submitted and the construction loan can be defeased.
SLIDE 4 Audits
DOE may require an applicant to agree
to an OMB A-133 audit as a consequence of being awarded a smart grid grant.
RUS will accept the A-133 audit in lieu
- f the traditional RUS audit under CFR
1773.
Audits
Applicants should make sure that the A-
133 audit is for the entire entity, not just the smart grid assets. The auditor will look at other federal program funds.
Non-RUS borrowers should speak with
their lenders regarding whether an A- 133 audit would be acceptable.
Davis Bacon Act & Buy American Provisions
David Predmore
SLIDE 5 Davis-Bacon Act (DBA)
Under section 1606 of the Recovery Act, the
prevailing wage provisions of the Davis- Bacon Act, were applied to projects funded “directly by or assisted in whole or in part” through the Recovery Act.
Provides laborers and mechanics on covered
federally financed or assisted construction contracts the right to receive at least the locally prevailing wage rate and fringe benefits on a weekly basis.
DBA Recipient Obligations
The funding recipient must ensure that
covered contractors pay their laborers and mechanics the prevailing wage.
The recipient must incorporate the DBA
clauses found in 29 CFR 5.5(a) into their contracts and require that the clauses apply to all subcontracts as well.
DBA Recipient Obligations (cont.)
Recipients, contractors and
subcontractors must maintain and retain payroll records for all laborers and mechanics for three years following project completion
Register on FederalReporting.gov
SLIDE 6
Sub Recipients
Receive funding directly from
Recipients to support a portion of the project for which the Recipient received funding
Recipient delegation of reporting
requirements to Sub-recipient is discretionary
If delegated reporting responsibilities,
register on FederalReporting.gov
DBA Exceptions
The U.S. Department of Labor has
previously decided, consistent with Federal Acquisition Regulation Sections 22.3 and 22.4, that where a utility is furnishing its own materials and is extending its own utility system, such work is not subject to the DBA.
DBA Exceptions (cont.)
Equipment installation does not trigger
DBA compliance.
For example, the installation of smart
meters or in-home monitoring networks – where the utility is furnishing its own materials and extending its system - is not subject to DBA requirements.
SLIDE 7
“Buy American”
Section 1605 of the Recovery Act
prohibits the use of stimulus funds for the construction, alteration, maintenance or repair of a public building or work unless all of the iron, steel and manufactured goods utilized are produced in the United States
These prohibitions may only be applied
consistent with U.S. obligations under international agreements
Buy American applies if. . .
The materials are iron, steel or
“manufactured goods”, and
the work constitutes construction,
alteration, maintenance or repair, and
the work is being performed on a
“public building” or “public work”
Buy American Exceptions
Iron, steel or manufactured goods are
not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality
Increases the cost of the contract by an
unreasonable amount, defined as more than 25% of the contract cost
Application is inconsistent with the
public interest
SLIDE 8 Buy American Exceptions (cont.)
Stimulus funds may purchase U.S.
products that incorporate foreign components
“Recovery Act designated countries,”
which are defined as countries participating in the World Trade Organization Agreement on Government Procurement
Buy American Penalties
Removal and replacement of
unauthorized foreign construction materials
Reduction of the contract price Contract termination Suspension or debarment Noncompliance involving fraud can
bring criminal penalties as well
Contacts
- Mary Ann Ralls, 703.907. 5837 maryann.ralls@nreca.coop
- Russ Wasson, 703.907.5802 russell.wasson@nreca.coop
- Susan Pettit, 703.907.5822 susan.pettit@nreca.coop
- David Predmore, 703.907.5848 david.predmore@nreca.coop
- Derek Dyson, Duncan, Weinberg, Genzer, & Pembroke, P.C.
202.467.6370 dad@dwgp.com
SLIDE 9 Smart Grid Demonstration Questions
- Robbin Christianson, 703.907.5842
robbin.christianson@nreca.coop
