Department of Health and Human Services 
OFFICE OF 
 
  INSPECTOR GENERAL 
 
 
 
 
 
HHS O
  VERSIGHT OF 
 
 
G C B
RANTEES  OULD  E 
 
 
I T
MPROVED  HROUGH 
 
 
B
ETTER 
I -S  
NFORMATION HARING 
Suzanne Murrin  
Deputy Inspector General  
for Evaluation and Inspections  
 
September 2015 
OEI-07-12-00110   
   
EXECUTIVE SUMMARY:  HHS OVERSIGHT OF GRANTEES COULD BE 
IMPROVED THROUGH BETTER INFORMATION-SHARING 
OEI-07-12-00110 
 
WHY WE DID THIS STUDY 
 
The Department of Health and Human Services (HHS) is the largest grantmaking agency 
in the Federal Government. In fiscal year 2014, HHS awarded nearly $402 billion in 
grants. We conducted this study to assess how HHSs grant-awarding agencies share 
information with each other about grantees and potential grantees to assess and mitigate 
risks of poor performance or misuse of grant funds.  Assessing and mitigating grantee 
risk is a component of HHS strategic initiatives.  Additionally, since 2007, the Office of 
Inspector General has identified grants management as a top management challenge for 
HHS. 
 
HOW WE DID THIS STUDY  
 
We conducted structured telephone interviews with the Chief Grants Management 
Officer and/or designated staff from each of 13 HHS awarding agencies.  We also 
collected data from awarding agencies regarding alert memorandums and fraud 
memorandums from the National External Audit Review Center (NEARC). 
 
WHAT WE FOUND 
 
Awarding agencies grant officials use various sources of information and communication 
to mitigate grantee risks; however, grant officials noted limitations in some instances.   
For example, information available in databases assists staff from awarding agencies in 
managing grantee risks, but lack of integration poses challenges.  NEARC memorandums 
contain important information about grantee risks, but not all awarding agencies receive 
them.  Awarding agencies lack a systematic method of sharing information about grantee 
risks, and sharing occurs infrequently. However, grant officials in the majority of  
awarding agencies we reviewed would like to receive such information from other 
awarding agencies.  
 
WHAT WE RECOMMEND 
We recommend that the Assistant Secretary for Financial Resources (1) analyze whether 
to implement the use of integrated databases that contain adverse information on 
grantees past performance, (2) establish a departmentwide source of adverse information 
from audits of grantees, and (3) facilitate departmentwide information-sharing about 
grantees that have past performance issues.  ASFR concurred with all three 
recommendations.  
   
   
   
 
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................4 

Findings........................................................................................................6 

Awarding agencies grant officials use various sources of 

information and communication to mitigate grantee risks; 
 
however, grant officials noted limitations in some instances ..........6 

NEARC memorandums contain important information about 
grantee risks, but not all awarding agencies receive them ...............7 

Awarding agencies lack a systematic method of sharing 

information about grantee risks, and sharing occurs infrequently ...9 

Conclusion and Recommendations ............................................................11
  
Agency Comments and Office of Inspector General Response.....................13 

Appendixes ................................................................................................14 

A: FY 2014 Grant Awards by Awarding Agency ..........................14 

B: Databases Used By Awarding Agencies to Mitigate Grantee 

Risks...............................................................................................15 

C: Agency Comments  ...................................................................16 

Acknowledgments......................................................................................18 

 
 
   
   
