Department of Health and Human Services
OFFICE OF
GENERAL
INSPECTOR 
NATIONAL CANCER INSTITUTE'S
MONITORING OF RESEARCH
PROJECT GRATS
~~ .u.p
~ SERVICes
( ..
Daniel R. Levinson
Inspector General
~~
July 2008
OEI-07-07-00120
~.lIlcf"a (: Office of Inspector General
http://oig.hhs.gov
The mission ofthe Offce ofInspector General (OIG), as mandated by Public Law 95-452, as
amended, is to protect the integrity of the Department of Health and Human Services
(HHS) programs, as well as the health and welfare of beneficiaries served by those
programs. This statutory mission is carried out through a nationwide network of audits,
investigations, and inspections conducted by the following operating components:
Office of Audit Services
The Offce of Audit Servces (OAS) provides auditing services for HHS, either by conducting
audits with its own audit resources or by overseeing audit work done by others. Audits
examine the performance of HHS programs and/or its grantees and contractors in carrying
out their respective responsibilties and are intended to provide independent assessments of
HHS programs and operations. These assessments help reduce waste, abuse, and
mismanagement and promote economy and effciency throughout HHS.
Office of Evalua tion and Inspections
The Offce of Evaluation and Inspections (OEr) conducts national evaluations to provide
HHS, Congress, and the public with timely, useful, and reliable inormation on signifcant
issues_ These evaluations focus on preventing fraud, waste, or abuse and promoting
economy, effciency, and effectiveness of departmental programs. To promote impact, OEI
reports also present practical recommendations for improving program operations.
Office of Investigations
The Offce of Investigations (Or) conducts criminal, civi, and adminstrative investigations
of fraud and misconduct related to HHS programs, operations, and beneficiaries. With
investigators working in all 50 States and the District of Columbia, 01 utilizes its resources
by actively coordinating with the Department of Justice and other Federal, State, and local
law enforcement authorities. The investigative efforts of 01 often lead to criminal
convictions, administrative sanctions, and/or civi monetary penalties.
Office of Counsel to the Inspector General
The Offce of Counsel to the Inspector General (OCIG) provides general  legal services to
OIG, rendering advice and opinions on HHS programs and operations and providing all
legal support for OIG's internal operations. OCIG represents OIG in all civil and
administrative fraud and abuse cases involving HHS programs, including False Claims Act,
program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG
also negotiates and monitors corporate integrity agreements. OCIG renders advisory
opinions, issues compliance program guidance, publishes fraud alerts, and provides other
guidance to the health care industry concerning the anti-kickback statute and other OIG
enforcement authorities. .. EXECUTIVE
SUMMARY
OBJECTIVE
To determine the extent to which the National Cancer Institute (NCr)
monitors Research Project Grants in accordance with Federal
regulations, departmental directives, and agency policies regarding:
(1) progress reports, (2) financial reports, (3) grant closures, and
(4) grant fies.
BACKGROUND
Health (NIH)
For fiscal year (FY) 2007, the National Institutes of 
its $29.1 billon budget via more than
disbursed 54 percent of 
38,000 Research Project Grants. NCI is the largest ofthe NIH
institutes and had responsibility for over $2.1 bilon in Research
Project Grants in FY 2007. In FY 2007, the Offce of Inspector General
(OIG) identified grants management (including the monitoring of
grants) as a top management challenge.
NCI monitors grants by reviewing report (e.g., progress and financial),
correspondence from grantees, audit reports, site visit reports, and
other available information. We requested and received from NCI a list
ofResear,ch Project Grants that received funding in at least 1 year
during FYs 2004, 2005, or 2006. This list contained 4,578 grants
totaling more than $3 bilion. From the population, we selected a
random sample of 100 grants for review. We reviewed each grant for
NCI's postaward monitoring in the following areas: progress reports,
financial reports, grant closeouts, and grant fies (i.e., the completeness
and accuracy of grant file materials).
FINDINGS
All grant files contained progress report that had evidence of
agency review; however, 41 percent of progress report were
received late. All required progress reports for FY s 2004, 2005, and
2006 for all 100 grants were present in the files. In addition, the case
files contained documentation of assessments of all of the progress
reports by the grants management specialist and the program staff
progress reports were
assigned to each grant. However, 41 percent of 
not received within the required timeframes (i.e., 2 months before the
next budget period for hard copy or 45 days before the next budget
period for electronic reports). Ofthese, electronic reports were received
an average of 18 days late and hard copy reports averaged 16 days late.
OEI.07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS EXECUTIVE
SUMMARY
We note that grantees' delay in submitting progress reports posed a low
risk because NCI did not disburse funds until it had received and
reviewed progress reports.
Deficiencies exist in financial oversight of Research Project Grants.
NCI grants management staff indicated that they rely on NIH's Offce
of Financial Management to monitor quarterly financial reports to
ensure that grantees are properly drawing funds. However, an Offce of
Financial Management offcial indicated that this offce does not
examine or maintain copies of quarterly financial reports; these are
submitted to the Payment Management System only. In our sample of
100 grants, 23 had reached the end of their grant periods during our
period of review and all 23 grant fies contained Financial Status
Reports. However, 11 of the Financial Status Reports were submitted
late and 12 indicated dates that did not reflect the entire budget
periods.
Five of the nine required grant closeouts in our sample were not
completed within the general timeframes specified in departmental
guidelines. Of the 100 grants in our sample, 9 were closed or eligible
for closeout. For five of the nine grants, the closeout process was not
completed within 180 days as generally required by departmental
policy. In addition, one closed grant lacked the required final Invention
Statement and Certification. Upon request, NCI staff could not provide
located it after we shared a draft ofthis
the statement; however, staff 
report.
Insuffcient documentation impedes third-part review of grant files
in some cases. Departmental grant policy directives require awarding
agencies to create and maintain fies that allow a third party
(e.g., auditor or other reviewer) to follow the paper trail, from program
inception through closeout of individual awards, and decisions made
and actions taken in between. While conducting a review of grant files,
we encountered documents with inaccurate dates and an inconsistent
filing structure and found that some files were missing, all of  which
impeded the review process.
OEI.07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS II EXECUTIVE SUMMARY
RECOMMENDATIONS
OIG recommends that NCI:
Initiate earlier and more frequent followup with grantees to obtain
required documents. Such diligence could promote grantee compliance
with Federal regulations and agency policies for submitting progress
reports, Financial Status Reports, and closeout documents.
