Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
The Ryan White CARE Act 
Title I and Title II Grantees 
Monitoring of Subgrantees 
INSPECTOR GENERAL 
MARCH 2004 
OEI-02-01-00641  O I G
FFICE OF  NSPECTOR  ENERAL

http://www.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 OIG's Office of Audit Services (OAS) provides all 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 in 
order to reduce waste, abuse, and mismanagement and to promote economy and efficiency throughout the 
Department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and program 
evaluations (called inspections) that focus on issues of concern to the Department, the Congress, and the 
public.  The findings and recommendations contained in the inspections reports generate rapid, accurate, 
and up-to-date information on the efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative investigations of 
allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment by 
providers.  The investigative efforts of OI lead to criminal convictions, administrative sanctions, or civil 
monetary penalties.  The OI also oversees State Medicaid fraud control units which investigate and 
prosecute fraud and patient abuse in the Medicaid program. 
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 in OIGs internal 
operations.  The OCIG imposes program exclusions and civil monetary penalties on health care providers 
and litigates those actions within the Department.  The OCIG also represents OIG in the global settlement 
of cases arising under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E  S U M M A R Y  
OBJECTIVE 
To assess the Ryan White CARE Act Title I and Title II grantees monitoring of subgrantees. 
BACKGROUND 
The Senate Finance Committee asked the Office of Inspector General (OIG) to review the 
Health Resources and Services Administrations (HRSA) oversight of Ryan White 
Comprehensive AIDS Resources Emergency (CARE) Act Title I and Title II grantees and 
grantees oversight of their subgrantees. Hereinafter these grantees are referred to as Title I 
and Title II grantees. As part of this request, the Committee asked OIG to also initiate audits of 
select grantees and subgrantees. 
The CARE Act provides funding to develop, organize, coordinate, and operate effective and 
cost-efficient health care and support services to medically underserved individuals and families 
affected by HIV/AIDS. Title I and Title II are the largest programs and are the focus of this 
inspection. Title I provides emergency relief grants to eligible metropolitan areas for 
community-based HIV-related services, and Title II provides grants to States, the District of 
Columbia, and territories to improve the quality, availability, and organization of health care and 
support services.  These services are provided directly through health department programs 
and through contracts with for-profit and non-profit subgrantees who apply for and receive 
funds directly from the grantees. 
To assess Title I and Title II grantees monitoring of subgrantees, we reviewed documents for 
fiscal year 2000 for 5 subgrantees from 20 Title I and Title II grantees, for a total of 100 
subgrantees. We also interviewed the 17 project officers responsible for these grantees, HRSA 
program officials, and the 20 grantees that represent 38 percent of all Title I funds and 41 
percent of all Title II funds.  This report is a companion report to  Monitoring of Ryan White 
CARE Act Title I and Title II Grantees, OEI-02-01-00640. 
FINDINGS 
Grantees monitoring of subgrantees is limited 
Fifteen of the 20 selected grantees did not have comprehensive documentation to demonstrate 
that they are monitoring their subgrantees systematically. These grantees did 
i
Grantee Monitoring of Subgrantees   OEI-02-01-00641  not have each of the three key documents (a contract or formal agreement, a program report, 
and a fiscal report) needed to monitor for all 5 of their subgrantees in fiscal year (FY) 2000. 
Further, not all grantees had each of these documents for all five subgrantees.  Twelve grantees 
