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The American Rescue Plan Act (ARPA) was signed into law by President Biden on March 11, 2021, the first major legislation enacted under the new administration, after passage in the closely divided U.S. Senate and House of Representatives. The law provides funding for about $1.9 trillion in federal investments towards diverse priorities, including the COVID-19 pandemic response and economic recovery, while also providing a broad range of relief to individuals, businesses of all sizes, state and local governments, health care providers and schools.

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In this article, we summarize some highlights of the funding provisions that are notable for government contractors and grantees, which have participated at every stage of the COVID-19 pandemic response. Like all businesses, contractors and grant recipients have had to address financial challenges due to the greater pandemic, health, financial and economic issues addressed by ARPA.

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Among ARPA’s funding provisions, the law provides billions of dollars for testing, contact tracing and mitigation; for vaccine supply and distribution, and the vaccine supply chain; for the public health workforce and community health centers.

Among other funding recipients, ARPA also provides billions in additional funding for state and local fiscal aid; rural health care providers; the Federal Emergency Management Agency and disaster relief; a new Critical Infrastructure Projects program; transportation and infrastructure, including airports, aviation and airlines; information technology and cybersecurity; and government oversight of COVID relief funding.

The law also provides for Defense Production Act purchases to expand domestic manufacturing of vaccines, test kits, personal protective equipment (PPE) and other medical supplies.&nbsp; When President Biden spoke on March 18 to mark the completion of 100 million vaccinations, he acknowledged the role of “the power given to a president under the Defense Production Act” to expedite critical materials in vaccine production.

ARPA also extends the reimbursement period for federal contractors under Section 3610 of the CARES Act to September 30, 2021. A title-by-title <a href="https://www.budget.senate.gov/imo/media/doc/ARP%20-%20Title-by-Title%20Summary.pdf">summary</a> of ARPA was released by the U.S. Senate after it amended the House legislation. See our firm's&nbsp;summary of employment related provisions <a href="https://www.thompsonhine.com/publications/american-rescue-plan-act-impact-on-employers-and-employees" target="_self" rel="noopener">here</a>.

In addition, we’ll also look ahead to the Biden administration’s next major proposed infrastructure legislation. Recent reporting has indicated that the administration’s forthcoming infrastructure proposal may total $3 trillion and include as much as $1 trillion for the construction and improvement of roads, bridges, rail lines, ports, electric vehicle charging stations, the electric power grid and clean energy sector.

The following is a summary of major government funding provisions in ARPA that may be of interest to contractors and grant recipients in certain sectors, including the pandemic response, public health, the DPA, government affairs, transportation, infrastructure and science and technology:

ARPA provides $7.5 billion in funding to the Centers for Disease Control and Prevention (CDC) for vaccine distribution, including vaccine clinics. These funds are “to carry out activities to plan, prepare for, promote, distribute, administer, monitor, and track COVID–19 vaccines.”

This includes activities to expand nationwide vaccine distribution and administration, and to provide technical assistance and grants or cooperative agreements to state, local, tribal and territorial public health departments, including support for community vaccination centers. An additional $1 billion in funding is provided for vaccine confidence efforts through CDC and $500 million for vaccine, therapeutic and device activities at the Food and Drug Administration.

ARPA also provides more than $6 billion for the supply chain for COVID-19 vaccines, therapeutics and medical supplies. These funds are for “necessary expenses with respect to research, development, manufacturing, production, and the purchase of vaccines, therapeutics, and ancillary medical products and supplies.”

ARPA provides $47.8 billion for testing, contact tracing, surveillance, and mitigation to contain the virus and alleviate its effects, hire staff for contact tracing, provide PPE for frontline healthcare workers, and take other steps to combat the virus, such as enabling isolation and quarantine.

This includes technical assistance and grants or cooperative agreements to state, local and territorial public health departments; support for the development, manufacturing, procurement, distribution and administration of tests; expansion of contact tracing capabilities; enhancement of data sharing and supporting IT capabilities; and grants and cooperative agreements to expand the public health workforce.

The testing subtitle also provides $1.75 billion for enhanced genomic sequencing and surveillance, $750 million for global health, and $500 million for data modernization and analytics infrastructure modernization at CDC.

ARPA provides $7.66 billion to bolster the public health workforce and COVID-19 response. These funds are “to carry out activities related to establishing, expanding, and sustaining a public health workforce.”

As stated in the Senate summary, the clinicians who administer the vaccine are supported by teams of public health workers who make the system work. However, local and state health departments have lost a significant percentage of their workforce since 2008, and almost a quarter of health department staff are currently eligible for retirement.

ARPA includes $7.6 billion for community health centers. Funding is to be distributed through grants and cooperative agreements under the Public Health Service Act for purposes of vaccine administration, testing, contact tracing, supplies, the health care workforce, health care infrastructure, and community outreach and education.