OBJECTIVES 
To determine: 
1. 	  how Department of Health and Human Services (HHS) agencies that 
award grants use information and communication to mitigate grantee 
risks;   
2. 	  the extent to which these agencies use alert memorandums and fraud 
memorandums from the National External Audit Review Center 
(NEARC); and 
3. 	  whether these agencies receive and/or share information on grantees 
that they are concerned about with regard to performance and/or 
accountability. 
BACKGROUND 
HHS is the largest grantmaking agency in the Federal Government.  In 
fiscal year (FY) 2014, HHS awarded nearly $402 billion in grants, 
approximately 24 percent of which funded programs other than Medicaid 
and the Childrens Health Insurance Program.1  We conducted this study to 
assess how HHS agencies that award grants (hereafter referred to as 
awarding agencies) share information and mitigate risks.  Assessing and 
mitigating this risk is a component of HHS strategic initiatives.2  
Since 2007, the Office of Inspector General (OIG) has identified grants 
management as a top management challenge for HHS.  As discussed in 
OIGs top management challenges, implementation of planned program  
integrity initiatives such as evaluating and monitoring risks and resolving 
reported audit findings regarding grantees would better position HHS to 
integrate program integrity into all aspects of its operations.3  
HHS Grants 
Within HHSs Office of the Assistant Secretary for Financial Resources 
(ASFR), the Office of Grants and  Acquisition Policy and Accountability 
(OGAPA) provides departmentwide leadership and management in the 
areas of grants and acquisition management.  OGAPA achieves this 
through policy development, data systems operations and analysis, 
performance measurement, oversight and workforce training, 
development, and certification.  Within OGAPA, the Division of Grants 
____________________________________________________________ 
1 See Appendix A for the number and dollar amount of  grants by awarding  agency.  
2 HHS, HHS Strategic Plan. Accessed at http://www.hhs.gov/strategic-plan/goal4.html  
on August 6, 2014. 
3 OIG,  2014 Top Management  & Performance Challenges.   Accessed at 
https://oig.hhs.gov/reports-and-publications/top-challenges/2014/ on  December 2,  2014. 
HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110)   1 
   
   
provides technical assistance to the Departments grant-awarding 
agencies; evaluates effectiveness of the grant programs and processes; 
develops pertinent departmentwide regulatory guidance, policies, and 
performance standards; and maintains and reports departmental 
grant/financial assistance award information.4  
Grantees may receive funding through multiple awarding agencies within 
HHS. For example, a community social service agency might receive 
funds from both the Administration for Children and Families (ACF) and 
the Substance Abuse and Mental Health Services Administration 
(SAMHSA). Similarly, grantees may receive funding through multiple 
offices within the same awarding agency. 
Federal Regulations and Departmental Guidance 
Awarding agencies must comply with Federal regulations and 
departmental guidance in issuing grants.  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.  Federal regulations contained in 45 CFR part 92 
establish uniform administrative requirements governing HHS grants to 
State, local, and tribal governments.5   The HHS Grants Policy Directives 
(GPD) provide guidance on grants management issues to affected program 
offices at all organizational levels within the Department.  The GPD are 
the highest level of departmental grants policy within the Department.  
The Awarding Agency Grants Administration Manual (AAGAM) 
implements the GPD by providing detailed guidance to awarding agency 
staff involved in grants administration.  The AAGAM must be used by any 
awarding agency that does not maintain its own grants administration 
manual (GAM).6  The National Institutes of Health (NIH) is the only 
awarding agency with its own GAM.  The Division of Grants is working 
on a new Grants Policy and Administration Manual that will incorporate 
the recently implemented Uniform  Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards7 and will replace 
the AAGAM. 
   
____________________________________________________________ 
4 HHS, Office of the Assistant Secretary for Financial Resources Functional Statement. 
Accessed at http://www.hhs.gov/asfr/asfr-functional-statement.html on January  26, 2015. 
 
5 On December 19, 2014, 45 CFR pts. 74 and 92 were replaced by 45 CFR pt. 75, which 

adapts the Office of Management and Budgets final guidance in 2 CFR pt. 200 with 

certain amendments.  79 Fed. Reg. 75871  (Dec. 19, 2014). 

6 AAGAM ch.  1.01.101-2. 

7 The Department implemented Uniform Administrative Requirements, Cost Principles, 

and Audit Requirements for Federal Awards in  2 CFR pt.  300 and 45 CFR pt. 75.  
 