Improve grants monitoring by:
 annually verifying grantees' self-reported fund balances with
external sources and developing an approach for financial reviews
that is not based solely on exceptions, and
 consistently documenting grantee correspondence and organizing
grant documents to assist NCI staff and third-party reviewers with
closeout.
following grantees' actions from inception ofthe grant to 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL
RESPONSE
NIH generally agreed with our recommendations and described actions
it plans to take in response to the recommendations. Regarding late
submission of progress reports, Financial Status Reports, and closeout
documents, NIH will continue to address this issue in education
outreach sessions with grantee offcials and stress the need for
institutions to monitor and adhere to all report deadlines. In addition,
NIH expects to increase timeliness of reporting by grantees through
continued development and deployment of its electronic grants
management system, enabling electronic submission of certain progress
and closeout reports. Regarding the recommendation to improve grants
monitoring by annually verifing grantees' self-reported fund balances
with external sources and developing an approach for financial reviews
that is not based solely on exceptions, NIH agreed that there may be
. value in using the Federal Cash Transaction Report on a broader scale
and wil conduct a pilot study to review the Federal Cash Transaction
prior to issuing the award for a specific pool of grants. At the
Report 
end of the pilot study, NIH wil identify the population of grants for
which review of the Federal Cash Transaction Report wil be required,
as well as best practices for the review and for resolution of any issues
that arise from the review. Additionally, NIH agreed with the
recommendation that grant files be properly documented and
OEI.07.07.00120 MONITORING OF Nei RESEARCH PROJECT GRANTS III EXECUTIVE
SUMMARY
organized. NIH wil continue to monitor the use of its electronic grant
system and update procedures for fie documentation as necessary. We
did not make any revisions to the report based on NIH's comments.
OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS Iv .. TABLE CONTENTS
o F
EXECUTIVE SUMMARy..................................... 1
INTRODUCTION ......... ........ ... ... ....... .... ... ... .... 1
FIN DIN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10
All progress reports reviewed; 41 percent received late. . . . . . .. 10
Deficiencies exist in financial oversight. . . . . . . . . . . . . . . . . . . .. 11
Grant closeouts not completed within general timeframes. . . . .. 14
Insuffcient documentation impedes third-party review. . . . . . .. 15
R E COM MEN D A T ION S ..................................... 17
Agency Comments and Offce of Inspector General Response ... 18
A P PEN D I XES ............................................. 19
A: Glossary of Grant Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19
B: Confidence Interval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 20
C: Agency Comments. . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . .. 21
A C K NOW LED G MEN T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29 ..
INTRODUCTION
OBJECTIVE
To determine the extent to which the National Cancer Institute (NCI)
monitors Research Project Grants in accordance with Federal
regulations, departmental directives, and agency policies regarding:
(1) progress reports, (2) financial reports, (3) grant closures, and
(4) grant fies.
BACKGROUND
Health (NIH)
For fiscal year (FY) 2007, the National Institutes of 
its $29.1 bilion budget via more than
disbursed 54 percent of 
38,000 Research Project Grants.i The NIH budget constitutes
approximately 38 percent of all discretionary spending for the
Department of Health and Human Servces (HHS) and nearly
50 percent of Federal civiian spending for research and development.2
Extramural research, performed by non-Federal scientists using NIH
grant or contract money, includes more than 200,000 scientists and
research personnel working in over 3,100 universities, academlc health
centers, hospitals, and independent research institutions in the United
States and abroad.3 NCI is the largest ofthe NIH institutes and had
responsibility for over $2.1 bilion in Research Project Grants in
FY 2007.4
In FY 2007, the Office ofInspector General (OIG) identified grants
management (including the monitoring of grants) as a top management
challenge.5 A previous OIG report on grants monitoring in one HHS
agency found that fiancial reports either were not received or were late
and that Federal requirements for grant closeout were not met.6
1 NIH, "Summary of the Fiscal Year (FY) 2009 President's Budget," February 4, 2008.
2 Congressional Research Service (CRS) Report for Congress, "The National Institutes of
Health (NIH): Organization, Funding and Congressional Issues," October 19, 2006.
Available online at http://www.nih.iwv/aboutldirector/crsrept.pdf. Accessed on
December 12, 2006.
3 Ibid., p. 6.
4 NCI, "The Nation's Investment in Cancer Research," January 2008.
5 OIG, "FY 2007 Top Management and Performance Challenges Identifed by the Offce
of Inspector GeneraL" Available online at
http://www.hhs.gov/afr/information/challenges/index.htmL. Accessed on February 27,2008.
6 HHS, OIG, "Agency for Healthcare Research and Quality: Monitoring Patient Safety
Grants" (OEI-07-04-00460), June 2006.
OEI.07.07-00120 MONITORING OF Net RESEARCH PROJECT GRANTS 1 INTRODUCTION
The National Cancer Institute
NCI, established under the National Cancer Institute Act of 1937, is the
principal Federal agency for cancer research and training. It
coordinates the National Cancer Program, which conducts and supports
research, training, health information dissemination, and other
programs with respect to the cause, diagnosis, prevention, and
treatment of cancer; rehabilitation following cancer; and the continuing
care of cancer patients and their familes. As part of its responsibilties,
NCI awards, monitors, and closes grants related to the National Cancer
Program.
NCI awards Research Project Grants to support research into the
causes, diagnosis, prevention, or treatment of cancer. These grants
account for the largest share of the NIH extramural research budget
and include grants to individual investigators, small teams, and groups
of researchers who work in collaborative programs or in
multidisciplinary centers that focus on particular diseases or areas of
research.7 An NCI Research Project Grant typically lasts 4 to 5 years-
an award period termed a competitive segment. The grantee does not
need to compete annually for continuation of funding when it has
received a multiyear Research Project Grant. A grantee may seek
extensions of the grant or apply for a new award, leading to another
competitive segment.
Applicable Federal Regulations, Departmental Directives, and Agency
Policies
Federal regulations contained in 45 CFR Part 74 establish uniform
administrative requirements governing HHS grants to institutions of
higher education, hospitals, and other nonprofit organizations.
The HHS Grants Policy Directives (GPD) provide guidance on grants
management issues to affected program offces at all organizational
7 CRS Report for Congress, "The National Institutes of Health (NIH): Organization,
Funding and Congressional Issues," October 19, 2006, p. 6. Available online at
htt.p://www.nih.gov/about/director/crsrept..pdf. Accessed on December 12, 2006.
OEI.07.07.00120 MONITORING OF He! RESEARCH PROJECT GRANTS 2 NTRODUCTION
levels within the Department.8 The GPD is the highest level of grants
policy issued by HHS. Part 1.01 ofthe GPD instructs agencies such as
NIH not to merely repeat the language in the GPD or reissue the GPD
in its entirety when developing their own implementation manuals.
Rather, HHS agencies are required to develop more detailed grants
administration manuals that reflect their implementation of the
directives. The NIH Grants Policy Statement, dated December 1, 2003,
is the policy document that contains the terms and conditions ofNIH
grant awards. A glossary of grant-related terms can be found in
Appendix A.
Grants-Monitoring Responsibilties
To fulfill its role in regard to the stewardship of Federal funds, NCI
monitors its grants to identify potential problems and areas in which
technical assistance might be necessary. NCI monitors grants by
reviewing reports (e.g., progress and financial), correspondence from the
grantee, audit reports, site visit reports, and other available
information. Grants monitoring continues for as long as NCI retains a
financial interest in the project or activity. As a result, property
accountabilty, auditing, and other requiements may continue after the
grant is closed out and NCI is no longer providing active grant support.9
NCI's Offce of Grants Administration is the focal point for all
business-related activities associated with the negotiation, award, and
administration of grants. Its Web site indicates responsibilities for the
following activities related to grants management:
 monitoring the financial and management aspects of grants to
ensure the effective utilization of Federal funds;
 building and maintaining a partnership with the grantee and NCI
program and review staff to ensure the issuance of award documents
that clearly communicate grant requirements and protect NIH from
waste, mismanagement, and costly disputes; and
8 Grants Policy Directives are issued as an instrument of  internal Department
management to direct Department staff regarding HHS's policies, standards, and
procedures. For grantees and other interested parties, the Department also issues the HHS
Grants Policy Statement to provide grantees up-to-date policy guidance and information on
HHS and its discretionary grant process. Available online at
http://www.hhs.!wv/grantsneUadminis/gpdlindex.htm. Accessed on February 26, 2008.
