September 26, 2024
Management Alert: Ensuring Proper Oversight of Major Contracts to Avoid Significant Cost Overruns
The AmeriCorps Office of Inspector General (OIG) has identified concerns regarding the award, management, and oversight of a contract for AmeriCorps’ new grants management system. Specifically, this alert identifies several factors contributing to cost overruns that will likely exceed $9 million—more than double the amount of the original contract—including the choice of a firm-fixed price contract for a project with uncertain requirements, a lack of technical expert involvement in contract oversight, and the descoping of contract tasks to accommodate cost overruns. While the OIG has not yet undertaken a full review of the allegations received, information collected to date warrants alerting AmeriCorps leadership of these concerns so that management has timely information to mitigate these risks in its ongoing management of this and other major contracts. AmeriCorps oversees many contracts, including other contracts related to IT modernization. As set forth below, AmeriCorps OIG suggests specific steps that AmeriCorps take to improve its contract management practices and avoid wasteful contract overruns.
April 18, 2019
Management Alert: Unrealistic Transformation Plan Unnecessarily Jeopardizes CNCS Mission
The Corporation for National and Community Service (CNCS or the Corporation) has begun to implement a plan to restructure the Corporation and alter its core grantmaking and grant management business practices. While CNCS’s Office of Inspector General (CNCS-OIG) strongly supports a re-examination of the Corporation’s structure, our experience indicates CNCS does not have the capacity to carry out its complex transformation plan at the rapid pace envisioned. CNCS has scheduled the reorganization, with its many risks, to occur at the same time as critically needed improvements to CNCS’s core business functions – developing information technology sufficient to support grant management; preparing and testing an effective grant risk model and aligned cost-effective monitoring activities; achieving reliable financial management, accounting and reporting; and establishing effective cybersecurity. Despite efforts, CNCS has been unable to achieve these improvements over the last several years, without the added stress of a major structural overhaul. The plan to accomplish these critical infrastructure upgrades while simultaneously reorganizing grantmaking, grant management and grant administration is unrealistic, exceeds the Corporation’s capabilities and creates a substantial risk that CNCS will not be able to achieve its mission of supporting national service. Instead, we strongly recommend that CNCS sequence the reforms, concentrating first on standing up the infrastructure to support informed, risk-based grantmaking and grant monitoring. Also imperative is completing and validating the corrective actions for financial management, accounting and reporting, so that CNCS can accurately track expenditures and provide strong stewardship of taxpayer funds. We further recommend that CNCS delay the reorganization to a regional structure until such time as it implements these critical upgrades. We are not suggesting an abandonment of the reorganization, but rather a slower-paced and risk-based, tiered approach to appropriately prioritize goals and promote the ultimate success of CNCS’s comprehensive plan.
July 11, 2016
Management Alert: Weaknesses in Seniors Council’s Financial Management Practices Warrant Immediate Action
During fieldwork for an audit of Seniors Council, a Corporation for National and Community Service (Corporation or CNCS) Senior Corps grantee located in Santa Cruz, California, we developed serious concerns regarding its current ability to manage and account for Federal funds responsibly. The current grants award Seniors Council $1,002,980 per year. We noted commingling of funds from multiple grants and grant years, improper drawdowns and misapplication of Federal funds, and failure to reconcile the Federal Financial Reports (FFRs) submitted to the Corporation to its accounting system.
September 28, 2018
Management Alert: Senior Corps Proposed Regulatory Changes Likely to Reduce Service to Communities and Requires Further Analysis
The Corporation for National and Community Service, Office of Inspector General (CNCS-OIG) issued a Management Alert to express our concerns over the following proposed regulatory changes to the Senior Corps Program, which do not appear to have undergone adequate risk assessment prior to the proposed rule-making: (1) Reducing the minimum number of volunteer service hours per week from 15 to 5; and (2) Eliminating the Direct Benefit Ratio or 80/20 Rule, which requires that at least 80 percent of the Federal grant award be expended for volunteer benefits. CNCS-OIG’s analysis suggests that these two changes may increase certain per-volunteer costs, and simultaneously decrease significantly the service hours delivered to the served communities. CNCS has not considered these potential financial and programmatic effects, nor has it undertaken a pilot program to identify any other unintended consequences. We made three recommendations to CNCS, focused on additional analysis and research into potential increased costs and reduction in community service hours. CNCS’s response did not address the concerns substantively, but said that it would do so as part of the rulemaking process.