Under separate Titles, ARPA also provides $8.5 billion for rural health care providers (Title IX), $8.67 billion for foreign assistance through the State Department for global health activities (Title X), and $6 billion through the Department of Health and Human Services for the Indian Health Service (Title XI).

Defense Production Act Funding (Title III)

In order to combat COVID-19 and address shortfalls in the medical supply chain, ARPA provides $10 billion to expand domestic production of personal protective equipment (PPE), vaccines and other medical supplies through the Defense Production Act (DPA).

These funds are for the purchase, production (including the construction, repair, and retrofitting of government-owned or private facilities as necessary), or distribution of medical supplies and equipment (including durable medical equipment) related to combating the COVID–19 pandemic.

This includes diagnostic testing products; PPE; drugs, devices, and biological products; and any materials, manufacturing machinery, additional manufacturing or fill-finish lines or facilities, technology, or equipment (including durable medical equipment) necessary to produce or use them (including syringes, vials, or other supplies or equipment related to delivery, distribution, or administration).

The funds may be used to carry out Titles I (Priorities and Allocation), III (Expansion of Productive Capacity and Supply) and VII (General Provisions) of the DPA. Title I provides the government’s power to require contractors to prioritize designated orders (known as rated orders) and to allocate materials, services and facilities to promote national defense.

Title III provides for the power to incentivize the domestic industrial base to expand production and establishes the Defense Production Act Fund. Title VII addresses certain immunity from liability for complying with rated orders, and elimination of certain antitrust liability; the role of small businesses; and the president’s power to block certain mergers that could threaten national security.

State and Local Fiscal Recovery Funds (Title IX)

ARPA provides $350 billion in emergency funding to states, territories, tribes and local governments for use in responding to the COVID-19 public health emergency, to offset revenue losses, bolster economic recovery (including aid to affected industries) and to provide premium pay for essential workers.

The permitted uses of funds include (a) to respond to the public health emergency or its negative economic impacts; (b) to provide premium pay to eligible workers, or by providing grants to eligible employers who perform essential work; (c) for the provision of government services; or (d) costs to make necessary investments in water, sewer, or broadband infrastructure.

Additional funds are available to eligible revenue-sharing counties and tribes.&nbsp; The Treasury Department will issue further guidance on the distribution of these funds.

ARPA also provides a new $10 billion Critical Infrastructure Projects program to help states, territories, and tribal governments carry out critical capital projects “directly enabling work, education, and health monitoring, including remote options,” in response to COVID-19.

According to a press release from the Treasury Department, “one particularly salient infrastructure challenge has been the digital divide[.] As more and more areas of work and education move online, this divide risks leaving many American families behind.”

Therefore, the Capital Projects Fund “takes critical steps to addressing these challenges laid bare by the pandemic, especially in rural America and low- and moderate-income communities, helping to ensure that all communities have access to the high-quality, modern infrastructure needed to thrive, including internet access.”

Homeland Security and Governmental Affairs (Title IV)

ARPA extends the reimbursement period for federal contractors under Section 3610 of the CARES Act to September 30, 2021.

ARPA provides $50 billion for the Disaster Relief Fund (DRF) at the Federal Emergency Management Agency (FEMA), for costs associated with major disaster declarations, as well as assistance for disaster-related funeral expenses. Additional funding is provided for FEMA’s emergency food and shelter program and firefighter and emergency response grants.

ARPA provides $1 billion to the GSA Technology Modernization Fund (which facilitates agency work with contractors); $650 to the DHS Cybersecurity and Infrastructure Security Agency (CISA) to mitigate cybersecurity risk; and $200 million to the U.S. Digital Service.

As stated by the Senate summary, ARPA provides these funds “to equip federal agencies with modern technology and cybersecurity tools to effectively and securely deliver to the American public the services and benefits that Congress has provided to fight COVID-19. These funds will protect vaccine development and distribution, address the technology and security challenges that arose with the rapid shift to remote work, and better enable agencies to meet the high demand for services and accurate information from the American public.”

ARPA supports the Government Accountability Office with $77 million and provides $40 million for the Pandemic Response Accountability Committee, which was created in the CARES Act to provide oversight and keep Congress and the public informed about the whole-of-government COVID-19 response and associated spending. As stated by the Senate summary, “comprehensive oversight is needed to regain public trust and make sure federal dollars have been and continue to be spent responsibly.”

Transportation and Infrastructure (Title VII)

The ARPA provides $8 billion through the Department of Commerce to sponsors of airports for costs relating to the pandemic, including costs related to operations, personnel, and combating the spread of pathogens.

As stated by the Senate summary, airports “have been especially hard hit by the pandemic, and without billions in additional aid will be forced to cut the jobs of thousands of employees, reduce or discontinue operations, and be unable to make payments on capital projects.” Amtrak also receives assistance, additional funds of about $1.7 billion, to help it restore long-distance service and recall furloughed employees.