had a program report, 9 grantees had a fiscal report, 13 grantees had a contract or formal 
agreement, and 4 grantees had a site visit report for all 5 of their subgrantees. 
Nevertheless, grantees are aware of some subgrantee problems 
Despite limited monitoring, grantees have identified some problems that their subgrantees are 
facing. Based on our document review, the 20 selected grantees had evidence of issues for 78 
of the 100 subgrantees. Ten of these subgrantees had audits that included findings. A total of 
19 subgrantees had corrective action plans that address a specific issue. Despite identifying 
subgrantee issues, grantees emphasize that they do not have serious concerns with any of their 
current subgrantees. 
HRSA does not always require grantees to report how they monitor subgrantees, 
and HRSA does not systematically monitor grantee oversight of subgrantees 
HRSA requires grantees to describe how they monitor their subgrantees in the grant 
application. However, HRSA does not require grantees to provide monitoring information in all 
instances.  For example, HRSA does not require monitoring information for Title II grantees if 
the information has not changed since the last application. Further, HRSA does not appear to 
use the information that Title I or Title II grantees provide in order to monitor grantees 
oversight of subgrantees. Further, one HRSA official notes that they do not see monitoring 
grantees oversight of their subgrantees as part of HRSAs responsibility, and that relying on the 
signed assurances from grantees is adequate. 
RECOMMENDATIONS 
The findings are based on documents from 100 subgrantees from 20 grantees.  These 20 
grantees receive 38 percent of all Title I funds and 41 percent of all Title II funds. The 
inconsistencies in monitoring that we found with the grantees reviewed suggest that Title I and 
Title II grantees monitoring of subgrantees needs to be strengthened. We are aware that since 
this inspection was conducted, HRSA has consolidated its grants management offices, 
relocated most Title II monitoring responsibilities from regional offices to headquarters, and 
redefined the Office of Field Operations as the Office of Performance Review. These changes 
may better position the agency to address the following recommendations. Specifically, we 
recommend that HRSA: 
	 Set standards for grantees monitoring of subgrantees that, at a minimum, require a 
contract or formal agreement, a program report, and a fiscal report, and some 
consideration of regular site visits 
ii
Grantee Monitoring of Subgrantees   OEI-02-01-00641  	 Require grantees to report how they monitor their subgrantees in accordance with these 
standards as part of every application 
	 Increase efforts to monitor grantees oversight of subgrantees, including using 
information grantees report to HRSA regarding subgrantee activities 
Agency Comments 
We received comments on our draft report from HRSA. The full text of these comments can 
be found in Attachment D.  HRSA concurs with all but one of our recommendations, and adds 
that significant administrative changes have occurred since this inspection was conducted. 
These changes may better position the agency to address the grantee monitoring activities 
discussed in this report. 
HRSA did not fully concur with the original OIG recommendation as it appeared in our draft 
report and required grantees to report how they monitor their subgrantees as a part of every 
annual application. In its comments to the Inspector General, HRSA reports that starting with 
the fiscal year 2004 grant guidance, they will require Title II grantees to submit a 
comprehensive application every other year instead of annually.  As such, we have reworded 
this recommendation to reflect this new policy, and now recommend that HRSA require 
grantees to report subgrantee monitoring information in every application. 
iii
Grantee Monitoring of Subgrantees   OEI-02-01-00641  T A B L E  O F  C O N T E N T S  
EXECUTIVE SUMMARY ................................................ i

