President's Council on Integrity and Efficiency
Survey of
PRESCREENING OF FEDERAL GRANTS AND LOANS
BY OFFICES OF INSPECTOR GENERAL
AND
THEIR AGENCIES' GRANT AND LOAN OFFICES
Conducted by the
Inspection and Evaluation Committee
January 1998
TABLE OF CONTENTS
Page
INTRODUCTION 1
PURPOSE AND SCOPE 1
BACKGROUND 2
I. SUMMARY OF OVERALL SURVEY FINDINGS 3
A. Pre-award Screening 3
B. Post-award Screening 4
C. Useful Databases and Services on Financial Assistance 6
D. Possible Future PCIE Projects 10
II. INDIVIDUAL AGENCY RESPONSES TO SURVEY QUESTIONNAIRE ON PRESCREENING OF GRANT AND LOAN RECIPIENTS 12
A. Agency for International Development 12
B. Corporation for National and Community Service 12
C. Department of Agriculture 13
D. Department of Commerce 14
E. Department of Defense 16
F. Department of Education 17
G. Department of Energy 18
H. Department of Health and Human Services 19
I. Department of Housing and Urban Development 20
J. Department of the Interior 20
K. Department of Justice 21
L. Department of Labor 22
M. Department of State 23
N. Department of Transportation 23
O. Department of the Treasury 24
P. Department of Veterans Affairs 25
Q. Environmental Protection Agency 25
R. Federal Emergency Management Agency 26
S. National Aeronautics and Space Administration 26
T. Nuclear Regulatory Commission 27
U. Small Business Administration 27
V. Social Security Administration 29
CONCLUSIONS 31
APPENDIX 1: Glossary of Definitions 32
APPENDIX 2: Survey Questionnaire 33
INTRODUCTION
The President's Council on Integrity and Efficiency (PCIE) was established by Executive Order
12805, dated May 11, 1992. The PCIE is comprised of all Presidentially-appointed Inspectors
General as well as representatives from the Office of Government Ethics, the Office of Special
Counsel, the Federal Bureau of Investigation (FBI), and the Office of Management and Budget
(OMB). The Council is chaired by the Deputy Director for Management at OMB and the
position of Vice Chair is currently held by the Inspector General at the Department of Health and
Human Services (HHS).
According to the Executive Order, the PCIE:
"...shall continually identify, review, and discuss areas of weakness and
vulnerability in Federal programs and operations to fraud, waste, and abuse, and
shall develop plans for coordinated, Governmentwide activities that address these
problems and promote economy and efficiency in Federal programs and
operations."
These activities include conducting interagency audit, inspection, and investigation projects to
effectively and efficiently deal with government-wide issues of fraud, waste, and abuse. One
way the PCIE accomplishes this task is through its various committees: Audit; Inspection and
Evaluation; Integrity; Investigation; and Legislation and Professional Development. In concert
with the PCIE's overall mission, the Inspection and Evaluation Committee, currently chaired by
the Small Business Administration's (SBA) Inspector General, decided to undertake a study to
identify ways to (1) prescreen and monitor potentially problematic recipients of financial
assistance and (2) improve coordination within the OIG community of information regarding
those recipients.
PURPOSE AND SCOPE
The purpose of the survey was to identify the "Best Practices" used by individual OIGs to
prescreen applicants for financial assistance from the federal government and help the agencies
combat fraud, waste, and abuse in their award of discretionary federal grants, loans, loan
guarantees, and cooperative agreements. More specifically, our objective was to identify the
policies, procedures, and practices that the OIGs and their agencies have successfully used to
identify problem recipients and issues before new or additional financial assistance awards are
made.
To compile an inventory of successful techniques and procedures used by OIGs and their
agencies' grant and loan offices, we prepared a survey questionnaire on federal grants and loans
and distributed it to all 31 PCIE members. Our survey results are based on the responses from
the 22 Offices of Inspectors General whose respective agencies have an active grant and loan
program; the remaining nine PCIE members were excluded because their agencies do not have an
active grant or loan program.(1)
BACKGROUND
Collectively, executive branch agencies award billions of dollars annually in financial assistance
to a wide range of recipients. Most persons or organizations receiving such federal assistance use
it appropriately. However, there are always some exceptions. Experience has shown us that it is
more efficient and in the government's best interest to deal with problem recipients and
grant/loan issues before the awards are made. Clearly, such efforts are in keeping with the
National Performance Review, which called for the focus of OIGs to be further broadened from
compliance auditing and detection of fraud, waste, and abuse, to proactive involvement on the
front end of programs and projects to stimulate better program management.
This project, led by the Department of Commerce's Office of Inspector General, was intended to
benefit both the OIG community and their agencies' financial assistance review processes.
Toward this end, we compiled an inventory of successful techniques and procedures used by
OIGs and their agencies' grant and loan offices to identify and screen out potentially problematic
recipients of federal grants, loans, or cooperative agreements before they receive federal funding.
Problematic recipients might include those with a history of criminal activity or misuse of federal
funds, those with significant credit or financial problems, and/or those who owe money to the
government or performed poorly on prior federal assistance awards. A prescreening process to
identify such problematic recipients might lead to the denial of further federal assistance, or to
the addition of special terms and conditions to any current or new federal financial assistance
awards to better safeguard public funds and provide the necessary oversight to enhance program
performance by the recipients. This process may even provide an incentive to those who owe the
government money to pay off those debts and to resolve other audit problems quickly so that they
will be eligible to receive more federal assistance.
By highlighting the best screening practices used--especially those within the OIG community--individual OIGs, and their respective agencies, can be provided with ideas and opportunities to incorporate successful practices into their respective agencies' review procedures for federal assistance projects. It is expected that the exchange of pertinent and useful information will allow the OIG community to establish a more effective, efficient, and focused program to prevent as well as detect waste, fraud, and abuse by federal grant and loan recipients.
I. SUMMARY OF OVERALL SURVEY FINDINGS
A. Pre-award Screening
OIG Reviews
The results of the Inspection and Evaluation Committee's survey on Inspectors General
Prescreening of Federal Grants, Loans, and Cooperative Agreements indicate that four
(or about 18 percent) of the 22 OIGs routinely review proposed grant or loan packages
prior to their agency approval of the awards (see Table 1). The prescreening processes
reported by the four OIGs vary. For example, the OIGs at both the Departments of
Commerce and Labor review all potential financial award recipients, the Department of
State's OIG reviews award packages for first time recipients, and the SBA OIG reviews
those applicants that indicate on the application that they have a criminal history.
These OIGs reported that the overall goal of their pre-award screening process is to
identify potential problem recipients early on in order to prevent the misspending of
government funds. Some of the reported successful outcomes of these OIG reviews
include denying, delaying, or imposing special conditions on the financial assistance
award (e.g., one special award condition may be to require a "reimbursement only"
method of payment or, an OIG may recommend that subsequent awards be delayed until
previous audit, investigative or other award issues are resolved).
For example, the Commerce OIG cited a specific success story of its prescreening efforts:
During a recent prescreening of a grant applicant, it was learned that an accounting
system survey of this same entity had recently been completed for a previous award. The
survey disclosed that there was more than $2 million in questioned costs resulting from
the lack of supporting documentation such as time sheets, vouchers, and invoices.
Because of these significant questioned costs, the OIG recommended that the new award
totaling $1.8 million be delayed until the previous award issues were resolved.