79  Fed.  Reg.  75872, 75875 (Dec. 19, 2014). 

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Databases Relevant to Grants and Grantees 
Many databases contain information about grantees and/or grant awards.  
Grant officials may consult these databases to obtain information about 
current or potential grantees.  For example, grant officials can view 
payment histories from current and previous HHS grants in the Payment 
Management System.  In another example, the System for Award 
Management identifies entities that are registered to do business with the 
Federal Government as well as those that are excluded.  Appendix B lists 
these and other databases, describes the information they contain, and 
describes how they are used. 
Awarding Agency Staff Roles and Responsibilities 
The GPD outline the primary responsibilities of the awarding agency staff 
involved in the award and management of HHS grants.8 Each awarding 
agency head must designate an individual to serve as the HHS official 
responsible for the business and nonprogrammatic management aspects of 
its grants. This official is known as the Chief Grants Management Officer 
(CGMO). 
The CGMO has the authority to appoint additional grants management officers 
(GMOs) for his or her awarding agency.   GMOs are responsible for all Federal 
business management matters associated with the review, negotiation, award, 
and administration of grants to which they are assigned.  They also interpret 
policies and provisions for grants administration.    
National External Audit Review Center 
Grantees that expend Federal funds totaling $500,000 or more in a year 
are required to have a single or program-specific audit conducted by a 
public accountant or by a Federal, State, or local governmental audit 
organization.9  The National External Audit Review Center (NEARC) 
part of HHSis the point of receipt for these required audits of grantees.  
As part of its review of these audits, NEARC may determine that certain 
negative audit findings merit appropriate action by awarding agencies.  
For example, an audit may find that a grantees financial condition raises 
substantial doubt about the grantees ability to continue operations.  In 
such cases, NEARC issues an alert memorandum to each awarding agency 
from which the grantee has received a grant, in addition to notifying 
OGAPA and certain regional and headquarters OIG staff.  Alert 
memorandums also contain information about repeat negative audit 
findings, if such findings exist. 
____________________________________________________________ 
8  GPD pt. 1.04. 
 
9 Pursuant to  Office of Management and Budget Circular  A-133, subpt. B.  Effective 

December 26, 2014, this threshold changed to  $750,000. 

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NEARC issues another type of memorandum, called a fraud alert, if an 
audit finds potential fraud (e.g., travel vouchers submitted for expenses 
not actually incurred). The distribution list for fraud alerts is the same as 
for alert memorandums, with the addition of notifying the Special Agent 
in Charge for the applicable regional OIG Office of Investigations. 
Until 2007, the HHS Office of Grants maintained an Alert List, which 
included grantees for which NEARC issued memorandums.  The purpose 
of the Alert List was to safeguard Federal funds by alerting other awarding 
agencies to the potential risks of awarding funds to these grantees.  In 
2007, the HHS Office of Grants suspended the use of the Alert List, 
pending a major redesign to increase internal control over its use and to 
better support postaward monitoring and oversight.  To date, the Alert List 
has not been reinstated, nor has another departmentwide tool been 
implemented in its place for grant officials to obtain adverse information 
from audits.  However, the AAGAM still refers to the Alert List.10  
METHODOLOGY 
Scope 
This evaluation included 13 awarding agencies, consisting of 10 HHS 
operating divisions (ACF, the Administration for Community Living 
(ACL), the Agency for Healthcare Research and Quality (AHRQ), the 
Centers for Disease Control and Prevention (CDC), the Centers for 
Medicare & Medicaid Services (CMS), the Food and Drug Administration 
(FDA), the Health Resources and Services Administration (HRSA), the 
Indian Health Service (IHS), NIH, and SAMHSA) and 3 HHS staff 
divisions (the Office of the Assistant Secretary for Preparedness and 
Response (ASPR), the Office of the Assistant Secretary for Health 
(OASH), and the Office of the National Coordinator for Health 
Information Technology (ONC)).  To determine whether grantees 
continued to receive grant funds in subsequent years after being the 
subject of audit findings that warranted alert and/or fraud memorandums, 
we used the timeframe of FY 2011 as the baseline for this analysis.  We  
reviewed the most current departmental and agency directives available at 
the time of our data collection.  We did not access information in 
individual grantee files, nor did we determine whether grant funds were 
spent appropriately. 
   