ARPA provides $15 billion for an extension of the air transportation payroll support program. As stated by the Senate summary, aviation drives 5 percent of U.S. gross domestic product (GDP) and supports over 10 million U.S. jobs. U.S. airline passenger volumes are at 42 percent compared to pre-pandemic levels.

Extension of the airline payroll support program “will help airlines and contractors avert mass layoffs and furloughs due to the unprecedented drop in business. Moreover, many of these jobs require intricate educational prerequisites, training requirements, and certifications, which if lost, would take years if not decades to build back. This relief will position the U.S. airline industry to capture the return of air travel demand.”

ARPA also provides a $3 billion payroll support program for these workers. As stated by the Senate summary, the U.S. aerospace industry represents nearly represents 2% of total U.S. GDP&nbsp;and provides America’s leading export by value. However, “the drop off in commercial air travel has caused a drop off in orders for new planes which in turn has disrupted the entire aviation manufacturing supply chain.&nbsp; Over 100,000 aerospace manufacturing jobs have been lost and more jobs are at risk. This program is the first federal relief designed to protect these highly-skilled workers[.]”

ARPA provides $30.46 billion for the Federal Transit Administration for grants to public transportation agencies. As stated in the Senate summary, the additional relief funding provided to transit agencies is to prevent layoffs of transit workers and prevent severe cuts to transit services that essential workers and the general public rely upon.

Most of the transit relief funding is provided as formula grants to cities and states based on operating costs.&nbsp; Funding is also included “to ensure that ongoing transit construction projects do not experience costly delays or slowdowns.”

ARPA provides $600 million to the National Science Foundation (NSF) for FY 2021, “to fund or extend new and existing research grants, cooperative agreements, scholarships, fellowships, and apprenticeships, and related administrative expenses to prevent, prepare for, and respond to coronavirus.”&nbsp; The ARPA also provides funding to the National Institute of Standards and Technology (NIST).

As explained by the Senate summary, researchers whose work was interrupted by COVID-19 are running out of funds to complete their research and there has been no funding to NSF to fill that gap:

“Without this research relief, the NSF would have to choose between supplementing existing grantees to allow them to finish their research and funding new research, which will result in either not reaping the benefits of taxpayer’s investment into existing grants or creating a research backlog that further reduces the agency’s ability to fund highly meritorious research.”

When President Biden first proposed the “Rescue Plan” during the transition, he proposed that it should be followed with a “Recovery Plan” focusing on the nation’s infrastructure, a major subject of campaign proposals.&nbsp; Biden announced his broad "Build Back Better" plan during the campaign, calling for new government procurement to modernize infrastructure and enhance national security; new research and development to improve America's competitive edge in new technologies; and increased attention to Buy American principles and U.S. supply chains. The campaign also released overlapping plans for infrastructure and clean energy.

Now, President Biden is meeting with top advisors to review details of potential plans and decide on key aspects of his “Recovery Plan” proposals, which may be released in the next few weeks. According to recent reporting, the infrastructure proposals would be part of a broader economic package that could total $3 trillion.

The infrastructure component of the plan could include up to $1 trillion in funding for construction and improvement of roads, bridges, rails, ports, electric vehicle charging stations, the nation’s electric grid and clean energy infrastructure. The proposals would also include billions in spending for climate-related priorities, including R&amp;D. The plan is reported to include as much as $100 billion for education infrastructure.

The proposals remain in flux, as the presidential administration negotiates with Congress and decides on details to be released in the coming days and weeks. The next stage of the Biden administration’s proposals can be expected to rely heavily upon government contracting and research and development to achieve goals relating to infrastructure, clean energy, national security, technology competitiveness, domestic manufacturing and economic recovery.

Joseph R. Berger 202.263.4193 <a href="mailto:Joseph.Berger@ThompsonHine.com">Joseph.Berger@ThompsonHine.com</a>

Jessica V. Haire 202.973.2778 <a href="mailto:Jessica.Haire@ThompsonHine.com">Jessica.Haire@ThompsonHine.com</a>

Tom Mason 202.263.4168 <a href="mailto:Thomas.Mason@ThompsonHine.com">Thomas.Mason@ThompsonHine.com</a>

Francis E. (Chip) Purcell, Jr. 202.263.4118 <a href="mailto:Chip.Purcell@ThompsonHine.com">Chip.Purcell@ThompsonHine.com</a>

Mona Adabi 202.263.4147 <a href="mailto:Mona.Adabi@ThompsonHine.com">Mona.Adabi@ThompsonHine.com</a>

We have assembled a firmwide multidisciplinary task force to address clients’ business and legal concerns and needs related to the COVID-19 pandemic. Please see our <a href="https://www.thompsonhine.com/services/covid-19-task-force">COVID-19 Task Force</a> page for additional information and resources.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

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