June 26,2018
Management Alert: Serious Weaknesses in National Civilian Community Corps Recruiting Contract May Jeopardize Program Success
The Corporation for National and Community Service, Office of Inspector General (CNCS-OIG) conducted a review to determine whether the $2.6 million NCCC member recruitment contract is structured to meet the crucial goal of annually filling the 1,200 Traditional NCCC and 1,000 FEMA Corps vacancies with members likely to successfully complete their terms of service. CNCS-OIG found that: 1. The NCCC recruitment contract places up to $2.6 million at risk; 2. Although the NCCC contract requires the contractor to create and maintain a database of prospective applicants that complies with CNCS cybersecurity and privacy policies and procedures, there is no assurance that the database in fact meets Federal and CNCS standards; 3. The contractor failed to demonstrate that it possesses the experience and proof of success specified in the solicitation and necessary for satisfactory performance; and, 4. The CNCS Contracting Officer’s Representative (COR) lacks the requisite recruiting experience and has not exercised sufficient oversight. Based upon our findings, we recommend that NCCC take the following actions: 1. Decline to exercise the option to continue the recruitment contract in future years; 2. Promptly undertake a new procurement, with clear objectives, statement of work, experience requirements and professional attributes and deliverables. The new contract should be structured as a performance-based contract, with metrics tied to recruitment of applicants who meet the program criteria, meet the diversity requirements and successfully complete their terms; 3. Assign a COR who has strong recruitment knowledge and experience to effectively manage and oversee this contract; 4. Ensure that the selected contractor demonstrates the requisite past performance, meets all the technically acceptable evaluation criteria and has qualified personnel who all meet the Statement of Work (SOW) requirements; and 5. Provide bidders with the Federal and CNCS detailed cybersecurity requirements, policies and procedures, and have the CNCS information security officer review the bidder’s cybersecurity safeguards to ensure that it has the systems in place to maintain secure databases that meet applicable cybersecurity mandates and protect Personally Identifiable Information. The Corporation agreed to implement recommendations 1, 4 and 5. With respect to recommendation number 2, while CNCS agreed to procure a new recruitment contract, CNCS committed only to "explore pursuing a performance-based contract” (emphasis added). However, NCCC treats its recruitment strategy as quantitative—increasing the leads that may generate members—and does not intend to include outcome-based qualitative metrics tied to qualifications, diversity and the ability to successfully complete service. The lack of focus on successful enrollment of highly qualified, diverse individuals who fulfill their service obligations creates a substantial risk that the new recruiting contract will be flawed and will not produce the desired program performance outcomes, resulting in additional funds at risk. CNCS also did not concur with CNCS-OIG’s findings and recommendations pertaining to the experience and oversight of its COR.
July 24, 2017
Management Alert: CNCS Continues to Pay Invoices Without Adequate Oversight of Labor Charges, in Violation of Federal Acquisition Regulations and CNCS’s Response to Audit Report No. 14-09.
Agencies are required per the Federal Acquisition Regulation (FAR) to scrutinize and validate labor charges by contractors and subcontractors, which reduces the risk of fraud, waste and improper expenditures. These safeguards are especially important for time-and-materials (T&M) contracts, because the contractor may have a financial incentive to charge excessive labor. To control the government’s costs and to prevent contractors from overbilling, agencies must obtain documentation from its contractors or subcontractors to support the hours billed. This includes evidence of actual payment to employees and individual daily time-keeping records as required by FAR 16.601(b)(1) Time and Materials Contracts. An audit report issued June 20, 2014, Audit Report No. 14-09, Audit of Blanket Purchase Agreements for Professional Consulting Services, found that CNCS was not complying with these and other requirements applicable to procurements. This is not a new issue; CNCS-OIG reported a similar finding in Audit Report No. 06-40, Audit of Corporation for National and Community Service Office of Procurement Services, issued in June 2006. CNCS agreed in 2014 to require that all contractors provide approved timesheets to support labor charges. More broadly, CNCS promised to scrutinize labor charges appropriately and to institute a variety of corrective actions, including requiring Contracting Officers to conduct a second-level review of documentation submitted prior to approving payment.
November 18, 2015
Management Alert: Weaknesses in Financial Monitoring of Social Innovation Fund (SIF) Grants
Established by the Edward M. Kennedy Serve America Act, the Social Innovation Fund (SIF) makes awards to grant-making institutions and partnerships (known as intermediaries), which in turn make subawards. To date, the SIF has awarded $241 million. Currently, there are 34 active SIF intermediaries with 306 subawardees.