 ____________________________________________________________ 
10 AAGAM ch. 2.01.101.  HHS departmental guidance regarding grants is  in the process 
of being updated into a new Grants Policy and Administration Manual. 
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NEARC Alert and Fraud Memorandums 
We obtained and analyzed all 110 alert and fraud memorandums issued by 
NEARC in FY 2011 to determine the number of grantees with negative 
audit findings that NEARC determined to warrant the attention of  
awarding agencies for appropriate action.  We identified the number of 
these grantees that continued to receive grant awards in FYs 2012 and 
2013. 
Departmental and Awarding Agency  Directives 
We reviewed departmental and awarding agency directives to delineate 
awarding agencies responsibilities in these areas:  analyzing a grantees 
past performance prior to initial award funding or continuation funding, 
sharing information about problematic grantees, and taking action as a 
result of receiving this information.  We reviewed Departmental directives 
including the GPD and the AAGAM.  For directives from awarding 
agencies, we reviewed the NIHGAM and any other directives that 
awarding agencies reported to us (e.g., standard operating procedures for 
risk mitigation).  
Structured Interviews With CGMOs  
We conducted structured telephone interviews with the CGMO of each of 
the 13 awarding agencies and/or his or her designated staff.  We asked 
questions about awarding agencies use of NEARC memorandums, their 
activities for analyzing a grantees past performance prior to initial award 
funding or continuation funding, and their sharing of grantee-related 
information with other awarding agencies.  We also solicited suggestions 
for mitigating grantee risks.  To the extent possible, we validated interview  
responses with the oversight practices described in written procedures.  
We analyzed the structured interviews for common themes across 
respondents. 
Limitations 
We obtained information from awarding agencies grants officials through 
open-ended questions in structured interviews.  Regarding the themes that 
emerged, we counted only responses that were explicitly stated and did not 
follow up with all respondents to determine whether they  shared the same  
perspectives.  Therefore, when we point out issues raised by a subset of 
respondents, we may not have related views from all 13 awarding agencies.  
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
   