With regard to the 18 respondents who indicated that their OIG does not routinely review
financial assistance packages, they provided the following reasons as to why they do not
conduct such prescreening:
Agency Review
In all but one case, the OIGs reported that program or grant and loan offices in their agencies routinely performed some type of review to screen their financial award recipients. In general, these reviews included various combinations of the following:
(1) credit checks on applicants, (2) review of agency's accounts receivable listing,
(3) review of the General Services Administration's (GSA) Suspension and Debarment
Listing, (4) coordination of proposed awards with other agencies, (5) clearance from the
Office of General Counsel, and (6) clearance from the Office of Inspector General. The
OIGs reported that some of the "Best Practices" used by their agencies in the prescreening
of grants and loan applicants include:
B. Post-award Screening
The survey results indicate that six (or approximately 27 percent) of the 22 OIG respondents routinely review an award recipient after the award has been made
(see Table 1). The majority of total respondents indicated that they may target a specific
assistance program or specific recipients for audit or other screening or will review a
specific award recipient if the agency overseeing a particular award becomes aware of a
potential problem and requests the OIG's assistance. Some of the successful outcomes of
conducting post-award reviews cited by the respondents include:
Table 1:
PCIE Member Agencies with Grant and Loan Programs*
AGENCY | FY 1996 FUNDING
ESTIMATES ($ in millions) |
OIG REVIEW
Pre-award Post-award |
PROGRAM OFFICE REVIEW | |
AGRICULTURE | $50,761 | |||
AID | 5,203 | |||
COMMERCE | 1,120 | 1 | ||
CNS | 422 | |||
DEFENSE | 2,500 | |||
EDUCATION | 34,041 | |||
ENERGY | 1,543 | |||
EPA | 3,540 | 1 | ||
FEMA | 3,041 | |||
HHS | 15,538 | |||
HUD | 4,467 | |||
INTERIOR | 1,160 | 1 | ||
JUSTICE | 1,447 | 1 | ||
LABOR | 4,540 | |||
NASA | 592 | |||
NRC | 1 | |||
SBA | 462 | 2 | ||
SSA | 5-6 | |||
STATE | 861 | 3 | ||
TRANSPORTATION | 24,822 | |||
TREASURY | 45 | |||
VA | 48 | |||
1The OIG Annual Workplan routinely includes a small provision for post-award grant reviews.
2 The OIG is involved in the pre-award screening for SBA loan applicants that indicate a criminal history. 3 The OIG is involved in the screening of first time DOS grantees prior to disbursement of funds. |
*This also includes cooperative agreements and loan guarantees.
C. Useful Databases and Services on Financial Assistance
Survey respondents reported various databases and services used by individual OIGs or their agencies to screen financial award recipients. For example, three databases or services that have been helpful in conducting a credit or financial check on an individual or organization connected with a proposed award are: (1) CDB Infotek, (2) Dun & Bradstreet, and (3) Equifax. In addition, the FBI's National Crime Information Center (NCIC) was cited by respondents as a useful tool for conducting criminal checks on individuals or organizations connected with a proposed award. The majority of the respondents also indicated that they or their agency routinely use the GSA's List of Parties Excluded from Federal Procurement or Nonprocurement Programs, more commonly known as the Suspension and Debarment Listing. Finally, the Research and Development in the United States database or "RaDiUS" was also cited as a potentially useful database to OIGs.
CDB Infotek
The Department of Energy's OIG reported that its Office of Investigations uses CDB
Infotek to locate persons in the United States. It also indicated that this service could be
used to screen financial award recipients because CDB Infotek provides its clients the
ability to scan hundreds of databases which includes bankruptcy files, tax liens, judicial
judgments, and professional licensing.
For more detailed information on CDB Infotek's services and products, the CDB Infotek
Home Page address on the Internet is:
http://www.cdb.com/public
Dun & Bradstreet
Both Commerce and State OIGs reported that they use Dun & Bradstreet's (D&B)
Business Background Report for background information about the operations of a
company located in the United States during its prescreening review. For further
information on D&B's services and products, D&B's Home Page address on the Internet
is:
http://www.dnb.com/
Equifax
The Commerce OIG reported that it uses Equifax during its prescreening review of grant
and cooperative applicants for obtaining consumer credit information reports. For further
information on Equifax's services and products, Equifax's Home Page address on the
Internet is:
http://www.equifax.com/
FBI National Crime Information Center (NCIC)
NCIC was created to assist federal, state, and local law enforcement agencies with their
investigations. According to the NCIC, its databases incorporate approximately 17 files
containing more than 10 million records of criminal data. Some of these files include the
Missing Persons File, Foreign Fugitive File, and the Interstate Identification Index
(containing approximately 24 million criminal history records). The database can be used
for virtually any type of investigation.
For example, Commerce OIG checks potential grant and cooperative agreement
applicants against the NCIC to determine if any of the principals affiliated with the
proposed recipient organization have been convicted of or are presently facing criminal
charges or are under investigation for fraud, theft, perjury, or other matters which have
significant impact on questions of management, honesty, and financial integrity. In
addition, the SBA OIG checks its loan and loan guarantee applicants--if they have
indicated on their application that they have a criminal history--against FBI records to
identify any discrepancies between the FBI background check results and the information
provided by the applicant.
GSA's List of Parties Excluded from Federal Procurement or Nonprocurement Programs
(commonly referred to as the Suspension and Debarment Listing)
GSA's Suspension and Debarment Listing provides an up-to-date source of information
on those firms and individuals that have been suspended, debarred, or otherwise excluded
from Federal Procurement and Nonprocurement Programs. According to GSA, it
suspends or debars about 300 individuals and businesses a year. Users of the Listing are
able to conduct a search by name of the excluded firm or individual, and "download"
various reports on excluded parties into other computer systems. Some of the reports
currently available for this purpose are the "Excluded Parties List Reports," the "Excluded
Parties List Supplemental Report," and the "Excluded Parties by State Report." The
reports afford the users the option of accessing "Procurement" data, "Nonprocurement"
data, or "All" data.
The "List of Parties Excluded from Federal Procurement and Nonprocurement Programs"
is published in hard copy and available on the Internet. For further information, GSA's
Suspension and Debarment Listing can be found on the Internet at:
http://policyworks.gov/org/main/mv/mvp.html
RaDiUS
The Critical Technologies Institute created a database of information on the Research and Development activities in the U.S. government called "RaDiUS" (for Research and Development in the United States).(2)
According to the RAND officials, the database
should provide users the capability to identify R&D activities and resources from cabinet-and agency-level budget down to the program, project, and award levels of the various
federal agencies.
The Commerce OIG has recently acquired access to RaDiUS. The DOC OIG believes
that this database, although limited to what individual agencies report as R&D activities,
could potentially be used by its office or other OIGs to (1) determine whether a financial
assistance applicant has been awarded multiple sources of funding for the same or similar
activity, and (2) review the recent funding history for either a recipient or the program.
For further information about RaDiUS, its Home Page on the Internet can be found at:
http://www.rand.org/centers/cti/radius.html
Science Resources Studies
The Science Resources Studies (SRS) is a division of the Directorate for Social,
Behavioral, and Economic Science at the National Science Foundation. The HHS OIG
reported it uses some of SRS's publications and datasets (e.g., Selected Data on
Academic Science & Engineering Research and Development Expenditures) to determine
those colleges and universities that receive the largest amounts of federal research dollars
each year in order to plan its nationwide audits of selected colleges and universities.
HHS also noted that SRS has detailed statistical tables covering federal support to
colleges and universities.
For further information about SRS publications and datasets, its homepage on the Internet
can be found at:
http://www.nsf.gov/sbe/srs/stats.htm
D. Possible Future PCIE Projects
Out of the 22 OIGs responding to the survey, 13 indicated that it would be helpful for them to
have access to a central database or some other mechanism that would enable IGs to cross check
with each other on the reliability of or prior federal government history with specific grant and
loan recipients (see Figure 1).
A few of the OIG comments regarding a central database include the following:
The Corporation for National and Community Service OIG agreed with the premise that
many grantees have other federal grants and, in some cases, have had problems with these
grants. Specifically, they stated that,
"...being aware of these prior problems would have been helpful in
planning the OIG's audit activity. Some of the Corporation's
grantees have accepted mutual terminations or non-renewals rather
than risk suspension or debarment, and the OIG believes other
agencies may find that information useful."
