Keeping abreast of government-funded project requirements

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The US government is looking more closely at funding awarded to cleantech companies. Addressing this increased scrutiny by building better business processes may be a worthwhile investment for the future, advises Jay Spencer.

In 2010, the US government was the world’s biggest provider of stimulus funds for cleantech projects, ahead of China and Germany. Funding offered through the American Recovery and Reinvestment Act (ARRA) in turn stimulated millions more mostly private capital funding from corporations and private equity and venture capital firms.

Scrutiny from start to finish

While the US government is still a major source of cleantech funding, 2012’s tougher regulatory environment will mean cleantech companies can expect increased scrutiny of funding applications and project implementation and closeout.

The implications include more due diligence or stricter enforcement of clauses concerning eligibility, significant changes in tax credit plans and placed “in service” dates.

Against this backdrop, the time is right for cleantech companies to review. Particular attention should be paid to contracting requirements, cost accounting methods, unique ARRA reporting requirements and key business systems because these areas are seen as vulnerable to ethics violations and contractor abuse.

Companies will need to ensure their project management team responds quickly to reporting requirements, maintains all appropriate documentation and that staff are trained and carefully monitored.

Opportunities to gain a competitive edge

While increased emphasis on reporting requirements may seem a burden, it provides a valuable opportunity to rethink current systems, processes, policies, controls and communication plans. It will not only ensure compliance and minimize risk, but also help gain future competitive advantage.

A focus on improved workflow is worth considering. One proven methodology starts with four connected, simultaneous work streams to ease coordination of related aspects of preparing for and complying with a government-funded project.

Each step overlaps with, or sets the stage for, the next step, and clear roles and responsibilities help teams move efficiently through the process. The work streams are:

  1. Pre-award audit and negotiations: including creating a price matrix table, estimating justifications and calculating government-compliant indirect rates.
  2. Readiness assessment: including identifying compliance obligations under the grant and the company’s current capability to fulfil them.
  3. Gap remediation: including addressing new or revised processes, policies, procedures and training.
  4. Post-award administration: including reporting requirements, tax issues and audit programs.

Looking ahead

The maze of ever-shifting regulations and risks around government funding for cleantech companies is challenging. Success often depends on quick action and efficient compliance with procurement rules and regulations.

While this can be time-consuming, establishing a robust compliance system can bring benefits in the seamless implementation and monitoring of a project. Structures and processes can also serve as a model for other awards applications.

Finally, other investors might welcome such strict compliance measures which show a company is meeting major milestones and long-term objectives. Funding opportunities remain for cleantech companies and their customers prepared to do the heavy lifting through the application and implementation stages to extract maximum award value with minimal project risk.

What you need to know:

  • Governments are examining project application, awards and performance more closely, so expect increased scrutiny.
  • Timely monitoring and transparency will help maintain a company’s project and reputation.
  • Companies applying for, and awarded, public funds should consider reviewing internal controls in employment, codes of conduct, billing and contracting systems to ensure they meet compliance requirements.
  • Develop proactive strategies to communicate changes to key stakeholders.

How we can help

Our Global Cleantech Center offers you a worldwide team of professionals in assurance, tax, transaction and advisory services who understand the business dynamics of cleantech. We have the experience to help you make the most of opportunities in this marketplace, and address any challenges. Whichever sector or market you’re in, we can provide the insights you need to realize the benefits of cleantech.

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