Challenge 6: Strengthening the Administration and Oversight of Contracts and Grants

Over the past several years, the Office of the Inspector General (OIG) identified several weaknesses in DOJ’s contract management and administration requirements. These include but are not limited to the following systemic issues that the OIG has identified through the audit work:

• contracting officials’ improper application of contractor cost estimates,
• inadequate use of planning documents (e.g., Quality Assurance Surveillance Plans), and
• insufficient monitoring of contract performance.

While the Department has taken action to address these recommendations, we have highlighted opportunities for DOJ to improve its compliance with requirements for acquisition planning, administration, and oversight.

Acquisition Planning

Appropriate acquisition planning promotes full and open competition and helps ensure the Department meets its procurement needs in the most effective, economical, and timely manner. The OIG’s work reveals that the Department continues to face challenges in the required acquisition planning steps that are necessary to ensure a fair and reasonable price for goods and services. We previously identified the issue of sole-source contracts, awards made without open competition, as presenting elevated risk to the Department in the 2022 and 2023 Top Management and Performance Challenges reports. Similarly, without appropriate planning, firm-fixed-price awards can be problematic. For example, the Bureau of Alcohol, Tobacco, Firearms and Explosives awarded a $396 million firm-fixed-price contract to a contractor for information technology services. Our audit of the contract found that the contractor did not achieve the cost savings it anticipated when program participation level decreased. In the pre-award phase, the contracting official’s contract actions did not adequately plan for the cost impact of any reduction in work scope or loss of participants causing increased costs that adversely impacted the Department’s budgets. Specifically, DOJ components had to allocate additional money for services that it had planned to be covered under the fixed price. The unforeseen costs resulting from poor acquisition planning also caused contentious interactions between the contractor; the Bureau of Alcohol, Tobacco, Firearms and Explosives; and other participating DOJ components.

The overall task order value increased by $336,382,036 (85%) from the original estimates.

Source: OIG

Another acquisition planning concern is deficient contract practices when selecting sole-source contracts. In an audit of the Federal Bureau of Investigation’s (FBI) contract for ballistic research assistant services, the OIG found that the FBI took “unconventional actions” to ensure that the FBI used a specific contractor, did not competitively bid the contract or follow requirements for awarding a sole-source contract, and inappropriately placed the contractor in a personal services role. The OIG also found significant deficiencies in the FBI’s management of the contract, including failing to evaluate potential conflicts of interest regarding the contractor’s participation in high-value and sensitive FBI procurements, exceeding its authority to extend the contract’s period of performance, and applying oversight procedures that were incongruent with Federal Acquisition Regulation requirements for firm-fixed-price contracts. Taken together, the OIG concluded that these issues indicated inadequate contract management and increased contracting risks.

Strengthening the contract acquisition planning process by requiring contracting officials (e.g., Contracting Officers, Contracting Officer Representatives (COR), Contract Specialists), program owners, and contractors to discuss, determine, and agree upon specific cost details and achievable outcomes will increase the likelihood of success of the Department’s contracts and reduce unforeseen costs.

Administration and Oversight

Effective contract administration and oversight ensures that the Department receives products and services that fulfill its mission while detecting fraud, waste, and abuse when spending taxpayer dollars. To ensure the Department receives a fair and reasonable price for the goods and services it paid for, the Department should better engage the program and contracting officials throughout the contract lifecycle. Specifically, the Department should aim to provide effective procedures that successfully achieve the contracted needs. For example, an improvement on the development of contract performance measures (e.g., monitoring of unique procurement factors) will help prevent such circumstances.

Effective contract administration and oversight ensures that the Department receives products and services that fulfill its mission while detecting fraud, waste, and abuse when spending taxpayer dollars.

Source: Ivan/stock.adobe.com

Our audits have found that the Department needs to strengthen the COR designation process and the monitoring process. These reports highlighted the need for the components’ acquisition offices to correct significant delays and problems arising from the Contracting Officer’s untimely issuance of written COR delegations, a role that is critical to the contract administration process and the day-to-day activities of a contract. For example, a COR’s authorized delegated functions typically support the Contracting Officer in ensuring adequate contract monitoring and that the contract requirements are met during the procurement lifecycle.

The Department can make progress in improving its contract management to address this challenge by more clearly designating contract management responsibilities among relevant job functions, using performance metrics, and administering risk-based monitoring tools to help ensure the Department receives the goods and services it paid for.

The Department continues to face challenges in effectively managing its portfolio of grants. As evidenced in numerous audits of grant recipients, the OIG consistently makes recommendations to enhance DOJ’s administration and monitoring of awards, help grant recipients better achieve compliance, and effectively implement grant recipients’ programs. During the past year, OIG grant audits continued to find that grant recipients need to improve their program execution, grant financial management, as well as their oversight of subrecipients of grant funding. With over $5.6 billion in grant funds awarded in FY 2023 alone, the oversight of grants, which has also been identified in nearly every year of the OIG’s Top Management and Performance Challenges reports, remains a challenge for the Department.

Grant Programs

More than 200 grant programs are administered by the Department’s Office of Community Oriented Policing Services, Office of Justice Programs (OJP), and Office on Violence Against Women. The OIG’s oversight helps support the grant-making components administer the programs and recipients use grant funds in a manner consistent with their intended purpose and in compliance with all requirements. These grant programs relate to some of the most critical issues facing the United States today. Therefore, the challenge for the Department in ensuring that the funds are used properly is critically important, and the OIG’s oversight is pivotal.