The Department of Defense OIG reported that,
"We believe the establishment of a central database on Federal
recipients would be very beneficial for both pre-award and post-award purposes. Not only would the database assist in identifying
problem recipients, it could be used to identify systemic problems
requiring joint OIG actions."
The Department of Housing and Urban Development OIG pointed out that,
"...while a benefit could conceivably be seen as background to
audit and investigative activities, it is unclear as to whether the
benefit would outweigh the effort to maintain such a system.
Should there be several agencies involved with the same recipients,
the benefit of such a system would certainly go up."
In addition, both the Agency for International Development and the Department of Education's
OIG reported that if contractors with the federal government were included in such a database, it
could provide agencies with greater insight into their federal work history.
Thirteen of the survey respondents (not necessarily the same respondents included above) believe
that the PCIE should undertake a review to determine the feasibility of the Inspector General
community developing an interagency clearinghouse for information on problem grantees and
loan recipients as well as multiple agency funding of grantees and loan recipients. Nine of the
OIG respondents indicated that they would be willing to work on developing such a database.
II. INDIVIDUAL AGENCY RESPONSES TO SURVEY QUESTIONNAIRE ON
PRESCREENING OF GRANT AND LOAN RECIPIENTS
A. Agency for International Development
The U.S. Agency for International Development (USAID) administers grants, loans, loan
guarantees, and cooperative agreements. For fiscal year 1996 this activity totaled approximately
$5.203 billion.
OIG Review
The USAID OIG has 220 employees. The OIG does not routinely review proposed grant
or loan packages prior to an award being made, nor does it routinely review a grantee or
loan recipient after an award has been made. The USAID OIG reported that the basic
reason it does not perform these functions is that it has had to devote its resources to other
priorities.
The USAID OIG believes, however, it would be useful to have access to a database
which would provide information on what other work a contractor has, or has done in the
past, for other federal agencies.
Agency Review
The USAID's grants office conducts certain reviews of its grant applicants including
performing credit checks on applicants and reviewing GSA's Suspension and Debarment
Listing. In addition, the agency's loan office also routinely performs credit checks and
reviews GSA's Listing.
B. Corporation for National and Community Service
The Corporation for National and Community Service (CNS) administers both a grant and cooperative agreement program. For fiscal year 1996, this activity totaled approximately
$421.7 million.
OIG Review
The Corporation's OIG is composed of 15 employees. The OIG does not routinely
review proposed grant packages from the agency prior to the award of any grants or
cooperative agreements, due in large part to its limited staff resources. It does, however,
systematically review grantees after the awards have been made. For instance, it
identifies high risk areas in programs and designs specific tests, identifies common
problem areas found in past reviews and audits and specifically tests for these, and
reviews OMB Circular A-133 single audit reports and underlying work papers as part of
the planning process for a review or audit. By performing reviews of Corporation
grantees, the OIG has been able to recommend the termination and nonrenewal of certain
awards. The OIG has also conducted reviews which resulted in recommendations to
enhance the Corporation's procedures for pre-award assessments of grant applicants.
According to the Corporation's OIG, many of its agency's grantees have other federal
grants and, in some cases, have had problems with prior grants. Its survey response
indicated that being aware of these prior problems would have been helpful in planning
the OIG's audit activity. It also stated that some of the Corporation's grantees have
accepted mutual terminations or nonrenewals rather than risk federal suspension or
debarment, and the OIG believes that other federal agencies may find this information
useful.
Agency Review
The Corporation's grants office performs certain screening of its grant and cooperative
agreement applicants. These actions include a review of the agency's accounts receivable
listings and a review of GSA's Suspension and Debarment Listing. In general, the
Corporation's grants office primarily relies on the applicant to self-report on its financial
capability. However, in response to OIG recommendations, the Corporation's grants
office has developed procedures for pre-award site visits to assess potential grantees'
systems and controls beginning in fiscal year 1998.
C. Department of Agriculture
The U.S. Department of Agriculture (USDA) is composed of 30 agencies that administer various
grant, loan, loan guarantee, and cooperative agreement programs. For fiscal year 1996 this
combined activity totaled over $50.0 billion.
OIG Review
The USDA OIG has 754 employees. The OIG does not routinely review proposed grant
or loan packages prior to the agency approving them, nor does it do so after the award is
made. The OIG stated in its response that USDA has too many grants and loans to look
at them on an individual basis. However, it does periodically audit the systems for grant
and loan making for systemic issues. As a part of these audits, it reviews a sample of
individual transactions.
Agency Review
There are no standard procedures for all of USDA's various grant, loan, loan guarantee,
and cooperative agreement programs. However, most of the grant and loan program
offices do take all or some of the following actions: (1) perform credit checks, (2) review
agency's accounts receivable listings, (3) review suspension and debarment listing, and
(4) coordinate proposed awards with other agencies, if appropriate.
In addition to some of the actions described above, the Food and Consumer Service
(FCS) performs additional prescreening of its proposed recipients for discretionary grants
and cooperative agreements. Specifically, the agency routinely screens applicants for
both "responsiveness" and "responsibility."
Responsiveness screening evaluates the material provided during the application process
including: (1) drug-free workplace certification, (2) anti-lobbying certification, (3)
general assurances certification, and (4) all standard application forms. The FCS
responsibility screening evaluates specific information dealing with the applicant's
professional and financial suitability for the grant. The evaluation includes screening
client supplied information on past performance, an evaluation of the applicant's ability
to meet accounting standards and assure proper funds management, and an evaluation of
the applicant's financial ability to support the effort associated with the grant.
Discretionary grant awards provided by the Grants Management Division are also
screened using the criteria noted above for the initial responsiveness screening.
Responsibility screening is performed when warranted as the applicants are generally
small private and public nonprofit organizations and the FCS grant awards are generally
small. Irregularities in the material provided by these nonprofit organizations would
prompt further screening and checks.
In addition, the Alternative Agricultural Research and Commercialization Corporation, a
wholly-owned government corporation of the USDA, has its Board of Directors,
appointed by the Secretary of Agriculture, provide peer reviews of commercial viability
for all of its proposed cooperative agreements.
D. Department of Commerce
The Department of Commerce (DOC) administers various grant and cooperative agreement
programs within its bureaus such as the Economic Development Administration, International
Trade Administration, Minority Business Development Agency, National Oceanic and
Atmospheric Administration, and the National Institute of Standards and Technology. For fiscal
year 1996 this activity totaled approximately $1.12 billion.
OIG Review
The DOC OIG has approximately 203 employees. The Office of Audits, in conjunction
with the Office of Investigations, routinely reviews proposed grant and cooperative
agreement applicants and awards from the various DOC bureaus prior to the grants
officer approval.
Upon receipt of a notice of a proposed financial award, the Office of Audits takes a number of actions to prescreen a recipient including (1) reviews completed audit and inspection reports and investigative files for negative findings on the proposed recipient,
(2) discusses ongoing audit and/or inspection work for proposed recipient with OIG
project leader to ascertain potential problems that need consideration, (3) makes inquiries
into the financial status of an individual and/or organization using either D&B or Equifax
Reports to determine credit worthiness, and (4) uses all information received to evaluate
the ability of the proposed recipient to properly administer federal funds.
The Office of Investigations also conducts a "name check" for all key personnel of proposed financial assistance recipients using the FBI's NCIC.(3) The agency program officer is responsible for initiating the "name check" process and the OIG is responsible for performing the name check review and informing the grants officer of the results. When significant adverse information is revealed as a result of the name check review, the grants officer is responsible for consulting with the program officer and the OIG prior to making a final determination on the award.
On occasion and at the discretion of the grants officer, key individuals associated with the
recipient organization may be required to submit an "Applicant Fingerprint Card" in order
to access FBI files not available through the standard "name check" process. Submission
of fingerprints ensures that a person on whom a criminal history check is being requested
does not avoid detection by name change or ensures that key individuals are not
incorrectly identified with a criminal record through the standard "name check" process.