INTRODUCTION .......................................................1

FINDINGS  ............................................................7

Grantees monitoring of subgrantees is limited  .............................7

Grantees are aware of some subgrantee problems ..........................10

HRSA does not always require grantees to report how they monitor

subgrantees, and HRSA does not systematically monitor grantee oversight of

subgrantees  ......................................................11

RECOMMENDATIONS ................................................ 12

APPENDICES  ....................................................... 13

Appendix A:  HRSA/HAB Organizational Structure  ........................13

Appendix B: OIG Grants Oversight Framework  ..........................14

Appendix C: Grantee Monitoring Documents 
Provided for Sampled Grantees  .......................................15

Appendix D: Agency Comments ......................................18

ACKNOWLEDGMENTS ............................................... 24

iv
Grantee Monitoring of Subgrantees   OEI-02-01-00641  I N T R O D U C T I O N  
OBJECTIVE 
To assess the Ryan White CARE Act Title I and Title II grantees monitoring of subgrantees. 
BACKGROUND 
In a letter dated August 2001, the Senate Finance Committee asked the Office of Inspector 
General (OIG) to review the Health Resources and Services Administrations (HRSAs) 
oversight of Ryan White Comprehensive AIDS Resources Emergency (CARE) Act grantees 
and grantees oversight of their subgrantees. News accounts have highlighted several instances 
of questionable spending by grantees and subgrantees that are now subject to Federal and 
State investigations. As a result, the Committee is concerned that HRSA does not appear to 
exert clear and consistent oversight over its CARE Act grantees, nor require, or otherwise 
monitor, grantees oversight of their subgrantees. 
As part of this request, the Committee asked OIG to also initiate audits of select grantees and 
subgrantees. The purpose of these audits is to evaluate grantees administration of Title I and 
Title II grant funds and their oversight of subgrantees, and to assess subgrantees fiscal 
capability and performance. 
The following report focuses on the Title I and Title II grantees monitoring of subgrantees.  It is 
a companion report to Monitoring of Ryan White CARE Act Title I and Title II Grantees 
OEI-02-01-00640, which focuses on how HRSA monitors Title I and Title II grantees 
programmatic performance. We organized these reports in this way, as opposed to by Title, to 
better respond to the Senate Finance Committees two-part request, and because the overall 
findings apply to both Title I and Title II. 
The CARE Act 
The CARE Act (Pub. L. 101-381) was passed in 1990, and reauthorized in 1996 
(as Pub. L. 104-146) and in 2000 (as Pub. L. 106-345).  The legislation provides funding to 
States and other public and nonprofit entities to develop, organize, coordinate, and operate 
effective and cost-efficient health care and support services to medically underserved 
individuals and families affected by HIV/AIDS. The CARE Act distributes resources to 
various entities under four Titles and Part F. Title I and Title II are the largest programs and are 
the focus of this inspection. 
1
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Title I 
Title I provides emergency relief grants to eligible metropolitan areas disproportionately 
affected by the HIV/AIDS epidemic.  The Title I grantee is the Mayor or chief elected official. 
This official typically designates administrative authority for the CARE Act to the city or county 
health department, which may also be called the grantee. The grantee designates a planning 
council that is responsible for prioritizing the allocation of funds and makes awards to 
subgrantees according to the planning councils decisions.  Subgrantees may include hospitals, 
community-based organizations, hospices, ambulatory care facilities, community health centers, 
migrant health centers, homeless health centers, and substance abuse treatment and mental 
health programs. 
Title I funding includes formula and supplemental components. Formula grants are awarded on 
the estimated number of people living with AIDS in the eligible metropolitan area over the most 
recent 10-year period. Supplemental grants are awarded competitively based on a 
demonstration of severe need and other criteria. In fiscal year (FY) 2001, 51 eligible 
metropolitan areas in 21 States, Puerto Rico, and the District of Columbia were awarded $604 
million in formula and supplemental funds. 
Title II 
Title II provides grants to States, the District of Columbia, and the territories to improve the 
quality, availability, and organization of health care and support services for individuals and 
families with HIV/AIDS.  The grantee for Title II is the Governor, and the administrative agency 
is the State Department of Health, which may also be the grantee. States distribute Title II 
funds to subgrantees, which are typically public or non-profit providers and community-based 
organizations. The grantee distributes funds either directly or through consortia that are 
responsible for prioritizing Title II funds in their area. In FY 2001, the States, the District of 
Columbia, and the territories were awarded $845 million in Title II grants. 
A portion of each States Title II funds must be used to establish an AIDS Drug Assistance 