9 NIH, "Grants Policy Statement," December 1, 2003, pp. 128-129.
OEI-07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 3 INTRODUCTION
. providing quality service promptly within NIH and to the grantee
community to reflect a continuing commitment to improve grants
management, thus enabling the grantee to perform its research
unfettered, in an open Federal research environment free of
10
unnecessary record collection and reporting requirements. 
Documentation Requirements
HHS GPD Part 3.06 requires awarding agencies to create and maintain
fies that allow a thid party to follow the paper trail, beginning with
program inception through closeout of grants, and decisions made and
actions taken in between. An offcial file must be created for each grant
and must contain the following documentation, as applicable:
 signed copies of applications and all documentation related to review
and approval of the applications;
. all notices of grant award;
. any approved deviations;
. site visit reports, records of telephone calls, and postaward technical
assistance provided;
. prior approval requests and other postaward correspondence;
. documentation related to enforcement actions, including any grant
appeals;
 required financial and progress reports and evidence of review and
acceptability;
. invention statements;ll and
. closeout documentation.
In 2000, NCI began using an electronic imaging system called eGrants to
store and retrieve documents contained in the offcial NCI grant files.
eGrants is an Internet-based data system that allows its users access to
grant information, including grant applications, progress reports, and
review checklists. Grant documents are organized by grant identification
number, award year, and document type. Site visit information is
10 NCI Offce of  Grants Administration function. Available online at
http://www3.cancer.gov/adminlgab/function.htm. Accessed on December 20, 2007.
llGrantees are required to submit Form HHS 568, Final Invention Statement and
90 days of the end of grant support. NIH Grants Policy Statement,
Certification, within 
December 1, 2003, p. 139.
OEI.07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 4 NTRODUCTION
maintained separately within eGrants in the Institutional File, which is
organized alphabetically by institution name.
Grantee Requirements and the Streamlined Non-Competing Award Process
Grantees must periodically submit progress and financial reports to
NIH. Other required reports may include invention reports, lobbying
disclosures, audit reports, and specialized programmatic reports.12
As part of the notice of grant award, NIH states whether a grantee is
permitted to use the Streamlined Non-Competing Award Process (SNAP).
Most NIH Research Project Grantees are subject to SNAP.13 Under SNAP,
NIH negotiates the direct costs for the entire competitive segment at the
time of award. This eliminates the need for annual budget submissions
and negotiations and reduces the information that NIH requires to review,
approve, and monitor noncompeting awards.
Grantees with SNAP awards are allowed to submit abbreviated annual
progress reports_ These can be submitted via the Grant Progress Report
(Form PHS 2590) or an eSNAP report. NIH grant policy requires grantees
to submit an annual Grant Progress Report 2 months before the beginning
of the next budget period or an eSNAP report 45 days before the beginning
of the next budget period.14
For financial reporting, grantees with SNAP awards are required to
submit the Federal Cash Transaction Report (Form PMS 272) within
15 days following the end of  the quarter. The Federal Cash Transaction
Report is submitted to the HHS Division of Payment Management.15 At
the end of the award, the grantee is required to submit a Financial
Status Report (FSR) (Form SF 269) covering the entire competitive
12 NIH, "Grants Policy Statement," December 1, 2003, p. 129.
13 Grantees may be excluded from SNAP if their grants require close project monitoring
or technical assistance or the grantees have a consistent pattern of failure to adhere to
appropriate reporting or notifcation deadlines.
14 Instructions for ''U.S. Department of Health and Human Services, Public Health
Service, Non-Competing Grant Progress Report (PHS 2590)," Revised November 2007.
Forms approved through November 30, 2010, Offce of Management and Budget (OMB)
No. 0925-0001, p. 2. Available online at
http://irrantsl.nih.irov/irrants/fundinid2590/phs2590.doc. Accessed on January 9, 2008.
Instructions for submitting the eSNAP. Available online at
http://grants.nih.irov/grants/submitapplication.htm.AccessedonNovember6,2007.NCI
staff confimed that submission requirements for FY s 2004, 2005, and 2006 were the same
as those described in these more recent instructions.
15 Due dates for Federal Cash Transaction Reports. Available online at
http://www.dpm.psc.gov/grant recipient/reports/due dates.  asp  x? Accessed on
February 21, 2008.
OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 5 INTRODUCTION
segment no later than 90 days after the end of the competitive
segment.16 According to NCI, the submission of timely and accurate
FSRs is central to ensuring prudent and effcient stewardship of public
resources.17
Grant Closeout
Grant closeout is the fial stage ofthe grants-monitoring process. The
HHS GPD Part 4.02 states that awarding agencies generally shall close
out grants within 180 days of the end of grant funding. The NIH
Grants Policy Statement states that NIH will close out a grant as soon
as possible after expiration if the grant wil not be extended or after
termination. Unless NCI grants an extension, grantees are required to
submit a fial progress report, a final FSR, and a final Invention
Statement and Certification (Form HHS 568) within 90 days of the end
18
of the grant period. 
Grantee Interaction With NIH
Each grantee is assigned a grants management specialist from the NCI
Grants Administration Branch to whom it may address any questions.
Financial
In addition, grantees interact with NIH's Offce of 
Management, the receipt point for FSRs. Grant payments and Federal
Cash Transaction Reports are administered through the HHS Payment
Management System. Grantees request payments via an
Internet-based application, and these are electronically transmitted to
the grantees' bank accounts.
Enforcement Actions
When a grantee fails to comply with the terms and conditions of the
grant, NCI may take one or more enforcement actions depending on the
severity and duration of the noncompliance. NCI generally wil afford
the grantee an opportunity to correct the deficiencies before taking
enforcement action unless public health or welfare concerns require
immediate action. However, even if a grantee is taking corrective
action, NCI may take action to protect the Federal Government's
interests, including placing special conditions on awards or precluding
the grantee from obtaining future awards for a specified period, or may
16 NIH, "Grants Policy Statement," December 1, 2003, p. 131.
17 NCI, "Everything You Wanted to Know About the NCI Grants Process But Were
Afaid to Ask," revised August 2005, p. 70.
18 NIH, "Grants Policy Statement," December 1, 2003, p. 139.
OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 6 NTRODUCTION
take action designed to prevent future noncompliance, such as closer
monitoring .19
METHODOLOGY
Research Projects
We requested and received from NCI a listing of 
Grants (R01) that received funding in at least 1 year durig FYs 2004,
2005, or 2006. This listing contained 4,578 grants totaling more than
$3 bilion. From the population, we selected a random sample of
100 grants for review. In the population, all but 0.5 percent ofthe
grants were awarded subject to SNAP. In our sample, all of the grants
were SNAP awards.