If the FBI "name check" is not completed prior to the award, the award is made with a
condition specifying that an adverse name check may result in termination of the award.
Overall, the pre-award process has been successful in identifying potential recipients who
have unresolved audit problems, owe money to Commerce, have a criminal history,
and/or have experienced internal management or performance problems which could
impact negatively on the effectiveness of grant projects financed by the Department.
Using the prescreening information, the OIG is able to recommend corrective action
before an award is made or renewed. Recommendations to program and grant officials
address whether the agency should deny, delay, condition, or unconditionally approve the
award. For recipients with adverse information in their file, the OIG usually recommends
special award conditions, such as the recipient be placed on "reimbursement only"
method of payment. Payment of outstanding debts (or entering into a payment plan) has
also been required before new awards can be made.
The OIG's response to the survey indicated that its pre-award screening process provides them with excellent results. Specifically, the DOC OIG--through this process--has been able to identify potential problem recipients which enabled it to recommend corrective action before an award was made.
The DOC OIG does not routinely review its grantees after awards have been made.
However, the OIG reported that it does perform accounting system surveys on a
reimbursable basis for all recipients of NIST technology assistance program funds. The
OIG also reported that it performs interim and final audits on an "as needed basis" when
problems are brought to its attention. Moreover, the OIG indicated that some of the
successful outcomes of these reviews include placement of award conditions on pending
or future awards, nonrenewal of current awards, and recovery of funds improperly spent.
Agency Review
The grants administration official for each bureau within the DOC is responsible, at a
minimum, for conducting the following reviews on its financial assistance applicants: (1)
credit checks on applicants, (2) review of agency's accounts receivable listings, and (3)
review of GSA's Suspension and Debarment Listing. In addition, the program official
may coordinate proposed awards with other agencies having similar programs. For
example, NOAA's Office of Global Programs coordinates its financial assistance awards
with the National Science Foundation.
Prior to making awards, the grant official must also certify that the Office of General
Counsel reviewed the award, and that it addressed the OIG's concerns resulting from its
above mentioned review of outstanding audit, investigative, or name check findings.
E. Department of Defense
The Department of Defense (DOD) administers both grants and cooperative agreements. For fiscal year 1996 this activity totaled approximately $2.5 billion.
OIG Review
The DOD OIG is comprised of 1,356 employees. The DOD OIG does not routinely
review proposed grant packages prior to an award being made. The DOD OIG does,
however, perform periodic quality control reviews of independent audit work performed
at its cognizant and oversight institutions. The quality control reviews ensure effective
audits are performed of recipients of federal financial assistance and that federal awards
are being managed in compliance with applicable laws and regulations. The DOD OIG
also performs programmatic audits of the procurement process which include
procurements applicable to financial assistance programs.
Agency Review
Prior to awarding a grant, the DOD grants officer verifies that all required financial
performance reports on previously awarded grants have been received. If there are
delinquent reports, the institution is notified that the new award will be withheld until all
required delinquent reports have been received. Other actions that the grant offices
perform for proposed grants or cooperative agreements include (1) reviewing GSA's
Suspension and Debarment Listing, (2) coordinating proposed awards with other
agencies, if appropriate, and (3) obtaining DOD's Office of General Counsel clearance.
When DOD is the federal government agency responsible for indirect cost negotiation for
a university, it reviews the indirect cost proposal to ensure that costs are allocable,
allowable and reasonable. The DOD also uses the Defense Contract Audit Agency to
conduct audits at DOD cognizant and oversight institutions to determine that costs
claimed on DOD awards comply with applicable government regulations and grant
agreements.
F. Department of Education
The Department of Education has grant, loan, loan guarantee, and cooperative agreement programs. For fiscal year 1996 this activity totaled approximately $34 billion.
OIG Review
The Department of Education OIG is composed of 280 employees. The OIG does not
routinely review proposed grant packages prior to an award being made, nor does it
routinely review a grantee after an award has been made. The Department of Education's
OIG response stated that due to the nature of entities receiving awards, and the eligibility
requirements applicable to individual recipients of Department of Education funds, the
OIG does not have or use any prescreening process. The recipients of their funds
primarily include state or local governmental entities, nonprofit entities, or student
applicants for Pell grants and loans to attain postsecondary education.
Agency Review
The Department routinely conducts reviews of applications submitted by the entities
applying for funds under the various Department of Education programs. The
Department uses a certification process to prescreen schools participating in the student
financial aid program on a four-year cycle. For institutions that do participate in the
student financial aid program, the program office reviews the GSA's suspension and
debarment listing and the entities are subject to annual program audit requirements. Pell
grants are awarded to students who apply and meet eligibility requirements based on need
and other federal student financial assistance requirements. The Pell grant and student
financial aid recipients are screened using an internal database to match Social Security
Numbers, determine Selective Service Registration status, and prior student loan history.
In addition, entities receiving grants and loans are also subject to the OMB Circular A-133 single audit requirement and program specific audit requirements.
The Department relies on state guaranty agencies to guarantee loans made available by
private lenders to students for postsecondary education, and the Department reinsures the
loans guaranteed by the guaranty agencies.
G. Department of Energy
The Department of Energy (DOE) administers both grants and cooperative agreements. During
fiscal year 1996 these activities totaled approximately $1.5 billion.
OIG Review
The DOE OIG has 248 employees. The DOE OIG's response indicated that it does not
review proposed grant packages prior to an award being made, nor does it review a
grantee after an award has been made. The OIG informed us that they do not see a need
to conduct these reviews at this time and that such reviews are the responsibility of the
program offices. However, the OIG did agree that it would be helpful to have access to a
central database or some other mechanism that would enable IGs to cross check grant and
loan applicants.
Agency Review
The DOE's grants office routinely performs several reviews to screen its financial
assistance applicants including: (1) conducts credit checks on applicants, (2) reviews
GSA's Suspension and Debarment Listings, and (3) obtains clearance from the Office of
General Counsel.
H. Department of Health and Human Services
The Department of Health and Human Services (HHS) administers grants, loans, loan
guarantees, and cooperative agreements. During fiscal year 1996 these activities totaled
approximately $15.5 billion (approximately 4 percent of HHS budget).
OIG Review
The HHS OIG has 1,095 employees. The OIG's survey response indicated that it does
not routinely review proposed grant or loan packages prior to an award being made, nor
does it routinely review a grantee or loan recipient after an award has been made. The
HHS OIG said that the best use of its audit resources is to (1) rely to the maximum extent
possible on the single audit for coverage of these activities, then (2) provide focused audit
work on financial assistance programs on a request basis. For instance, when requested
by the program office, the OIG will conduct assessments of new organizations having
little or no experience managing federal funds. These assessments, formally called
recipient capability audits, determine the adequacy of each organization's accounting and
administrative systems and its financial capabilities to satisfactorily manage and account
for federal funds.
Agency Review
HHS's grant offices routinely perform several reviews to screen its financial assistance
applicants including reviewing the agency's accounts receivable listing and the GSA
Suspension and Debarment Listing. HHS program or grant offices also coordinate
proposed awards with other agencies. For example, HHS, primarily through the National
Institutes of Health, participates in the SBA Small Business Innovative Research program
and will contact the SBA to ensure that scientific research and development projects
funded by one agency will not be duplicated by the same small business using funds from
another federal agency.
In addition, the Assistant Secretary for Management and Budget maintains an Alert List,
which is shared electronically with each HHS program office. The Alert List includes
grantees that are at risk for poor performance, instability, inadequate management
systems, and noncompliance with previous awards. For the Alert List to remain current,
the OIG encourages the program offices to refer to the List, monitor grantee
improvement, assess at the conclusion of a corrective action period whether the grantee
warrants removal from the Alert List, and notify the HHS Office of Management and
Budget when the grantee should be removed from the List.
