The U.S. Department of Labor (USDOL), Office of Inspector General, conducted an audit of the San Francisco Private Industry Council's (SFPIC) H-1B technical skills training grant for the period August 1, 2000 through December 31, 2001. The overall audit objective was to evaluate if SFPIC was meeting the intent of the H-1B Technical Skills Training Program and the requirements of its grant. The subobjectives were to determine if:

• The project had been implemented as stated in the grant.

• Program outcomes were measured, achieved, and reported.

• Reported costs were reasonable, allocable, and allowable in accordance with applicable Federal regulations, and Office of Management and Budget (OMB) Circular A-122, Cost Principles for Non-Profit Organizations.

The H-1B Technical Skills Training Program was designed to help U.S. workers acquire the technical skills for occupations that are in demand and being filled by foreign workers holding H-1B visas. USDOL awarded SFPIC $3,000,000 for the period August 1, 2000 through July 31, 2002, to train and place up to 250 participants in digital media skill occupations.

AUDIT RESULTS

As of December 31, 2001, SFPIC had implemented a sustainable training project that was consistent with grant requirements and served the target population. Reported costs totaled $1,885,057. However, SFPIC had not met planned placement outcomes and we question $915,985, or 49 percent of reported costs, that were not reasonable, allocable, and allowable.

• While most training outcomes were achieved, planned placement outcomes did not occur due to decreased demand for digital media skills in the internet industry. The grant required SFPIC to report the number of participants placed into employment (placements), their average hourly wage (placement wages), and the number of participants remaining employed for at least 8 months after being hired (retention). SFPIC did not adequately measure retention outcomes. Also, SFPIC did not report placement wages or retention achievements to USDOL.

• We question $915,985, or 49 percent of reported costs of $1,885,057, because amounts claimed were not based on actual costs. Further, the matching requirement of 25 percent was not being met as of December 31, 2001. Future costs may be questioned if the matching requirement is not met.

  SFPIC'S RESPONSE

  On September 11, 2002, SFPIC's President responded to our draft report. She stated that she agreed that SFPIC had implemented a sustainable project consistent with the grant requirements but had not met planned placement outcomes as of December 31, 2001. She also provided additional documentation related to expenditures questioned in the draft report.

  OIG'S COMMENTS

  The materials enclosed with SFPIC's response did not support costs of $915,985 and presented conflicting information from what had been obtained during the course of the audit.

  Excerpts of SFPIC's response to the draft report have been incorporated into appropriate sections of the report. The response is included in its entirety as an Appendix.

  RECOMMENDATIONS

  We recommend that the Assistant Secretary for Employment and Training recover questioned costs of $915,985 and ensure that the SFPIC achieves planned placement outcomes, measures job retention, and fully reports program outcomes.

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