Grant File Review
For the purpose of reviewing the grant files, the study team members
obtained read-only access to NCI's eGrants system. In instances in
which we could not locate documentation electronically, we requested
hard-copy documents from NCI staff.
Using a structured instrument, we reviewed each grant for NCI's
postaward monitoring in the following areas with respect to Federal
regulations, HHS Grants Policy Directives, and NIH policies and
procedures:
Proaress reports. We determined whether progress reports were
complete and submitted timely. Pursuant to 45 CFR  74.51, we
reviewed the progress report for (1) a comparison of actual
accomplishments with the goals and objectives established for the
period, the findings ofthe investigator, or both; and (2) the reasons
established goals were not met, if appropriate. Grantees are required to
submit annual Grant Progress Reports 2 months before the beginning of
the next budget period or the eSNAP reports 45 days before the
beginning of the next budget period.20 In total, we reviewed
256 progress reports (202 were Form PHS 2590 and 54 were eSNAP).
19 NIH, "Grants Policy Statement," December 1, 2003, p. 136.
20 Instructions for "U.S. Department of  Health and Human Services, Public Health
Service, Non-Competing Grant Progress Report (PHS 2590)," revised November 2007.
Forms approved through November 30, 2010, OMB No. 0925-0001, p. 2. Available online at
http://grants l.nih.iwv/grants/funding/2590/phs2590.doc. Accessed on January 9, 2008.
Instructions for submitting the eSNAP. Available onlie at
http://grants.nih.gov/grants/submitapplication.htm.AccessedonNovember6,2007.NCI
staff confimed that submission requirements for the years FYs 2004, 2005, and 2006 were
the same as those described in these more recent instructions.
OEI-Ol-Ol-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 7 INTRODUCTION
We projected timeliness of progress reports to the universe of N CI
Research Project Grants that received funding in at least 1 year during
FY s 2004, 2005, or 2006. Because progress reports are required to be
submitted annually on every grant, we were able to project this
statistic. The point estimate and 95-percent confdence interval can be
found in Appendix B.
Financial Status Reports. We determined whether FSRs were complete and
timely. Pursuant to 45 CFR  74.52, grantees are to submit FSRs no later
than 90 days after the end of the reporting period. An FSR is required
from SNAP grantees only at the end of a competitive segment.21 Because
a competitive segment is typically 4 to 5 years for a SNAP grantee and our
period of review was 3 years, only 23 FSRs were within the scope of our
review. We reviewed those 23 FSRs.
Grant closeout. For grants that were closed or eligible for closeout, we
reviewed the grant fies to determine whether NCI complied with
departmental and agency guidance concerning grant closeout
procedures. Nine grants in our sample were either closed or in the
process of closeout. We reviewed these grant fies for documentation of
grantee submission of the final progress report, the final FSR, and the
final Invention Statement and Certifcation within 90 days after
the grant.22 We also determined whether NCI closed out
completion of 
these grants within 180 days of the end of grant support pursuant to
HHS GPD part 4.02.
Grant fies. To assess the documentation, we reviewed the grant fies to
determine whether NCI's monitoring processes (1) followed up with
grantees to obtain any delinquent reports; (2) escalated enforcement
actions in the event of continued Q.elinquency; (3) reviewed and provided
feedback to the grantee; and (4) accepted revised reports from grantees,
if applicable, in accordance with GPD Part 3.06B. We also reviewed the
grant files for documentation of enforcement actions (e.g., temporarily
withholding cash payment pending the receipt of a required financial
report).23
21 NIH, "Grants Policy Statement," December 1, 2003, p. 131.
2245 CFR  74.71 and NIH, "Grants Policy Statement," December 1, 2003, p. 139.
23 NIH, "Grants Policy Statement," December 1, 2003, p. 136.
OEI-07-07.00120 MONITORING OF Net RESEARCH PROJECT GRANTS 8 INTRODUCTION
Grant File Followup and Interviews
We also consulted NCI staff throughout our review for answers to
questions concerning the documentation found in the grant fies. We
conducted structured telephone interviews with offcials from the Offce
of Financial Management and the HHS Payment Management System
to obtain information on their functions with respect to monitoring the
financial aspects of NCI Research Project Grants.
Standards
This study was conducted in accordance with the "Quality Standards for
Inspections" issued by the President's Council on Integrity and
Effciency and the Executive Council on Integrity and Efficiency.
OEI-07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 9 .. FINDINGS
GPD Part 3.06 emphasizes the
All grant files contained progress report that had
importance of posta ward
evidence of agency review; however, 41 perc~nt monitoring of grants. The guidance
of progress report were received late states that the monitoring
approach should be consistent with
performance reports (i.e., progress
45 CFR Part 74 and include review of 
reports), related audits, and other required reports. The assessment
should take place on an ongoing basis, but must be documented at least
annually and the results included in the grant fie.
NCI grants management staff review progress report
Al required progress reports for FY s 2004, 2005, and 2006 for all
100 grants were present in the files, totaling 256 progress reports. In
addition, the case fies had documentation of the assessments of all of
the progress reports by the grants management specialist and the
program staff assigned to each  grant. We observed that grants
management specialits focused their review of progress reports on the
responses that grantees provided in three required areas: (1) changes in
the sources of salaries for key personnel occurring since the last
reporting period, (2) anticipated changes in the level of effort for key
personnel from what was approved, and (3) potential unobligated funds
greater than 25 percent of the current year's total budget.
Program staff also reviewed progress reports for changes in research goals
and objectives, the use of human and/or animal subjects, and indications of
whether the grantee's progress was satisfactory for continued funding. We
observed that grants management specialists followed up with grantees
concerning any omissions from the progress reports or clarifications
needed for the information provided. NCI did not award additional funds
until the progress report was received and reviewed, demonstrating a
relationship between monitoring and continued grant funding. For each of
the sampled grants, NCI established the beginning date of the new budget
period based on receiving a complete progress report that satisfied all
requirements.
Forty-one percent of progress report were not received timely
For the period of our review, NCI accepted either hard-copy progress
reports or electronically submitted eSNAP reports. NIH grant policy
requires grantees to submit the hard-copy progress reports 2 months
before the beginning of the next budget period or the eSNAP reports
45 days before the beginning of the next budget period.
OEI-07-01.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 10 F IN 0 I NG S
Forty-one percent were not received withi the required timeframes.
We note that grantees' delay in submitting progress reports posed a low
risk because NCI did not disburse funds until it had received and
reviewed progress reports. Table 1 shows the range and average
number of days past due for progress reports that we reviewed.
Table 1: Late Progress Reports for 100 Sampled Grants
Number Range of Average
Number
Report FORnat Received Number of Number of
Received
Late Days Late Days Late
Electronic 54 7 1-39 18
Hard copy 202 99 1-86 16
Total 256 106 N/A N/A
Source: OIG analysis of progress reports, 2007.