I. Department of Housing and Urban Development
The Department of Housing and Urban Development (HUD) administers grants, loans, loan
guarantees, and cooperative agreements. HUD programs do not normally involve direct contact
with the ultimate beneficiary (tenants, mortgagors, borrowers) of the award. HUD's funds are
administered through intermediaries, such as public housing authorities, state and local
governments, and nonprofit organizations. During fiscal year 1996 these activities totaled
approximately $4.47 billion.
OIG Review
The HUD OIG has 541 employees. The OIG's survey response indicated that it does not
routinely review proposed grant or loan packages prior to an award being made, nor does
it routinely review a grantee or loan recipient after an award has been made.
Agency Review
If applicable, intermediaries, such as the public housing authority or state and local
governments, are expected to perform credit checks on recipients. The names of
applicants for some HUD funding are checked against GSA's Suspension and Debarment
Listing. This check is in the form of a certification on an Application for Federal
Assistance. In addition, the Office of General Counsel provides advice to program
managers upon request, and the OIG, upon request, checks names against its own records
of internal audit and investigative activities.
J. Department of the Interior
The Department of the Interior (DOI) administers grants, cooperative agreements, and loan guarantees. During fiscal year 1996 these activities totaled approximately $1.158 billion.
OIG Review
The DOI OIG has 248 employees. The OIG's survey response indicated that it does not
routinely prescreen the DOI's grants, cooperative agreements, or loan guarantees because
they are given primarily on a nondiscretionary basis to state and local governments,
Native American tribes, and insular area governments. The response also indicated that
although the OIG does not routinely review grantees or cooperative agreement recipients
after awards have been made, it will perform such reviews at the request of the DOI
bureaus and offices. In addition, the OIG routinely allocates time in its Annual Audit
Workplan to review DOI grant, cooperative agreement, or loan guarantee program
recipients.
Agency Review
The DOI reports that it does not routinely perform any prescreening of grant, cooperative
agreement, or loan guarantee applicants to "screen out" recipients because the awards are
primarily given on a nondiscretionary basis to state and local governments, Native
American tribes, and insular area governments. However, DOI program offices perform
numerous reviews of the awards to ensure that funds will be used efficiently and for the
purposes intended. For example, the U.S. Fish and Wildlife Service Regional Directors
are responsible for ensuring that each grant's proposed projects meet eligibility
requirements for approval. In addition, the DOI relies on financial institutions to perform
credit and other checks before loan guarantees are made.
K. Department of Justice
The Department of Justice (DOJ) administers both grants and cooperative agreements. During
fiscal year 1996, these activities totaled approximately $1.447 billion.
OIG Review
The DOJ OIG had 471 full-time equivalent positions at the close of fiscal year 1997. The
OIG's survey response indicated that it does not routinely prescreen grants or cooperative
agreements. However, it has occasionally assisted program offices, upon request, by
reviewing application packages before the award has been made. The DOJ OIG stated
that it does not routinely prescreen applications for grants and cooperative agreements
because the primary responsibility for such examinations is appropriately placed with the
Department's grant program officials who must approve or deny the applications.
Although the DOJ OIG does not prescreen all awards, its annual workplan routinely
includes a limited number of post-award grant reviews. During these reviews, the OIG
examines various periodic financial and programmatic progress reports completed by the
award recipient. Its reviews have successfully (1) identified questionable costs and
recovered funds, (2) identified and deobligated excess funds, and (3) identified and
reduced excessive per diem rates for federal inmates housed in nonfederal facilities.
Agency Review
The Office of Justice Programs routinely performs several reviews to screen its financial
assistance applicants including: (1) credit checks on applicants, (2) reviews of the
agency's accounts receivable listing, (3) reviews of GSA's Suspension and Debarment
Listings, (4) coordination of proposed awards with other agencies, and (5) Office of
General Counsel clearance. The program office also performs a financial cost analysis
which tests for reasonableness, allowability, and appropriateness.
L. Department of Labor
The Department of Labor (DOL) administers both grants and cooperative agreements. During fiscal year 1996 these activities totaled approximately $4.537 billion.
OIG Review
The DOL OIG has 434 employees. The OIG's Office of Investigations routinely screens
grant applications to determine whether they have an ongoing investigation related to the
applicant. The investigative unit reports back to the program agency whether or not the
applicant is the subject of an ongoing investigation. In addition, program agencies also
inquire as to whether the OIG has any information available from an ongoing audit that
they should consider in making their award decisions. By immediately notifying the
grant officer when problems are noted during a grant audit, DOL OIG enables the grant
officer to take effective and timely corrective action that has prevented the misspending
of government funds.
The OIG does not routinely review a grantee after an award has been made. Upon request
from a program agency, the OIG will conduct vulnerability assessments to identify
potential problem grantees. These assessments are the basis for selecting the grantees
they audit. The OIG reported that it pays close attention to awards to smaller
organizations that may not have adequate internal controls. In addition, as staff resources
permit, the OIG conducts audits of direct and indirect costs incurred.
The DOL OIG reported that its audits have resulted in termination of current awards;
however, termination is not always a cost effective solution. As a result of its audits, the
grant officer may impose special conditions on the grantee for the remaining grant period
and then not renew the option year. Also, the OIG may recommend that the grantee enter
into an advance agreement with the Office of Cost Determination detailing exactly what
will be allowable or unallowable costs. The DOL OIG stated that the key to a successful
outcome is to work closely with the grant officer to identify problems early during the
grant period and prevent misspending of government funds.
Agency Review
The Department of Labor's program offices routinely perform a responsibility review for each financial assistance applicant including: (1) credit checks on applicants, (2) review of the agency's accounts receivable listings, (3) review of the financial viability of the potential award recipient, (4) review of GSA's Suspension and Debarment Listing,
(5) coordination of proposed awards with other agencies with similar programs, (6)
Office of General Counsel clearance, and (7) OIG clearance.
M. Department of State
The Department of State (DOS), including the United States Information Agency, administers
both grants and cooperative agreements. For fiscal year 1996, this activity totaled approximately
$861 million.
OIG Review
The DOS OIG has 305 employees. The OIG does not routinely review proposed grant or
cooperative agreement packages prior to the agency approving the award. However, the
OIG does conduct pre-award surveys for first-time recipients of financial assistance prior
to a disbursement of funds. This assessment is done through questionnaires, desk reviews
of financial reports, and on-site reviews.
In addition, the OIG routinely conducts post-award, on-site audits of high risk grantees
after the completion of the program. Some of the successful outcomes of these reviews
include reimbursement of questioned costs, placement of grantee on the GSA Suspension
and Debarment Listing, or referral to the OIG's Office of Investigations or the
Department of Justice.
Agency Review
There are various actions taken by the DOS's program offices prior to issuance of an
award. These actions include (1) performing a credit check on the applicants, (2)
reviewing the agency's accounts receivable listing, (3) reviewing GSA's Suspension and
Debarment Listing, and (4) obtaining a clearance from the Office of General Counsel.
N. Department of Transportation
The Department of Transportation (DOT) administers grants, loans, loan guarantees, and cooperative agreements. For fiscal year 1996, this activity totaled approximately
$24.822 billion.
OIG Review
The DOT OIG has 440 employees. The OIG does not routinely review proposed grant
packages prior to an award being made, nor does it routinely review a grantee after an
award has been made. OIG officials informed us that due to the fact that the majority of
DOT recipients are state and municipal agencies, they do not see a need to review them.
In addition, the DOT OIG relies on single audits conducted by Independent Public
Accountants for post-award audits.
Agency Review
The vast majority of DOT grantees and cooperative agreement recipients are state and
local governments. Therefore, according to DOT's response, the usefulness of credit
checks and GSA's Suspension and Debarment Listing is limited. However, the grants
offices do coordinate with other agencies, as appropriate, such as the Departments of
Defense and Education.