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FINDINGS 
HHS is the largest grantmaking agency in the Federal Government, 
awarding nearly $402 billion in grants in FY 2014.  We conducted this 
study to assess how HHS awarding agencies share information about 
grantee-related risks and how they mitigate these risks.  Awarding 
agencies grant officials use various sources of information and 
communication to mitigate grantee risks; however, grant officials noted 
limitations in some instances.  NEARC memorandums contain important 
information about grantee risks, but not all awarding agencies receive 
them.  Less than half of awarding agencies share grantee information with 
other agencies; however, grant officials report that they would like to 
receive this information.  There is no requirement or systematic method to 
share grantee information across awarding agencies.   
Awarding agencies grant officials use various 
sources of information and communication to mitigate 
grantee risks; however, grant officials noted 
limitations in some instances 
Information available in databases assists awarding agency staff to 
manage grantee risks, but lack of integration poses challenges. Grant 
officials named a variety of sources of information about grantees that are 
available in searchable databases.  Appendix B lists these databases, 
describes the information they contain, and describes how they are used.  
Grant officials from 3 of the 13 awarding agencies voiced concerns about 
a lack of integration with regard to the databases they use to identify 
potential grantee risks.  For example, one grant official suggested that 
there should be one portal from which to access the various databases that 
verify the legitimacy of grantee organizations.  Grant officials from two 
awarding agencies noted concerns about conflicting information 
(e.g., grant award numbers) across various databases. 
Grant officials review reports to mitigate grantee risks, but these reports 
may be late and do not include descriptive information. Grant officials 
from 6 of the 13 awarding agencies mentioned the importance of 
reviewing grantees Federal Financial Reports and/or progress reports in 
mitigating risks.  Two of these six grant officials said that late and/or 
inaccurate reporting can be early warning signs that grantees are 
experiencing problems.  However,  one grant official commented that 
Federal Financial Reports indicate only the amount of funds expended, not 
how the funds were spent or whether they were spent properly.  
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Communication among GMOs, program officers, and grantees help to 
mitigate grantee risks, but lapses in communication pose challenges.   
Grant officials from 8 of the 13 awarding agencies told us that 
communication has helped their awarding agencies to mitigate grantee 
risks. This included communication between program officers and 
grantees and between program officers and GMOs.  Grant officials noted 
that having close interaction with grantees can help prevent grantees from  
doing something improper.  For example, when a grantee knows that it can 
call its program officer to obtain guidance before taking an action, this 
guidance can prevent the grantee from inadvertently making a prohibited 
expenditure. Grant officials from  two awarding agencies noted that 
turnover of grantee staff can be high, which underscores the need for 
establishing and maintaining ongoing communication with grantees.  
Grant officials noted the importance of timely communication between 
program officers and grants management staff (e.g., GMOs) regarding 
grantee actions. Grant officials from 2 of the 13 awarding agencies noted 
that time lapses in program officers communication of negative 
information can impact the enforcement actions that grants management 
staff would take.11   Therefore, program officers need to report any red 
flags right away. 
NEARC memorandums contain important information 
about grantee risks, but not all awarding agencies 
receive them 
Not all awarding agencies maintain NEARC memorandums. Grant 
officials for 10 of 13 awarding agencies reported that they receive 
NEARC memorandums and maintain them either electronically or in hard 
copy. Grant officials from five awarding agencies offered that historical 
files of NEARC memorandums were useful for pre-award assessments of 
grantees.12  
For example, a grant official from one awarding agency reported that the 
agency has maintained an electronic spreadsheet, updated weekly, of 
NEARC memorandums since 2007.  This informs grants management 
staff of grantees previous audit findings.  Similarly, grant officials from  
another awarding agency reported that the agency has maintained a 
____________________________________________________________ 
11 An awarding agency may take enforcement actions if a grantee does not comply with  
the terms and conditions of the award.  Examples of enforcement actions include 
temporarily withholding cash payments and  requiring a grantee to spend its own money 
up front and submit receipts for reimbursement. 
12 Grant  officials from five awarding agencies volunteered this information about the  
usefulness of NEARC  memorandums;  we do not know whether the remaining grant  
officials found them useful. 
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hardcopy file of NEARC memorandums since 2006.  These grant officials 
reported that this file had been helpful during pre-award assessments, 
particularly for grantees with which they had no prior experience. 
The grant officials for the remaining three awarding agencies reported that 
they either did not receive NEARC memorandums or did not maintain 
them.  The grant official for one awarding agency stated that she did not 
receive NEARC memorandums13 and the grant officials for the other two 
awarding agencies stated that they saw no need to maintain memorandums 
if their respective agencies did not have current grants with the audited 
grantees.  
NEARC memorandums communicate grantee risk information to awarding 
agencies. In FY 2011, NEARC issued alert and/or fraud memorandums 
regarding 90 unique grantees. Of these grantees, 56 percent (50 of 90) 
received HHS grant funds in FYs 2012 and/or 2013.  Figure 1 provides 
information from the two alert memorandums that NEARC issued in 
2011one in January 2011, one in March 2011for one grantee.   
Figure 1: Example of Information From NEARC Memorandums   
 
  January 2011NEARCs review of the grantees 2008 audit 
report revealed that $174,411 of Federal funds were drawn 
down in excess of the grantees immediate needs and an audit 
report was received nearly 6 months late.   
 
