Report Government
Fraud, Waste & Abuse

Screening of Federal Grants and Loans by Offices of Inspector General and Their Agencies' Grant and Loan Officers (January 1998)

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

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 Governmentwide 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: 

  • Reliance on OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, pursuant to the Single Audit Act of 1984, as amended (most frequently given answer).
  • Lack of resources.
  • Not OIG's responsibility; it is the program office's responsibility.
  • Program officials are doing an adequate job of prescreening.
  • Majority of recipients are state and local governments or well-known universities.

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: 

  • HHS maintains an Alert List which includes grantees that are at risk due to poor performance, financial 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.
  • The Department of Justice's Office of Justice Programs conducts several reviews prior to its approval of grants and cooperative agreements, including a financial cost analysis which tests for reasonableness, allowability, and appropriateness.
  • The Small Business Administration, in addition to routine credit checks and other screening procedures, uses IRS tax return data to verify financial information submitted by loan and loan guarantee applicants.

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: 

  • Placement of award conditions on pending or future awards.
  • Placement of grantee on GSA's Suspension and Debarment Listing.
  • Termination of current award.
  • Nonrenewal of current award.

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.cbtinfotech.com/ 

 

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: 

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/ 

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:*

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________



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 

 


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:


Comments. Please feel free to provide any additional comments you may have in the space below. 

 


THANK YOU VERY MUCH FOR YOUR COOPERATION AND ASSISTANCE!