There are various actions taken by DOT's loan office prior to issuance of an award
including (1) performing credit checks on applicants, (2) reviewing agency's accounts
receivables listings, (3) reviewing GSA's Suspension and Debarment Listing, (4)
coordinating proposed awards with other agencies, and (5) obtaining clearance from the
Office of General Counsel. DOT also administers a Loan Guarantee Program (through
the Maritime Administration) that routinely performs prescreening of applicants. In
addition, the Office of Small and Disadvantaged Business Utilization administers an
indirect loan program that relies on four selected banks to prescreen program applicants.
O. Department of the Treasury
The Department of the Treasury (Treasury) has very few grant and loan programs. The grant and
loan program that has received the most attention recently is the Community Development
Financial Institutions (CDFI) Fund, which was created by Public Law 103-325, the Riegle
Community Development and Regulatory Improvement Act of 1994. According to the OIG, the
Fund is a new activity for Treasury and the first mandated grant and loan program in the
Department. It was placed within Treasury by Public Law 104-19, in 1995.
OIG Review
The Department of Treasury OIG is comprised of approximately 260 employees. At the
present time, the OIG does not prescreen grant and loan applicants since grant and loan
programs do not constitute a major activity in the Department of Treasury. In the case of
the CDFI Fund, the OIG is auditing the program.
Agency Review
The Department's review of grant and loan applicants under the CDFI Fund includes only
a review of GSA's Suspension and Debarment Listing. Again, the Department's OIG
points out that the CDFI Fund is a new activity for Treasury and its review processes are
evolving.
P. Department of Veterans Affairs
The Department of Veterans Affairs (VA) only administers grants to state agencies. During
fiscal year 1996 this activity totaled approximately $48.4 million.
OIG Review
The VA OIG currently averages 340 employees. The OIG does not routinely review
proposed grant packages prior to an award being made, nor does it routinely review a
grantee after an award has been made.
Agency Review
The VA does not perform any reviews of state agencies prior to disbursing its grants.
Q. Environmental Protection Agency
The Environmental Protection Agency (EPA) awards grants and cooperative agreements to help
it accomplish its environmental mission. EPA makes awards to state, local, and tribal
governments, universities, and nonprofit recipients. For fiscal year 1996, these activities totaled
approximately $3.54 billion.
OIG Review
The EPA OIG has 351 employees. The OIG has not placed special emphasis on the pre-award review of potential recipients of grants and cooperative agreements. However,
because of the continuing large dollar amounts represented by assistance agreements in
EPA's budget and the importance of these agreements to the overall mission
accomplishment, the OIG does audit both financial and performance aspects of assistance
agreements. In the future, the OIG intends to build on the Single Audit and focus its
efforts on the larger, higher risk programs that constitute 70 percent of the total financial
assistance budget. Its survey response also indicated that their long audit history with
certain large grantees, in particular, has identified problem areas for EPA corrective
action, including the inclusion of special grant conditions in assistance agreements.
Agency Review
EPA's grants office routinely performs several reviews to screen its financial assistance
applicants including: (1) review of GSA's Suspension and Debarment Listing, (2)
coordination of proposed awards with other agencies with similar programs, and (3)
clearance from the Office of General Counsel.
R. Federal Emergency Management Agency
The Federal Emergency Management Agency (FEMA) administers grants, loans, and cooperative agreements. During fiscal year 1996 these activities totaled approximately
$3.041 billion.
OIG Review
The FEMA OIG has 55 employees. The OIG's survey response indicated that it does not
routinely review proposed grant packages prior to an award being made, nor does it
routinely review a grantee after an award has been made. FEMA OIG explained that it
does not do such screening or monitoring because of its limited resources.
Agency Review
The only review FEMA's loan office routinely performs is a check of the agency's
accounts receivable listings for all of its loan applicants.
S. National Aeronautics and Space Administration
The National Aeronautics and Space Administration (NASA) administers both grants and cooperative agreements. For fiscal year 1996, these activities totaled approximately
$591.8 million.
OIG Review
The NASA OIG has 188 employees. The OIG's survey response indicated that it does not routinely review proposed grant or loan packages prior to an award being made. The NASA OIG reported to us that there are too many grants and cooperative agreements for it to review each one. However, when contacted by program officials for information on potential recipients, the OIG's Office of Investigations does provide pertinent and releasable information using commercial databases and internal OIG indices on potential awardees to the appropriate NASA official. The NASA OIG will periodically perform audits and investigations of specific grants and cooperative agreements. In addition, pursuant to an agreement between the HHS OIG and the NASA OIG, HHS OIG conducts audits of NASA grants and cooperative agreements to educational and other nonprofit institutions and provides the audit reports to the NASA OIG.(4) The NASA OIG then reviews the audit reports and any significant issues are referred to NASA management.
Agency Review
The NASA program offices routinely perform reviews to screen its grant applicants, including: (1) a review of GSA's Suspension and Debarment Listing and
(2) coordination of proposed awards with other agencies, if appropriate.
T. Nuclear Regulatory Commission
The Nuclear Regulatory Commission (NRC) administers only grants. For fiscal year 1996, this
activity totaled approximately $1.462 million. NRC's grants are made to nonprofit
organizations, institutions of higher education, state and local governments, and professional
organizations.
OIG Review
The NRC OIG has 44 employees. The OIG does not routinely review proposed grant
packages prior to an award being made, nor does it routinely review a grantee after an
award has been made. The NRC OIG does not feel that this activity is a material issue for
its agency due to the small number of grants awarded by NRC to well-established entities.
Agency Review
The NRC's Office of Administration, Division of Contracts, routinely takes several
actions to screen its grant applicants including: (1) reviews GSA's Suspension and
Debarment Listing, (2) coordinates proposed awards with other agencies with similar
programs, if appropriate, and (3) ensures review of the proposed award by the Office of
General Counsel. In addition, the Division of Contracts routinely reviews a grantee after
the award has been made. This review includes obtaining and reviewing monthly
invoices for completeness, accuracy, and evidence of appropriate approvals.
U. Small Business Administration
The Small Business Administration (SBA) administers grants, loans, loan guarantees, and
cooperative agreements. For 1996, these activities totaled approximately $462.4 million.
OIG Review
The SBA OIG has 102 employees and another 16 employees on temporary appointments
for the conduct of disaster assistance oversight. The OIG does not routinely prescreen its
loan applicants for criminal backgrounds unless the applicant admits on the required
"Statement of Personal History," Form 912, that he/she has a criminal record. The loan
applicants who admit to a criminal history must provide fingerprint cards and details of
their offense. With the submission of the fingerprint card, the FBI can verify the identity
of the applicant against FBI records and provide the OIG with a report of all criminal
offenses associated with that applicant. SBA program officials make the final decision to
approve or decline the loan based upon the severity of the crime and when it occurred.
The SBA OIG reports that the success rate for this oversight activity is high, but, at the
moment, the review is limited to cases where the applicant acknowledges a criminal
history on the Form 912.
The SBA OIG also does not routinely review recipients' criminal background after an
award has been made; however, it conducted two random sample reviews which found
instances where significant numbers of applicants failed to disclose their prior criminal
records. The first OIG review--restricted to defaulted loans--showed that 12 percent of
loan recipients failed to disclose criminal histories on their applications. This resulted in
several indictments and efforts to recover funds for the Government. The results were
reported in the Wall Street Journal and featured both on ABC and NBC Network News.
The second review--including all SBA loan guarantees--showed that almost 8 percent of
loans that were either charged off or in liquidation were associated with borrowers with
undisclosed criminal records; however only three percent of the performing loans were
associated with borrowers with such records. As a result of these two reviews, the OIG is
about to begin random post-award checks on recipients to determine whether applicants
are disclosing their criminal history, and OMB recently approved adding a statement to
SBA's Form 912 notifying applicants that they may be subject to a criminal history
check. Finally, the Inspector General has proposed that the Agency adopt a policy of
conducting criminal history checks on all of its loan guarantee applicants. This proposal
is currently under consideration by the SBA Administrator.