For example, the misuse of prescription opioids, as well as heroin abuse, persists as a serious national epidemic. Created as a result of the Comprehensive Addiction and Recovery Act, the Comprehensive Opioid, Stimulant, and Substance Use Program (COSSUP) aims to:

1. Reduce opioid misuse and overdose fatalities, and support a variety of opioid-related measures, strategies; and
2. provide financial assistance and technical assistance to identify, respond to, and support those impacted by illicit drugs.

The OIG’s oversight ensures that the grant-making components administer the programs, and its recipients use grant funds in a manner consistent with their intended purpose.

Source: Ngampol/stock.adobe.com

In March 2024, the OIG issued an audit report of the OJP Bureau of Justice Assistance’s (BJA) administration of the precursor program of COSSUP, the Comprehensive Opioid, Stimulant, and Substance Abuse Program (COSSAP). The OIG found that BJA did not consistently apply or fully disclose preferences used to evaluate COSSAP applications. BJA’s failure to provide notice to all prospective COSSAP applicants of significant evaluation preferences undercut requirements that federal funding opportunities be transparent to maximize fairness of the process, as well as OJP’s commitment to ensuring a fair and open process for making awards.

Finally, the OIG has identified recurring findings related to financial management including unsupported and unallowable grant expenditures. For example, an August 2024 audit concluded that the grantee did not maintain adequate supporting documentation for grant expenditures, charged unbudgeted expenses to the grants, did not adequately track its matching costs expenses, and did not use the correct methodology to charge indirect costs to the grants. These failures resulted in the OIG questioning costs in the amount of $247,326 of the $1,555,732 grant funds received by the grantee during the audited period.

Crime Victims Fund

In 1988, the Office for Victims of Crimes (OVC) was authorized by an amendment to the Victims of Crime Act (VOCA) of 1984 to administer the Crime Victims Fund (CVF). The CVF receives monies from fines, special assessments, and forfeited bail paid by people who are convicted of federal crimes in U.S. courts around the country. OVC distributes these funds to (1) state administering agencies (SAA) through the VOCA victim assistance and compensation formula grants and (2) state and local governments, individuals, educational institutions, and private nonprofit organizations through discretionary grants. Congress has allocated $10 million each FY in VOCA funds to the OIG, beginning in 2015, for use in auditing and assessing risks and deficiencies in the management of OVC programs. Since 2016, the OIG has released over 110 reports resulting in about 700 recommendations and approximately $15 million in questioned costs in conducting oversight of the use of these grant funds.

CVF State Administering Agencies

With the CVF funds, SAAs provide pass-through funding to providers of direct services for victims of crime. Such assistance can include crisis intervention, emergency shelter, transportation, legal assistance, and crisis counseling. The OIG has found that the SAAs struggled with monitoring of subrecipients as identified. The purpose of subrecipient monitoring is to ensure that the subaward is being used for the authorized purpose, in compliance with the federal program and grant requirements, laws, and regulations, and the subaward performance goals are achieved.

As an example, a CVF audit issued in March 2024 found that the Arizona Department of Public Safety, which administers the VOCA victim assistance programs that ensure appropriate and accessible services are available to crime victims, had not performed an on-site monitoring visit for all 150 subrecipients who received subawards between FY 2021 and FY 2023. More specifically, 85 subrecipients had not had an on-site Arizona Department of Public Safety monitoring visit in 4 years, and of those 29 subrecipients had not been visited in 10 years. An on-site monitoring visit consists of reviewing supporting documentation related to subgrant financial transactions or performance and evaluating whether a subrecipient's costs comply with VOCA Guidelines, as well as whether subrecipient performance data reported to OVC was fairly represented, for all subrecipients.

Additionally, SAAs are responsible for the fair treatment of crime victims, including protecting their privacy and personally identifiable information. A CVF audit issued in September 2023 found that the Guam Office of Attorney General (Guam OAG) was not operating its program in compliance with VOCA grant requirements. Specifically, the Guam OAG publicly adjudicated victim compensation claims featuring the public appearance of victims and dissemination of personally identifiable information. As a result, the Guam OAG advocated to change Guam statutes. The Guam Legislature passed Bill 144-37 on July 28, 2023, and the Governor of Guam signed it into law on August 11, 2023. The public law protects victims by allowing the Guam's Criminal Injuries Compensation Commission to have closed meetings to adjudicate victim compensation claims.

Subrecipients

Our CVF subrecipient audits identified concerns with grant financial management and program performance. Grant financial management helps ensure compliance with financial guidelines, general accounting practices, and fiscal management of grant expenditures, all of which can reduce the risk of fraud, waste, and abuse. The OIG identified issues with subaward expenditures in several recent audit reports, including those issued in November 2023, April 2024, and February 2024. Another CVF audit issued in February 2024 found that the University of Maryland Prince George’s Hospital Center, a subrecipient of a CVF award to the Maryland Governor’s Office of Crime Prevention, Youth, and Victim Services, did not have adequate internal controls to ensure the appropriateness of personnel charges (e.g., timesheets, activity reports, or time-and-effort reports) and to provide evidence of the distribution of costs or allocation of time among various activities.

In a May 2024 CVF audit report, the OIG found that the grantee, a subrecipient of a CVF grant awarded to the New Jersey Department of Law and Public Safety, expended only a portion of funds provided and achieved less than expected under one of the audited subawards because, according to grantee officials, they experienced challenges in the early stages of deploying a new initiative. The OIG also found that the grantee lacked programmatic policies and procedures, including protecting victim personally identifiable information, and performance data reported reflected agency-wide data as opposed to only VOCA-funded services. The OIG’s recommendations in these grant audits highlight our goal to help the Department’s grant-awarding components and grant recipients comply with Department and other federal regulations and ensure that the funds are efficiently and effectively administered for their intended purposes.