  March 2011NEARCs review of the grantees 2009 audit 
revealed that the grantee had experienced continuing losses 
from operations, had a liability to the Internal Revenue 
Service in the amount of $212,362 for payroll taxes and 
associated penalties and interest, and had a cash shortage of 
$61,464. NEARC stated in the memorandum that it appeared 
that program funds were used for non-program purposes.  
NEARC further stated that these conditions raise substantial 
doubt about the Organizations ability to continue as a going 
concern. If the Organization is unable to continue operations, 
the objectives of the Federal programs may not be met, and 
the Federal funds advanced may be at risk. 
The grantee cited in the example above received funds from only one HHS 
awarding agency during the years covered by the audit reports; however, 
the grantee continued to receive grant funds in FYs 2012 and 2013 from 
 ____________________________________________________________ 
13 In August 2014, NEARC confirmed that the grant official was on its distribution list. 
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two HHS awarding agencies totaling $2.2 million and $1.8 million, 
respectively.  
Awarding agencies lack a systematic method of 
sharing information about grantee risks, and sharing 
occurs infrequently  
Less than half of awarding agencies share information about grantees 
with other agencies.   Grant officials from 6 of 13 awarding agencies 
reported that they had shared information with another awarding agency.  
Of these six grant officials, one said that he occasionally receives requests 
from other grant officials asking about a grantees past performance.  
However, the grant official expressed reluctance to answer such inquiries, 
stating that he provides information about the grantees timeliness in 
submitting financial and progress reports, but does not provide further 
detail.  
Of the officials from the six awarding agencies that share information with 
other awarding agencies, those from  two awarding agencies volunteered 
that they contact other awarding agencies with information more 
frequently than they receive information from other awarding agencies.  
An official from one awarding agency stated that the agencys staff use the 
Tracking Accountability in Government Grants System to determine 
awarding agencies with which they have grantees in common.  At the end 
of each year, this official sends emails to grants staff at other awarding 
agencies regarding concerns about those common grantees.  Officials from 
three awarding agencies noted that information about problematic grantees 
affecting multiple awarding agencies is shared at the Department level, 
either through guidance or during in-person meetings. 
Grant officials in the majority of awarding agencies we reviewed would 
like to receive grantee risk information from other awarding agencies; 
however, there is no requirement or systematic method to share grantee 
information across awarding agencies.   Officials from eight awarding 
agencies stated that they would like to receive information about other 
awarding agencies concerns regarding grantee performance expectations 
and/or accountability requirements.  Further, officials from six awarding 
agencies responded that receiving this type of information could improve 
their respective agencies  abilities to mitigate grantee risks.  As one 
official stated, If someone had already identified a prior problem [with a 
grantee meeting its] terms and conditions, it would help us focus our 
resources on problems.  Another official stated that being aware of other 
awarding agencies experiences with grantees would assist the officials  
own agency in taking a proactive approach to grantees with known 
problems.  In contrast, two grant officials pointed out that although such 
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information might be helpful, a grantees history at one awarding agency 
does not necessarily mean that the grantee will have the same problem at 
another.   The grant officials said that the applicability of the information is 
dependent on the nature of the work that the grantee is to perform.  
   
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CONCLUSION AND RECOMMENDATIONS 
HHS is the largest grantmaking agency in the Federal Government, 
awarding nearly $402 billion in grants in FY 2014.  We conducted this 
study to assess how HHS awarding agencies share information and 
mitigate risks.  To mitigate this risk, awarding agencies grant officials use 
various sources of information and communication to mitigate grantee 
risks; however, grant officials noted limitations in some instances.  
NEARC memorandums contain important information about grantee risks, 
yet not all awarding agencies receive them.  Finally, no systematic method 
of sharing grantee risk information across awarding agencies exists, and 
sharing occurs infrequently.  Therefore, we recommend that ASFR: 
Analyze whether to implement the use of integrated databases 
that contain adverse information on grantees past 
performance 
ASFR should analyze whether to implement the use of databases that 
would integrate various sources of existing information on entities 
applying for or receiving Federal funds.  For example, the Department of 
the Treasurys Do Not Pay Web site integrates the HHS List of Excluded 
Individuals and Entities, the System for Award Management, the Social 
Security Administrations Death Master File, and the Treasury Offset 
Program Debt Check.  Use of integrated databases could provide 
risk-relevant information in a more efficient manner than checking 
numerous separate databases.    
 
Establish a departmentwide source of adverse information 
from audits of grantees 
ASFR should establish a departmentwide source of adverse information 
from audits of grantees.  ASFR should ensure that grant officials have 
timely access to this information to use it in pre-award assessments and to 
mitigate grantee risks.  
During the course of our review, the Office of Management and Budgets 
(OMB) updated guidance on Uniform Administrative Requirements, Cost  
Principles, and Audit Requirements for Federal Awards became effective 
on December 26, 2014.  Implementation of this guidance may change 
NEARCs involvement in issuing alert and fraud memorandums in the 
future. 
   