Agency Review
SBA's grant and loan offices take various precautions prior to awarding proposed grants,
cooperative agreements, loans, and loan guarantees. For grant packages, the agency
checks the GSA Suspension and Debarment Listing and obtains SBA's Office of General
Counsel approval. Cooperative agreements are also submitted to the Office of General
Counsel for a legal sufficiency review before final approval, and all proposed awards to
Small Business Development Centers are cleared with the appropriate state government
to avoid duplication of awards.
For direct loans, credit checks are performed and the applicant's name is screened
against SBA's Portfolio Management Query Database (PMQD) to determine the status of
any past SBA loans. In addition, SBA's Disaster Assistance program coordinates its
efforts with the Federal Emergency Management Agency to avoid duplication of benefits
and avoid redundant application information.
Loan guarantees are originated by private lenders, who are responsible for performing
credit checks. A summary of these checks is submitted to SBA for review and approval.
SBA's review includes a PMQD check and, if the applicant has indicated on the
application that he/she has previously applied for or received a government loan, the
status of the prior loan is checked with the cognizant agency. Lenders who hold a
"preferred" status are responsible for their own legal reviews and are not required to wait
for the SBA to screen the applicant against the PMQD system.
SBA recently instituted a new procedure to help verify financial data provided by its loan
and loan guarantee applicants. All applicants must now sign a release form giving SBA
(or its guaranteed lenders) authority to obtain Internal Revenue Service (IRS) tax return
data to verify that the tax and financial information provided by the applicant is accurate.
To date, the Agency's tax return verification policy has identified over 1100 applicants
who have submitted false tax returns and an additional 1225 individuals who have been
referred to the IRS as "non-filers." Since October 1994, the OIG has received allegations
from the agency against 559 individuals with requested loan amounts totaling $32.6
million. Most of that amount was not disbursed as a result of the verification process.
V. Social Security Administration
The Social Security Administration (SSA) is not involved in any loan or loan guarantee activity,
but it does administer grants and cooperative agreements. Cooperative agreements are used
when a determination is made that a grantee should be required to operate under stricter
conditions. In these cases, a grant would be converted to, or renewed as, a cooperative
agreement. During fiscal year 1996, about $5-6 million was budgeted for both grants and
cooperative agreements.
OIG Review
The SSA OIG has 344 employees. The OIG does not routinely review proposed grant or
cooperative agreement packages prior to the agency approving the award. In addition, it
does not routinely review a recipient after an award has been made. The SSA OIG stated
that it does not conduct such screenings because of its limited resources, the relatively
small number of grants and cooperative agreements, and the lack of indications of
problems with them.
Agency Review
There are various actions taken by the SSA Grants Management Team prior to issuance
of an award. These actions include performing credit checks on the applicants, reviewing
SSA's accounts receivable listing, and reviewing GSA's Suspension and Debarment
Listing. SSA also coordinates its proposed awards with other agencies, if appropriate.
For example, because SSA recently became independent from the HHS, SSA cross-checks its applicants with HHS.
In addition, the SSA Grants Management Team reviews each new potential grantee (via
questionnaire) to determine the adequacy of its financial management system. Each
grantee is asked to provide data on the source of its other Federal support and other
revenues, its accounting resources, the nature of its accounting system and related
documentation, budgetary controls, legal liabilities, audits of financial records, and
knowledge of SSA grant payment procedures. The team also reviews a firm's prior audit
reports which it receives from the grantee.
CONCLUSIONS
Although the majority of PCIE Inspectors General who participated in our survey reported they do not have an active prescreening process for proposed grants and loans prior to their agency approval of the awards, as we analyzed their responses and held numerous follow-up discussions with many OIG contacts, we found strong support among the Inspectors General for greater coordination regarding the identification of problematic recipients of federal financial assistance.
Toward that end, we recommend that the PCIE undertake a review to determine the feasibility of
the Inspector General community developing an interagency clearinghouse to facilitate the
exchange of information on problem grantees and loan recipients.(5) As a part of the review, the
PCIE also may wish to consider a central database incorporating all federal grant and loan
recipients, and possibly even federal contractors, to enable agencies to determine whether the
recipient of an award is receiving multiple agency funding for a similar program.
In the interim, because most Office of Inspectors General rely heavily on their agencies' program
or grant offices to prescreen grant, cooperative agreement, loan, and loan guarantee applicants,
the Inspectors General, as appropriate, may want to review their agencies pre-award screening
activities for these financial awards to determine the efficiency and effectiveness of this process.
APPENDIX 1
Glossary of Definitions
Award. A grant, loan, loan guarantee, or cooperative agreement used by a federal
agency to engage the services of a non-federal entity to carry out a governmental
responsibility or to achieve some purpose.
Cooperative Agreement. The legal instrument reflecting a relationship between
the federal government and a recipient whenever: (1) the principal purpose of the
relationship is to provide financial assistance to the recipient and (2) substantial
involvement is anticipated between the executive agency and the recipient during
performance of the contemplated activity.
Grant. The legal instrument reflecting a relationship between the federal
government and a recipient whenever: (1) the principal purpose of the relationship
is to provide financial assistance to the recipient and (2) no substantial
involvement is anticipated between the executive agency and the recipient during
performance of the contemplated activity.
Note: For the purpose of this review, we did not include data on Block
Grants. This survey only covered discretionary grants.
Loan. Financial assistance provided through the lending of federal monies for a
specific period of time, with a reasonable expectation of repayment. Such loans
may or may not require the payment of interest.
Loan Guarantee. Program in which the federal government makes an
arrangement to indemnify a lender against part or all of any defaults by those
responsible for repayment of loans.
Financial Assistance. A transfer of money, property, services or anything of
value to a recipient in order to accomplish a public purpose of support or
stimulation which is authorized by federal statute.
APPENDIX 2
1. These nine agencies are: the Central Intelligence Agency, Federal Bureau of Investigation, Federal Deposit Insurance Corporation, General Services Administration, Office of Government Ethics, Office of Management and Budget, Office of Personnel Management, Office of Special Counsel, and the Railroad Retirement Board.
2. The Critical Technologies Institute (CTI) is a federally funded research and development center within the RAND Corporation. CTI operates under a contract administered by the National Science Foundation.
3. The FBI name check is not conducted for universities or state and local governments.
4. This agreement is in conjunction with the Single Audit Act.
5. As a part of any feasibility study, the PCIE should consider any legal questions associated with
constructing and deploying a multiple-user database of problematic recipients of federal financial assistance. The
PCIE should also work closely with the various federal grant and program offices in conducting the review.
APPENDIX 2
President's Council on Integrity and Efficiency
Inspection and Evaluation Committee
______________________________________________________________________________
SURVEY OF INSPECTORS GENERAL
PRESCREENING OF
FEDERAL GRANTS, LOANS, AND COOPERATIVE AGREEMENTS
Introduction
The President's Council on Integrity and Efficiency's (PCIE) Committee on
Inspection and Evaluation is conducting a review to identify "best practices"
used by individual Inspectors General and their agencies to help combat fraud,
waste, and abuse in the award of federal discretionary grants, loans, loan
guarantees, and cooperative agreements.
The purpose of this survey questionnaire is to compile an inventory of
successful techniques, practices, and procedures used by Inspectors General and
their agencies' grant and loan offices to identify and screen out potentially
problematic recipients of federal grants, loans, loan guarantees, or cooperative
agreements before they receive federal funding. By highlighting the best
practices used--especially those within the OIG community--the report will
provide individual Inspectors General (and their respective agencies) ideas and
opportunities to incorporate successful and applicable practices into their review
procedures for federal assistance projects.
Your participation in this survey is essential for us to present the most
comprehensive Best Practices Guide on Prescreening of Federal Grants,
Loans, and Cooperative Agreements to the IG community. We appreciate your
cooperation.