The grant fies for some of the late progress reports contained copies of
letters that NCI sent to grantees informing them that a progress report
was due but had not yet been received. As evidenced in the grant file,
NCI sent a letter on March 5, 2004, to a grantee stating that a progress
report had been due on or before February 1, 2004. The letter advised
the grantee that ifthe report was not received by March 17, 2004,
funding might be jeopardized.
NIH guidance states that NIH
Deficiencies exist in financial oversight of
awarding offices fulfil their role in
Research Project Grants
regard to the stewardship of Federal
funds by monitoring grants to
identif potential problems and areas where technical assistance might be
necessary. Although we observed consistent review of progress reports, we
did not observe the same level of examination of financial reports. We
identifed three deficiencies with respect to NCI's financial oversight of
grants: (1) Federal Cash Transaction Reports are not monitored; (2) long
periods of time elapse between funding and grantees' submission of FSRs;
and (3) some FSRs are received late and contain incorrect budget period
dates. The amount of Federal funds represented in our sample of
100 grants totaled $ 106 milion.
Federal Cash Transaction Report are not monitored; NCI relies on
self-reported information regarding unobligated funds
We asked NCI grants management staff whether they monitor the
submission of the quarterly Federal Cash Transaction Reports. They
OEI.07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 11 FINDINGS
told us that they do not. Instead, NCI grants management staff
indicated that they rely on the Offce of Financial Management to
monitor Federal Cash Transaction Reports to ensure that grantees' are
told us that
properly drawing funds. NCI grants management staff 
some, but not all, grants management specialists have access to the
Payment Management System, and very rarely would they check
Federal Cash Transaction Reports unless a grantee reported a problem.
However, an Offce of Financial Management offcial told us that his
offce "does not get involved with Federal Cash Transaction Reports."
The offcial indicated that Federal Cash Transaction Reports are
submitted only to the Payment Management System and that the Offce
of Financial Management does not examine or maintain copies of them.
We were unable to identif anyone who regularly reviewed the Federal
Cash Transaction Reports.
The annual progress report requires grantees to report unobligated
funds greater than 25 percent ofthe current year's total budget. We
asked grants management staff whether they verify this information
with an external source. NCI grants management staff indicated that
the grantee is the only source that they would check for the current
balance.
Long periods of time elapse between funding and submission of FSRs
NCI grants management staff indicated that they monitor the
submission of the FSR to see whether it has been submitted to and
approved by the Offce of Financial Management. For SNAP awards,
the project period, which is typically
the FSR is required at the end of 
4 to 5 years. However, even more time may elapse before submission of
the FSR, depending on whether the grantee requests a project extension
of 1 to 2 years. For example, from July 1, 2001, to June 30, 2006, a
grantee received $1,117,672. The grantee requested and received two
I-year extensions to complete the project, making the new project end
date June 30, 2008. The FSR is not due until September 30, 2008-
more than 7 years after funds were first awarded.
Eleven of twenty-three Financial Status Reports in our sample were received
late and some contained incorrect budget period dates
In our sample of 100 grants, 23 reached the end of their competitive
23 FSRs were present in
segments during FYs 2004, 2005, or 2006. All 
the fies. However, 11 of the 23 FSRs were submitted more than
90 days after the end of the project periods. These reports were
submitted between 8 and 573 days late. The grant files for some of the
OEI-07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 12 FINDINGS
late FSRs contained letters that NCI sent to grantees informing them
that an FSR was due but had not yet been received. For example, .NCI
sent a letter on March 22, 2006, to a grantee stating that an FSR was
past due. Because the project period had ended April 30, 2005, the FSR
was 237 days past due when the letter was sent. Grants management
staff explained that they check for the receipt of an FSR for a prior
funding in a new
project period before awarding the second year of 
project period. If the FSR is not on fie, then a deficiency letter is sent
to the grantee as a reminder of the requirement to submit the FSR, and
the annual grant award is not issued until the FSR has been received
and accepted.
For SNAP awards, the FSR must report on the cumulative support
the 23 FSRs
awarded for the entire competitive segment.24 For 12 of 
that we reviewed, the grantee reported dates on the FSR that did not
reflect the entire budget periods. Often, a grantee reported a period of
only 1 year. NCI grants management staff indicated that grantees often
mistakenly list the last year of the project period for the applicable
dates on the FSR but that this is an oversight. These FSRs usually
included the full amounts awarded in the project period but attributed
these amounts to an incorrect time period.
At the time of our review, the deficiency letter sent to grantees when
FSRs were late instructed grantees to submit "a completed Financial
Status Report (FSR) for the grant year prior to the last award.'~ We
why the letter was worded in that
asked NCI grants management staff 
manner. They explained that the letter was a form letter that is
generally not altered for SNAP awards to indicate the entire prior
project period. (Grantees that are not subject to SNAP must submit
FSRs annually.) NCI grants management staff reported that the letter
is suffcient to notify the grantee of the need for an FSR. However, the
language, which is inaccurate for grantees of SNAP awards, may lead to
these grantees' reporting on periods of shorter duration than the entire
competitive segment. Subsequent to our review, this deficiency letter
was revised to reflect that grantees should submit an FSR for the entire
competitive segment.
24 NIH, "Grants Policy Statement," p. 131.
OEI-07 -07 -00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 13 FINDINGS
Ofthe 100 grants in our sample,
Five of the nine required grant closeouts in our
9 grants were closed or eligible for
sample were not completed within the general
closeout. For five of the nine
timeframes specified in departmental guidelines
grants, the closeout process was
not completed within 180 days as
generally required by departmental policy.25 In one of these instances,
the grantee had received a I-year project extension, which made the
new project end date December 31,2005. The grantee submitted the
final FSR on January 27,2006, but neither the final progress report nor
the final Invention Statement and Certification had been received as of
October 2007. When we asked NCI grants management staff about the
closing of this grant, the staff responded that delinquency letters were
4 and October 24, 2006. The grant remained open at the
sent on April 
time of our review. In addition, one closed grant lacked the required
final Invention Statement and Certification. Upon request, NCI staff
could not provide the statement. After we shared a draft of this report,
NCI staff conducted additional research to locate the statement and
uploaded the form to eGrants.
During our review, we noted a particular practice that may delay
closing grants. When a grantee approaches the end of the current
competitive segment, it may submit a new application to continue the
research for an additional competitive segment. Such applications
require assessment and scoring by the review committee to determine
whether the application will receive funding. When an application does
not receive funding, the grantee has two opportunities to submit
amended applications. During this time, the grant remains open. For
example, a grantee received an award with the competitive segment of
July 1,2000, to June 30, 2005. The grantee submitted an application
for an additional competitive segment on April  14, 2005, but it did not
receive funding. The grantee submitted an amended application on
December 7,2005, which also did not receive funding. The grantee
submitted a second amended application on July 26, 2006, that was
approved by the review committee in January 2007. The new
competitive segment began April 1, 2007, nearly 2 years after the end of
the original competitive segment.
25 GPD Part 4.02 states that grants generally shall be closed out within 180 days of the
end of grant support.