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Facilitate departmentwide information-sharing about grantees 
with past performance issues 
ASFR should facilitate information-sharing among awarding agencies  
grant officials regarding grantees that have experienced performance 
issues. ASFR could facilitate internal meetings or develop an internal 
database of grantees performance problems and points of contact.    
   
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AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
ASFR concurred with all three of our recommendations.   
In responding to our first recommendation, ASFR stated that OMB is in 
the process of promulgating a new regulation that will require awarding 
agencies to report the following: awards that are terminated because of 
noncompliance with the award terms and conditions; actions to resolve a 
suspension or debarment proceeding; and any finding that a non-Federal 
entity is not qualified to receive a given award on the basis of prior 
performance under Federal awards.  The regulation will require awarding 
agencies to report this information to a designated integrity and 
performance system.  HHS will publish a Grants Policy Administration 
Manual chapter providing supplementary guidance associated with the 
regulation and will provide training to CGMOs. 
In responding to our second recommendation, ASFR stated that audit 
reports submitted in accordance with OMB Circular A-133 provide HHS 
awarding agencies with assurances relating to whether resources have 
been safeguarded, funds have been properly expended, and program  
results have been achieved. We note that in July 2015, the Federal Audit 
Clearinghouse was temporarily taken offline for maintenance and testing 
because of a U.S. Census Bureau information technology security 
investigation. This is an example of a contingency that ASFR should take 
into account in considering whether it should establish a departmentwide 
source of adverse audit information.  We also suggest that ASFR consider 
how OMBs guidance that became effective on December 26, 2014, may 
impact notification of grantees adverse audit information to grant officials 
through NEARC. 
In responding to our third recommendation, ASFR stated that HHS will 
leverage existing forums within the Department, such as the Executive 
Committee on Grants Administration Policy, to enhance and make routine 
the practice of sharing information among awarding agencies regarding 
recipients that have experienced performance issues, and to understand 
recipient performance in the context of risk. 
For the full text of ASFRs comments, see Appendix C. 
 
 
   
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APPENDIX A 
Table A-1:  FY 2014 Grant Awards by Awarding Agency 
Number of   Percentage  Dollar Amount of  Percentage of  
Awarding Agency  
Awards   of Awards   Awards   Dollar Amount 
ACF  7,353   9%   $49,583,810,932   12%  
ACL  2,127   3%   $1,668,282,990   <1%  
AHRQ  648  1%   $174,173,273   <1% 
CDC  4,304   5%   $5,128,117,929   1%  
CMS*  1,399   2%   $309,737,682,047  77%  
FDA  589  1%   $126,517,378   <1%  
HRSA  6,341   8%   $7,607,869,591   2%  
IHS  916  1%   $2,418,038,503   1%  
NIH   51,868   65%   $21,818,409,722   5%  
Office of the Secretary  698  1%   $428,752,444   <1%  
SAMHSA  2,967   4%   $3,232,758,168   1% 
   Total   79,210   100%   $401,924,412,977  100%  
Note:  Percentages do not sum to 100 percent due to  rounding. 

*Includes approximately $307 billion of Medicaid and Childrens Health Insurance Program grants to States. 

Source:  Tracking Accountability in Government Grants System.  Accessed at http://taggs.hhs.gov  on 

April 22, 2015. 