Instructions
Please attach additional explanation sheets, as necessary. We ask that you
return the completed survey in the enclosed envelope by July 15, 1997. The
return address is:
Ms. Jennifer Hathaway
Department of Commerce/Office of Inspector General
Room 7886-B
14th & Constitution Ave., NW
Washington, D.C. 20230
If you prefer, we can send you a copy of the questionnaire in an electronic format. If you have any questions, please contact Jennifer Hathaway at (202) 482-3089 or via E-mail: Jhathawa@doc.gov.
Definitions
Award. A grant, loan, or cooperative agreement used by a federal agency to
engage the services of a non-federal entity to carry out a governmental
responsibility or to achieve some purpose.
Cooperative Agreement. The legal instrument reflecting a relationship between
the federal government and a recipient whenever: (1) the principal purpose of
the relationship is to provide financial assistance to the recipient and (2)
substantial involvement is anticipated between the executive agency and the
recipient during performance of the contemplated activity.
Grant. The legal instrument reflecting a relationship between the federal
government and a recipient whenever: (1) the principal purpose of the
relationship is to provide financial assistance to the recipient and (2) no
substantial involvement is anticipated between the executive agency and the
recipient during performance of the contemplated activity.
Note: For the purpose of this review, we request that you do not provide data on Block
Grants.
Loan. Financial assistance provided through the lending of federal monies for a
specific period of time, with a reasonable expectation of repayment. Such loans
may or may not require the payment of interest.
Loan Guarantee . Program in which the federal government makes an
arrangement to indemnify a lender against part or all of any defaults by those
responsible for repayment of loans.
Financial Assistance. A transfer of money, property, services or anything of
value to a recipient in order to accomplish a public purpose of support or
stimulation which is authorized by federal statute.
Background
Agency:_________________________________________________________
OIG Contact Name:________________________Title:___________________
Office of Contact:
Audits Investigations
Inspections/Evaluations Other: (Please
Specify)__________
Phone Number:____________________FaxNumber:_____________________
E-mail Address:___________________________________________________
Total Number of Employees in the OIG:_______________________________
Does your agency award any of the following:
(Check all that apply.)
Grants
Loans
Loan Guarantees
Cooperative Agreements
If you checked any of the boxes, please proceed with the questionnaire.
[Note: Hereafter all references to "grants and loans" will include
grants, loans, loan guarantees, and cooperative agreements.]
If your agency does not award any of the above types of financial
assistance, do not continue. Thank you very much for your help.
Please return this questionnaire so that we can make sure we are
counting your response in our overall assessment.
What was your agency's total budget appropriation for the following activities
in FY 1996 (budget estimates are adequate):
Grants: __________________________________________
Loans: __________________________________________
Loan Guarantees: __________________________________________
Cooperative Agreements: __________________________________________
OIG Techniques and Practices: Pre-Award Review
1a. Does your IG office routinely review proposed grant packages or
awards from your agency prior to the agency approving the grant in
order to raise appropriate questions about the suitability of an applicant
(e.g., provide information on whether or not the applicant has
unresolved audit or inspection findings and recommendations on earlier
awards or identify multiple agency funding)?
Yes
No
1b. Review loan applicants?
Yes
No
1c. Review loan guarantee applicants?
Yes
No
1d. Review cooperative agreement applicants?
Yes
No
2. If you answered yes to any of the questions above, which units within
your IG office are involved in the review process? (Check all that
apply.)
Audits Investigations
Inspections Other (Please Specify.)_______________
3a. If your office does have a review process in place prior to the issuance
of an award, does it include conducting a credit or financial check on
the individual or organization connected with the proposed award?
Yes
No
Please check which of the following your offices uses.
____Dun & Bradstreet
____Equifax
____TRW
____Others (Please specify.) ________________________________
________________________________
3b. If your office does have a review process in place prior to the issuance
of an award, does it include conducting a criminal check on the
individual or organization connected with the proposed award?
Yes
No
If yes, please list the types of checks in the space below (e.g., FBI).
_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
3c. Please describe your review process for each type of award, including a
description of the nature and purpose of any reviews your office
conducts.
Grants:*
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Loans:*
__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Loan guarantees:*
_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Cooperative Agreements:*
_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
*Please attach/provide any written directive, policies, guidelines, or procedures that
your offices uses.
4a. What does your office do with the results of negative name checks?
Please describe any practices and techniques your office uses to
prevent or condition awards being made to recipients who have a
history of financial, performance, or management problems (e.g.,
placing conditions on the award).
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
4b. On a scale of 1-5, how successful has your office been in stopping or
conditioning problem awards? Please circle one and explain your
answer in the space below.
(Low) 1 2 3 4 5 (High)
___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
OIG Techniques and Practices: Post-Award Review
1a. Does your IG office routinely review a grantee after the awards have
been made (e.g., Accounting System Surveys or Interim Audits)?
Yes
No
1b. Review loan recipient?
Yes
No
1c. Review loan guarantee recipient?
Yes
No
1d. Review cooperative agreement recipient?
Yes
No
2. If you answered yes to any of the above, what are some of the effective
practices and tools your IG office uses to monitor grantees or loan
recipient's financial, management or program performance during the
effective period of the grant or loan or at the end of a grant or loan?
__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
3. What have been some of the successful outcomes of these reviews, if
any? Check all that apply.
Placement of award conditions on pending or future awards
Termination of current award
Nonrenewal of current award
Other (Please explain.)
_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Agency Program Office's Techniques and Practices
1. Does your agency's program or grant office(s) routinely perform any of
the following actions on proposed grants or cooperative agreements:
ACTIONS | YES | NO |
a) Perform credit checks on applicants. | ||
b) Review agency's accounts receivable listings. | ||
c) Review suspension and debarment listings. | ||
d) Coordinate proposed awards with other agencies, if appropriate. | ||
e) Obtain Office of General Counsel clearance. | ||
f) Obtain Office of Inspector General clearance. |
2. Does your agency's program or loan office(s) routinely perform any of
the following actions on proposed loans or loan guarantees:
ACTIONS | YES | NO |
a) Perform credit checks on applicants. | ||
b) Review agency's accounts receivable listings. | ||
c) Review suspension and debarment listings. | ||
d) Coordinate proposed awards with other agencies, if appropriate. | ||
e) Obtain Office of General Counsel clearance. | ||
f) Obtain Office of Inspector General clearance. |
3. Please describe any other reviews conducted by your agency's
program, grant or loan offices to prescreen potential award recipients.
__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Useful Databases on Financial Assistance
1. Are there any databases that your office finds useful that might be
helpful to others in the Inspectors General community? (For example,
the Department of Commerce's Inspector General Office has recently
acquired access to a database called Research and Development in the
United States or "RaDiUS." RaDiUS is a collection of information on
the R&D activities in the U.S. government. The database provides
users the capability to identify R&D activities and resources of the
various federal agencies, thereby, potentially enabling users to
determine whether a grant applicant has been awarded multiple sources
of funding for the same activity.)
Yes (Please list databases used and describe their content, potential use for the screening process and accessibility to other users.)
No
Example 1
______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
On a scale of 1-5, how useful do you think this database would be for
other OIGs? (Please circle one.)
(Low) 1 2 3 4 5 (High)
Example 2
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
On a scale of 1-5, how useful do you think this database would be for
other OIGs? (Please circle one.)
(Low) 1 2 3 4 5 (High)
Possible Future PCIE Projects
1. Do you think it would be helpful for your OIG to have access to a
central database or some other mechanism that would enable IGs to
cross check with each other on the reliability of or prior federal
government history with specific grant and loan recipients? Please
explain your answer.
Yes
No
Undecided
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2. Should the PCIE undertake a review to determine the feasibility of the
IG community developing an interagency clearinghouse for
information on problem grantees and loan recipients as well as multiple
agency funding of grantees and loan recipients?
Yes
No
Undecided
3. Would your OIG be willing to work on developing such a database?
Yes
No
Comments:
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Comments. Please feel free to provide any additional comments you may have
in the space below.
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THANK YOU VERY MUCH FOR YOUR COOPERATION AND ASSISTANCE!