OEI-07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 14 FINDINGS
The HHS GPD Part 3.06 requires
Insuffcient documentation impedes third-part
awarding agencies to create and
review of grant files in some cases
maintain fies that allow a third
party (e.g" auditor or other
reviewer) to follow the paper trail, from program inception through
individual awards, and decisions made and actions taken in
closeout of 
between. While conducting a review of  grant files, we generally were
the grants.
able to follow the documentation throughout the course of 
However, we encountered the following examples that impeded the
review process:
 Inaccurate dates-We found incorrect budget period dates on
progress reports and incorrect dates of proposed periods of support
on applications. In some instances, the correct dates were penciled
in, but this was not done in all cases, necessitating additional file
review to determine the correct dates.
 Inconsistent filing structure-NCI offcials told us that grant
applications were located in an electronic folder labeled Application
File. Although we found this to be true in the majority of grant files,
we found some with the first page of the application located in the
middle of a large (75+ page) folder labeled Grant File.
 Missing files-NCI maintains an Institutional File in which
grantees are listed in alphabetical order. This fie contains audit
and site visit reports. When we accessed the Institutional Files in
November 2007, we could not locate the fies for grantees beginning
with the letter "Y" (e.g., Yale University). It appeared that the
electronic fies for grantees beginning with the letter ''W' were
erroneously copied over the area where the Y files should have been.
No fies existed for institutions beginning with the letter Y and the
W files appeared twice.
NCllacks a consistent approach for documenting communication between
NCI and grantees
The NIH Grants Policy Statement emphasizes that NIH awarding
agencies, in regard to fulfilling their role as stewards of Federal funds,
monitor grants to identify potential problems and areas where technical
assistance might be necessary. In addition to reviewing progress and
financial reports, monitoring is accomplished through correspondence
OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 15 FINDINGS
and site visits.26 NCI offcials told us that, if there are questions on
information reported in the progress report, the grants management
specialist may e-mail or call the grantee for clarifcation.
Documentation of communication with the grantee is up to the
discretion of the grants management specialist and can occur different
ways. E-mails may be scanned and appended to the end of the progress
report and fied in the Application File, or notes of a telephone
conversation may be transcribed and included with a grants
management specialist's review checklist in the Award File. The lack of
a consistent approach makes it more diffcult for a third 'party reviewer
to locate grant file documents.
26 NIH, "Grants Policy Statement," p. 128.
OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 16 ..
RECOMMENDATIONS
Most signicant to the overall monitoring of grants is ensuring the
progress reports. NClhas several grants
completeness and accuracy of 
monitoring practices aimed at ensuring that progress reports are
reviewed and that grant funds are not awarded until progress reports
are received and accepted. In fact, NCI reviewed all progress reports to
monitor grantee performance. However, 41 percent were received late.
In some instances, NCI sent late notices 35 days after the grantees' due
date for the report. Furthermore, deficiencies exist in financial
oversight of Research Project Grants. Federal Cash Transaction
Reports are not monitored for unobligated fund balances, but instead
NCI relies on grantee-reported information. In our sample, 11 of
23 Financial Status Reports were late and five of nine required grant
closeouts were not completed within general departmental guidelines.
Research
Finally, we generally were able to follow NCI's monitoring of 
Project Grants in the fies, but insuffcient documentation impeded our
efforts in some cases.
Therefore, we recommend that NCI:
Initiate Earlier and More Frequent Followup With Grantees To Obtain
Required Documents Timely
Such diligence could promote grantee compliance with Federal
regulations and agency policies for submission of progress reports,
Financial Status Reports, and closeout documents.
Improve Grants Monitoring By:
 annually verifying grantees' self-reported fund balances with
external sources and developing an approach for financial reviews
that is not based solely on exceptions, and
 consistently documenting grantee correspondence and organizing
grant documents. This action could assist NCI staff, as well as
third-party reviewers, in following grantees' actions from inception
of the grant to closeout.
OEI-07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 17 RECOMMENDATIONS
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL
RESPONSE
NIH generally agreed with our recommendations and described actions
it plans to take in response to the recommendations. Regarding late
submission of progress reports, Financial Status Reports, and closeout
documents, NIH wil continue to address this issue in education
outreach sessions with grantee offcials and stress the need for
institutions to monitor and adhere to all report deadlines. In addition,
NIH expects to increase timeliness of reporting by grantees through
its electronic grants
continued development and deployment of 
management system, enabling electronic submission of certain progress
and closeout reports. Regarding the recommendation to improve grants
monitoring by annually verifyng grantees' self-reported fund balances
with external sources and developing an approach for financial reviews
that is not based solely on exceptions, NIH agreed that there may be
value in using the Federal Cash Transaction Report on a broader scale
and wil conduct a pilot study to review the Federal Cash Transaction
Report prior to issuing the award for a specific pool of grants. At the
end of the pilot study, NIH wil identify the population of grants for
which review ofthe Federal Cash Transaction Report will be required,
as well as best practices for the review and for resolution of any issues
that arise from the review. Additionally, NIH agreed with the
recommendation that grant files be properly documented and
organized. NIH wil continue to monitor the use of its electronic grant
system and update procedures for file documentation as necessary.
We did not make any revisions to the report based on NIH's comments.
For the full text of NIH's comments, see Appendix C.
OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 18 .. APPENDIX"'A
Glossary of Grant Terms
Application-Applicants seeking fiancial assistance for a project
formally request funds via an application. Applications are evaluated
for their scientifc merit and scored based on the project's potential
impact. The National Cancer Advisory Board conducts a second level of
review, evaluating grant applications in relation to the needs and
the National Cancer Institute (NCI). The entire process can
priorities of 
take approximately 10 months from application receipt to award.
Award-The provision offunds by NCI to an organization to carry out a
Research Project Grant based on an approved application and budget.
Budget Period-The interval oftime (usually 12 months) into which the
grant project period is divided for funding and reporting purposes.
Competitive Segment-The initial project period recommended for
support (usually 1 to 5 years) or each extension of the prior project
resulting from the award of a competing continuation grant.
awarded
Financial Status Report (FSR)-The FSR shows the status of 
funds for the competitive segment as maintained in the offcial
accounting records of the grantee institution.
Notice of Grant Award-The legally binding document that notifes the
grantee and others that an award has been made. This document
contains or references all terms and conditions for the award and
documents the obligation of Federal funds. The award notice may be in
letter format and/or may be issued electronically.
Source: National Cancer Institute (NCn, "Everything You Wanted to Know About the NCI
Grants Process But Were Afaid to Ask." Revised August 2005.
OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 19 ..
APPENDIX-B
95-Percent
Finding Point Estimate Confidence
Interval
Percentage of FYs 2004, 2005, and 2006 progress reports that were
41.4% 33.6%-49.2%
not received timely
OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 20 ..
APPENDIX
c
Agency Comments
Public Health Service
(~ DEPARME Df HETH " RUMAN ..""..
.....""~l-
National  Institutes of Health
Bethesda,. Mary1and 20892
~JUN 20 2008
TO: Daniel R. Levinson
Inspecor General, HHS
FROM: Director
Natioii Institutes of  Health
SUBJCT: National Insitutes of Health Comments on the Draft OlG Report
N(aOtionalE CanIce-r l0nstit7ue '-s M0on7itori-ng0 of 0Res1earc2h Pr0oje)ct G r.ants
Attached are our comments on the Offce of Inspector General draft report on grt
monitoring at the National Cance Institute. We appreciat the opportty to review and
comment on this report.
