BTOP Grantee Closeout Process Encountered ‘Challenges,’ Weaknesses, Commerce Department OIG Finds

"We found that NTIA, along with the grant offices at [the National Institute of Standards and Technology] and [National Oceanic and Atmospheric Administration], encountered challenges in effectively closing out the first awards,” Eilers said (http://1.usa.gov/1fYAdzB). “Delays have occurred due to computer system issues that were not identified until those initial closeouts, time-consuming Uniform Commercial Code-I filings (to secure federal interest in property), audits of for-profit companies that must be completed before closeout, and extension requests.”

Grants were, by and large, set to end in fall 2013. The audit found a large share of grant recipients have asked to extend the grant cycle, some into 2015. As of Sept. 16, 69 comprehensive community infrastructure grantees and 44 public computer center and sustainable broadband adoption grantees asked for extensions, according to NTIA data the auditors cited. NTIA, NIST and NOAA administered the different grants.

The memo outlined ways in which NIST standard operating procedures and NOAA closeout procedures were incomplete. “Closeout is the last opportunity for grants personnel to flag and follow up on fraud, waste, and abuse indicators in grant spending,” OIG said, citing lack of appropriate closeout instructions to grant recipients. “Without comprehensive procedures, that opportunity could be missed.” The NIST operating procedures don’t mention the process for recovering unspent grant advances or include a required record-retention period for grantees, OIG found. NOAA’s closeout procedure left out several required documents and doesn’t address audit report requirements, it said. Neither of those agencies addressed government compensation for aggregate supplies valued at greater than $5,000, it said.

OIG also said grantee closeout procedures failed to follow through at times and grantee files were incomplete. It included a chart showing 11 grantees -- responsible for several tens of millions of dollars altogether -- and only showed that one of the 11, Silver Star Telephone Co., was compliant with the closeout process. Nine of those 11, for instance, failed to submit all required documents within 90 days of the end of the award period, without any request for extension. The government didn’t always give grantees proper notice of what was required before the grant ended, OIG found. “The 90-day closeout letter to Michigan State University was sent 48 days after the end of the award, making it 78 days late.” It also cited “an inconsistent approach to grant closeouts among NTIA’s federal program officers,” based on interviews OIG conducted. The report offered broad recommendations that NTIA, NIST and NOAA address all these different issues.

In November, one unnamed “grant recipient told NTIA it would not be able to complete an audit for 2013 as it was closing the business,” OIG said. “Although grant funds are provided to recipients to cover the cost of audits, the NIST grants program officer did not properly monitor the drawdown of funds to ensure that adequate funds remained for the final audit."

NTIA defended its efforts and oversight. The final OIG report included a Nov. 14 response from BTOP Program Director Anthony Wilhelm, responding to a draft of the report. NTIA “implemented a rigorous monitoring and oversight plan for BTOP grants,” Wilhelm said. “NTIA carried that rigor forward with the development of its BTOP project closeout process ... and established numerous methods for ensuring effective guidance throughout the process.” NTIA has contacted NOAA and NIST, and both will “reply directly” to OIG about the recommendations, Wilhelm said, saying NTIA will consult with both to make sure all documents required are in throughout the closeout process. For some recommendations, NTIA urges “direct interaction” between NOAA, NIST and OIG in resolving the issues. It defended the knowledge of its federal program officers and the many materials on the closeout, describing “a strong institutional foundation for understanding and facilitating the closeout process."

"NTIA played a leading role in promoting the Administration’s broadband agenda through our broadband grant programs,” said NTIA Deputy Assistant Secretary for Communications and Information Angela Simpson in a Friday blog post (http://1.usa.gov/1gUCi2k). “This past year we've seen many of the broadband projects make great strides in reaching their goals.” As grants close out, NTIA will “be focusing on leveraging the lessons and expertise gained from our broadband grants into other areas, including the President’s ConnectED initiative,” she said.

NTIA also described the closeout process in detail in a quarterly report to Congress this fall. “As of June 30, 2013, 163 BTOP projects remained in active status,” NTIA said of the 224 projects total (http://1.usa.gov/K2C4c4). “Sixty-one projects have completed their project activities. Of these 61, 48 projects are in the process of closing out their grants and 13, representing approximately $60.2 million in federal funding, have formally closed out.” It mentioned that in April, “NTIA began to hold regular recipient closeout webinars to discuss the timing of closeout activities and recipient closeout requirements” and reported that NTIA “monitors project statuses and conducts analyses to gauge when projects are likely to close out.” NTIA tries to predict when grantees face challenges they cannot control, it said.

NIST’s grants management division “concurs” with the audit report and laid out ways it will update its standard operating practices and make other changes, said a Nov. 22 letter from acting Division Chief Cecelia Royster. NOAA also defended certain actions, in an Oct. 22 memo from Arlene Simpson Porter, director of its grants management division. North Georgia Network Cooperative, for instance, submitted all the documents it believed necessary by the appropriate Feb. 28 closeout deadline, but the grants office “discovered some issues and requested revisions,” Porter said, explaining why documents were submitted after the deadline without a grantee request for more time. “Additionally, the Program Office had created some additional requirements such as the Program Officer checklist that was not part of the original request.” NOAA’s memo described “several technical issues that NOAA, NTIA, NIST and Grants Online did not anticipate” when closing out the city of Williamstown, Ky., which “led to the creation of several adjustments to closeout procedure that are now used to close the remaining grants.”