    
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APPENDIX B 
Table B-1:  Databases Used By  Awarding Agencies to Mitigate Grantee Risks 
How Awarding Agencies 
Name of Database  Function of Database  
Use Database  
Grant applicants are required to have a unique identification 
Data Universal  To verify the identity  of the 
number from this system for each physical location of their 
Numbering System   grantee organization 
business 
Employer 
Internal Revenue Service identification number for business  To verify the identity  of the 
Identification 
entities   grantee organization 
Number  
Federal Audit  Database of audits conducted as required by Office of  To view  grantee  
Clearinghouse   Management and Budget circular A-133   organizations audit findings 
HHS List of 
To prevent payments to 
Excluded  Provides information regarding individuals and entities excluded 
excluded individuals and 
Individuals and  from participation in Federal health care programs  
entities  
Entities 
Payment  Provides awarding agencies and grantees with the tools to  To view  payment histories 
Management  manage grant payment requests and disbursement reporting  from current and previous 
System   activities  HHS grants  
Public Health 
Includes the names of individuals who currently have  To prevent payments to 
Service 
administrative actions imposed against them by the Office of  suspended or debarred 
Administrative 
Research Integrity, the Assistant Secretary of Health, and/or HHS  researchers  
Action Report  
System for Award  Identifies entities registered to do  business with the Federal  To prevent payments to 
Management   Government as well as excluded entities  excluded entities 
Tracking 
To view  HHS awards from 
Accountability in  Serves as a central repository for HHS grants which tracks 
current and previous HHS 
Government  obligated grant funds at the transaction level 
grants  
Grants System  
Source:  Analysis of OIG interviews with CGMOs, 2014. 
HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110)   15 
  APPENDIX C 
Agency Comments 
DEPARTM ENT OF H EALTH & HUMAN SERVICES 	 Office of the Secretary 
Washington , D.C. 20201 
AUG  0 4 2015 
TO:  Suzanne Murrin 
Deputy Inspector General 
for Evaluation and Inspections 
FROM:  Ellen G . Murray 
Assistant Secretary for Pinancial Resources and Chief Financial Officer 
SUBJECT:  HHS Comments on OIG Draft Report: HHS Oversight ofGrantees Could Be 
Improved Through Better Infimnation Sharing. OEI-07-12-00110 
The Department of Health and Human Se rvices (1-IHS) appreciates the opportunity to review and 
comment on the Office of Inspector Gene ral 's draft report HHS Oversight ofGrantees Could Be 
Improved Through Beller Information Sharing, OEI-07-12-00 II 0 . 
1. 	 Analyze whether to implement the usc of integrated databases that contain adverse 
information on grantees' past performance 
1-IHS concurs with this recommendation . 1-11-IS currently employs several systems to prevent 
improper payments, fraud , waste, and abuse. Systems such as the System for Award 
Management (SAM) are being used to determine if an applicant or grantee, or an employee 
or agent of an applicant or recipient, has been debarred , suspended or otherwise excluded by 
any federal agency. Other systems, such as Do Not Pay are also being used to help determine 
eligibility for payments. In an effort to strengthen and streamline the already rigorous pre
award screening and post-award monitoring of grants recipients , OMB is in the process of 
publishing the regulation , " Guidance for Reporting and Use of Information Concerning 
Recipient Integrity and Performance," in 2 CFR Subtitle A, Chapter I, Part 180, Chapter II 
Part200. 
The "Guidance for Reporting and Use of Information Concerning Recipient Integrity and 
Performance" regulation will require all federal awarding agencies to report information 
about any termination of an award due to a material failure to comply with the award tenns 
and conditions ; any administrative agreement with a non-federal entity to resolve a 
suspension or debarment proceeding; and, any finding that a non-federal entity is not 
qualified to receive a given award, if the finding is based on criteria related to the non-federal 
entity's integrity or prior performance under federal awards . Currently, the designated 
integrity and performance system is the Federal Awardee Performance and Integrity 
Information System (FAPIIS). FAPIIS , an integrated information system, is intended to 
enhance the scope of information that is available to awarding agencies as they assess the 
integrity and performance of prospective recipients. The information provided via FAPIIS 
will significantly improve HI-IS's access to information pertaining to entities applying for , or 
receiving, federal funds. 
HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07 -12-0011 0)  16   
   
HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110)  17 
   
   
 
 
ACKNOWLEDGMENTS 
This report was prepared under the direction of Brian T.  Whitley, Regional 
Inspector General in the Kansas City regional office.  
Tricia Fields served as the team leader for this study.  Other Office of 
Evaluation and Inspections staff from the Kansas City regional office who 
conducted the study include Dennis Tharp.  Central office staff who 
provided support include Lucia Fort, Evan Godfrey,  Althea Hosein, 
Christine Moritz, and Talisha Searcy. 
HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110)   18 
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector 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 Office  of  Audit Services  (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 responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office of Counsel to the Inspector General  
The Office 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 OIGs  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.