We believe that our comments will help you iIi prearing your final report on this.
importt issue. If you have any questions, please contact  Patrcia Quast, in the NIH
Offce of Manement Assesment, at 301-402-8264.
~wu~Jr (fr
Attchment
OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 21 A P PEN D
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COMMENTS OF THE NATIONAL INSTITUTES OF HEALTH (NIH)
ON THE OFFICE OF INSPECTOR GENERAL DRAFT REPORT, NAnONAL CANCER INSTITUTE'S
MONITORING OF ReSEARCH PROJECT  GRANTS (OEI-07-07-001iO)
OIG RECOMMENDATION
Initiate earlier and more frequent foUowup with grantees to obtain required documents
timely. Such diligence could promote grantee compliance with Federal regulations and
agency policies for submission of progress report, Financial Status Reports, and closeout
documents.
NIH RESPONSE
The Nll agrees in principle that ealier and more frequent follow up with grantees could result
in greater grate compliance. In fact, we have taken extensive actions, including earlier and
more frequent follow up with grantees, to improve gratee compliance with respt to timely
submission. We will continue to addres this issue by exploring and testing different approaches
to optimize grantee performance. The NIH fully expects that grtee performance will improve
with the ful deployment of its electronic systems, as evidence by the data presente in the
report. In addition, we will continue to remind grntees of  their responsibility to submit accurate
and timely report, as described elsewhere in ths document. .
The NIH and NCI have been working diligently to resolve the problem of late progress report as
evidence by the extensive actions  already taken. As documented by a previous OIG report
agree that grtes' delay in
grantees fruently submit incomplete or late progress report. We 
submitting progress report poses a low risk because it is NIH policy that additiona fuds ar not
awaded until progres reports are received, reviewed, and approved, as evidenced by NCI
actions. Grantees are responsible for ensuring timely and accurte reporting. The NIH continues
to achieve effciencies and improve performance of grantee institutions in this area.
We have developed and implemented many initiatives to address the problems associate with
late progress report. It is importt to understad. however, that although the Nl has and
continues to develop tools for its grant recipients, it is absolutely imperative tht grtee have
policies, procedur, and monitorig systems in place to ensure compliance with reportng
requirements. Actions taen to specifically address late anual (Type 5) progress report
include:
. The Nll and NCI continue to address late as well as incomplete reports in education
outrch sesions, clarifying Nll requirements and focusing on grtee responsibilties,
. including those of  the PI, and the need for institutions to monitor and adhere to all report
deadlines. The NCI continues to stress the importance of  timely and complete reports,
specificaly citing data that ilustrtes the magnitude of the problem and the negative and
costly impact late and incomplete reports have on NCI sta. NCI staff strss the
OEI-Ol-Ol-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 22 A P PEN D
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importce of grantees monitoring their own performance and implementing appropriate
measuIs to ensur reporting compliance. The NIH and NCI will continue to stress
reporting requirements and compliance at all outreah meetings with grantee offcials.
 In 2004, the NTH implemented a system  though the eRA Commons, an electonic grnts
mangement system, enabling grantes to submit an electronic verion of  the Stramlined
Noncompeting Awar Proces (e-SNAP) Type 5 progress report.
 E-mail reminders are sent to Principal Investigators (PIs) two months
before a Type 5 prog;ess report is due.
 E-mail reminders ar sent to Principal Investigators when a Type 5
progress report is more tha I 5 days late.
 Similar e-mail reminders are in development for business offcials at
grantee institutions.
 As noted above, grantees are responsible for monitoring and meeting
reporting deadlines. To assist that effort, we have creted a Web site
that grantees can access for noncompeting progress report (Typ 5) due
date informaton. This allows grtee offcials to obta a list of  when
all Typ 5 progress report for their institution are due and when reports
are delinquent (htto:/lera.nih.gov/userreportsfor due.cfm). Due date
information is also available in the eRA' Commons Status system
accessible by both PIs and institutional Administrtive Offcials.
Final progress reports are one element of grt closeout docwnentation. To address late final
progress reports, we have taen the following actions:
 In June 2005, we introduced a new Closeout featu in the eRA Commons that provides
the capabilty  to electronicaly submit required Closeout Reports: final progress report
final Financial Statu Report (FSR), and final inventions statement.
 All grtee institutions are required to be registered in the eRA Commons, which allows
them to query in the Commons Status system for those grts that are in a closeout
statu. Commons users can then enter the Closeout screens to electronically process and
submit the reuired report.
 A Term of Awar is automatically included in the Notice of Award for the final year of
the project period reminding grantees of the requirement to submit closet information
using the eRA Commons withn 90 days of  the end of  the project peod.
 To assist NIH grants management staf in addressing the problem of late closeout, we
developed an electronic closeout module in IMP AC II. In 2004, we made it a
2
OEI-07-07-00l20 MONITORING OF NCI RESEARCH PROJECT GRANTS 23 A P PEN 0
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requirement that all NIH Institutes and Centers use the closeout module for all grant
awards expirng on or afer October I, 2004.
 In fiscal year 2008, we completed the tranition of administrative closeout fuctions from
all NIH Institues and Centers (lCs) to the Division of Extrural Activities Support
(DEAS). The DEAS is responsible for grants closeout, in acrdance with standard
operating proedures, for all of the NtH awarding components.
. NIH grts management staff no longer perform closeout fuctions.
The data in the report indicate tha for the 100 sampled NCI grants, i 3 percent of the electronic
progress report were received late in contrast to 49 percent of  paper progress reports that were
received late. We believe that when the NIH electronic systems ar fuly developed and
electronic submission of  Typ 5 progress reports is required, timeliness will improve, as
suggested by the data in this report Until then, we wil continue om efforts to address late
Type 5 progress report.
OIG RECOMMENDATION
Improve grants monitoring by annually verifying grantees' self-reported fund balances
with external sources and developing an approach for financial reviews that is not based
solely on exceptions.
NIH RESPONSE
The NCI agees ther may be value in using the Fed..ral Cash Tranaction Report (FCTR)
(pMS 272) on a broader scale than is currntly being done. In order to determine the best most
productive use of  the 272 report NCI will conduct a pilot study.
The arual progress reports for SNAP applications require that the gratee answer th
questions, including whether they anticipate an unobligated balance grater th 2S percent of
the current year's total budget. Similar inormation on signficant balaces (25 percet of the
curnt year's tota authorized budget) is also requested as par ofthe budget justification in non-
SNAP progress reports. NCI Offce of Grants Administraion (OGA) staff review the
information provided in conjunction with program sta review of the progress report in the
application. If there appea to be discrepancies between the report balance and the progress
made in the project, they are discussed with the grantee. In addition, ifthe grantee report a
large balance, OGA sta  will contat the grtee to verify th magnitude of  the balance and
discuss options for use of the funds based on the cirumces (e.g., reducing the pending
award, allowing the caover on the pending award, or restrcturing timelines). The FCTR
(pMS 272) wil also be reviewed in grants for which there appear to be problems or
balances in the progress report. .
discrepancies in reporting of 
3
OEI.07.07.00120 MONITORING OF Net RESEARCH PROJECT GRANTS 24 A P PEN D
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Submission of the FCTR is monitored by staff of the Payment Management System (PMS). All
OGA staf have access to the PMS and review the FCTR on an as-needed basis. Th FCTR is
one of  the tools usedby OGA staf  to monitor balances in grt awars, when necessary.
However, the limitations of  this data as a monitoring tool  nee to be noted.
The PMS is based  on the calendar yea, so information raly coincides with the budget period
for any partcular grant. In addition, the FCTR reports are baed on quaerly draw downs
(March 31, June 30, Septembe 30, and December 31 ),and report are not due frm the grantee
until  45 days after the end of  the quar, so expenditure analysis is not curent. However,
becuse the report provide a general indication of  the baance remaining in a grant account, they
are used as an additional monitorig tool, as the paricular situation warrants. A worksheet is
available for grts management staff to asist them in using the FCTR information as a fiscal
monitoring tool.
In response to the recommendation, the NCI will conduct a pilot study to develop an~ evaluate
best practices for reviewing FCTR reports and to determine for which population of grants this
review is appropriate, given the limitations of the PMS report noted abve.
Specifically, the NCI plans to institute:
. A pilot study to conduct a review of  the FCTR (pMS 272) report prior to issuing the
awar for a specific pool of grants.
 If  the PMS 272 reflects that the grantee has accurately reported the anticipated
unobligated balance in the progress report, the fie will be docwnented accordingly.
. If a review of the PMS 272 rases questions or concerns about the gratee's
the balance, the specialist will reuest additional infonnation from the
reportng of 
garantcee, cwillo taer appdropriiaten actgion las nyecss.ar,  and .will  doc.ument  the fie
the pilot stuy, the NCfwill evaluate the data and develop appropriat
 At the end of 
stadard operating procedur. The procedures will identify the population of
grants for which the Grats Speialist wil be required to review the FCTR
PMS 272 report, as well as the best practices for the review and for resolution of
any  issues tht arise from the review.
OIG RECOMMENDATION
Improve grants monitoring by consistently documenting grantee correspondence and
organizing grant dCKuments to assist NCI staff and third-party reviewers with following
grantees' actions from inception of  the grant to closeout.
NIH RESPONSE
The NCI agrees with the recommendation that offcial fies be properly documented and
organized. We note that the reviewers were generally able to follow the documentation
4
OEI.07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 25 A P PEN D
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the grants and conf tha the NCI had proper docuentaon for its
thoughout the coure of 
actions. As discussed below, the NCI has and will continue to inonitor and improve eGrats for
all users.
The NCI has develope an implemented a fuly  integrated stae-of-the-ar electronic grat file
system known as eGrants, which staff continualy monitor, evaliite, and improve. The NCI's
prima goal is to mantain and enhance an electronic grant fie system that is curent, complete,
consistently organized, and user frendly. The eGrats system allows authorized users to easily
follow and review the flow of grt documents from inception to closeout.
The NCI OGA has always reCognized the  need to have a consistent andeffcient electronic grat
fie. In order to promote consistency in fie documentation, OGA has developed and continually
updtes guidance to staff. "The List of Standard Practices for Electronic Review and
Grt Files," dated November 2007, has a list of stadad practice for
Documentation of 
electronic documentation of grt files. We will continue to monitor the use of eGrats and to
updte our procdUres for fie documentation as necessary.
A history of  the evolution of eGts is attched  for fuher reference.
6/19/08
5
OEI.07.07.00120 MONITORING OF Nei RESEARCH PROJECT GRANTS 26 A P PEN D
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AITACHMENT
The NCI Offce of Grats Administration (OGA) traition from working with a well-organized
offcial paper-based grant fie to an eleconic document management systm has taen place
over the last i 4 years. It has been.a process incrementa in natue, with tranitional staes being
implemented to take advantage of  the most rect advances in technology. During ths time
period-specific guidelines for sta regarding fie documentation, indexing stdads,
bookmaking, etc., have periodically been revised and updated based on user feedback from
and program stff, as well as extrnal comments made by independent
grants management 
entities.
The trsition from paper to electronic fies began in 1993, with a feaibilty study regarding the
tranition of  the application fie back-up from microfiche to an Electronic Imaging Management
Systm.
In 1996, the conversion system was implemented-a back-fie conversion of  grt applications
to indexed electronic images-tis went back to the last competing yea. The back-file
conversion was completed in 1999 with 2.5 millon pages scaed in the eGrts database.
In i 998, we began niing demonstrtions of  the electronic fie system in multiple small group
settings to a vanety ofNCI, NIH, and grtee staff. A significant purse ofthese
demonstrtions was to get user feedback. In Marh 2000; eGants was rolled out for extensive
NCI extramurl use as a Web-based system.
In November 2002 (fiscal-year 2003), the NCI began processing SNAP applicaions exclusively
using eGrats, eliminatng the paper files for these mechanisms.
In April 2004, we moved into processing other types of mechanisms using eGrants. This
amounted to approximately 70 percent of  the workload. However, for the more complex
mechanisms, staff was stil marking up paper copies that were .then rescanned into eGrats:
In Augut 2004, thee flat panel LCD c~nfiguations were intrduced to OGA staffto enable
them to work the remaining 30 percent of  their portfolio electronically.
the grt
In October 2004 (fiscal year 2005), NCI Grants staf  began working 100 percent of 
portfolio electrnically-meaing no paper 'fies at a11-ad we began destroying existing paper
fies:
In FY 2006, over 20 percent (i ,200 linear feet) of the OGA' s records mangement center shelves
were empty. Currently, the OGA does not have any paper fies in the records management
center, over 35,000 active paper grts fies have been shredded, and all of our offcial fies are
kept in the eGrts database.
6
OEI-07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 27 A P PEN D
x c
As previously stated, the OGA manages i 00 percent of grant portolios electrnically. This
business practice is possible by utilizing the eGrants database and the Adobe Acrobat softare.
In order to maintan a consistent and effcient grant folder, the OGA has once again updated its
guidance to stff "The List of Stadad Practices for Electronic Review  and Documentation of
Grat Files," dated November 2007, is a compilation of stadad practices for electrnic
documentation of grt files, and the OGA has shared this  document with the nine other ICs that
are curently using eGants.
We feel that we have consistently documented the grant files and organized grant documents to
assist and facilitate NCI sta and third-pary reviewers with following grtees' actions from
inception of  the grt to the closeout.
6/19/08
7
OEI.07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 28 .. ACKNOWLEDGMENTS
Brian T. Pattison,
This report was prepared under the direction of 
Regional Inspector General for Evaluation and Inspections in the
Kansas City regional offce.
Tricia Fields served as the team leader for this study. Other principal
Offce of Evaluation and Inspections staff from the Kansas City regional
offce who contributed to the report include Michael Barrett, Rae
who contributed
Bozworth, and Dennis Tharp; other central offce staff 
include Robert Gibbons and Mark Richardson.
OEI-07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 29