Program (ADAP) to provide medications to low-income individuals with HIV/AIDS and their 
families.  In FY 2001, the ADAP portion of the Title II award totaled $571 million. 
Federal Oversight 
The HIV/AIDS Bureau in HRSA is responsible for implementing Title I and Title II.  Prior to 
December 2002, these programs were managed differently.  The Bureaus Division of Service 
Systems was responsible for monitoring and oversight of Title I grantees and ADAP.  The 
Office of Field Operations, which included the 10 regional offices, was responsible for Title II 
grantees as well as other grants (see Figure 1 and Appendix A). 
2
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Figure 1: Monitoring Responsibilities 
(Regional Responsibility Italicized) 
CARE Act Program 
Responsibility  Title I  Title II  Title II ADAP 
Program Monitoring  Division of  Office of Field  Division of Service 
Service Systems - Operations - Systems -
Project Officer  Project Officer  Representative 
Fiscal Monitoring  Division of Service Systems - Grants Management Officer 
In January 2003, HRSA announced that the Bureaus Division of Service Systems would be 
responsible for both Title I and Title II. The Office of Field Operations, which had 
responsibility for Title II grantees, became the Office of Performance Review, and now serves 
as the focal point for reviewing and enhancing performance of HRSA-supported programs. 
Monitoring Requirements 
Federal regulations and guidelines describe grantees responsibilities for overseeing the activities 
of their subgrantees. The OMB Circular A-133 sets forth responsibilities for pass-through 
entities, including grantees.  Recipients of Federal grants funds are required to:  Monitor the 
activities of subrecipients as necessary to ensure that Federal awards are used for authorized 
purposes in compliance with laws, regulations, and the provisions of contracts or grant 
agreements and that performance goals are achieved. 
Program Monitoring. According to 45 CFR  92.40, grantees must monitor grant and 
subgrant-supported activities to assure compliance with applicable Federal requirements and 
that performance goals are being achieved.  Performance reports contain a comparison of 
actual accomplishments to the objectives established for the period, cost per unit, if helpful, and 
reasons for slippage if established goals are not met. Reports must also contain additional 
information including, when appropriate, analysis and explanation of cost overruns or high unit 
costs. 
Fiscal Monitoring. According to 45 CFR  92.20, grantees and subgrantees must maintain 
records that adequately identify the source and application of funds provided for financially-
assisted activities.  These records must contain information pertaining to grant or subgrant 
awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income. 
Federal regulations also require that accounting records be supported by such source 
documentation as cancelled checks, paid bills, payrolls, time and attendance records, and 
contract and subcontract award documents. Also, the awarding agency may review the 
3
Grantee Monitoring of Subgrantees   OEI-02-01-00641  adequacy of the financial management system of any applicant for financial assistance as part of 
a preaward review or at any time subsequent to the award. 
Awarding and Monitoring Subawards Under Federal Grants, a training manual used by 
Federal grants personnel, further suggests three documents that the grantee may use to monitor 
subgrantee progress: the contract (also called the subaward document), the progress report, 
and the financial report. Specifically, it states: 
	 The subaward document forms a baseline for assessing subrecipient performance and 
compliance (Chapter 5.1) 
	 The program report is the primary means of communication between the subrecipient 
and the pass-through entity program staff. The progress reports main function is to 
explain the subrecipients progress (or lack thereof) toward achieving the goals 
established in the approved application (Chapter 6.3.1) 
	 The financial report should always be read in conjunction with progress reports 
covering the same period to ensure the two match up (Chapter 6.3.2) 
This manual also includes site visits as a mechanism that agencies can use to monitor 
subrecipients. Specifically, site visits determine compliance or noncompliance with the terms 
and conditions of the grant award, verify information received in reports, and provide an 
opportunity to counsel the subrecipient in ways to remedy deficiencies (Chapter 6.2). 
OIG Oversight Framework 
As part of its focus on grants oversight, OIG has developed an oversight framework that 
establishes monitoring fundamentals for Federal grants (see Appendix B).  This framework is 
based on the Grants Administration Manual and Awarding and Monitoring Subawards 
Under Federal Grants. The framework focuses on four areas:  (1) requirements developed 
by the operating division that address program and financial progress; (2) reports generated by 
the grantee that are collected by the operating division; (3) review and verification of report 
information; and (4) enforcement authority used by the operating division to address identified 
issues.  We used this framework to assess HRSAs oversight of the Title I and Title II grantees. 
METHODOLOGY and ANALYSIS 
To assess Title I and Title II grantees monitoring of subgrantees, we compared how grantees 
are monitoring their subgrantees to the training manual guidelines, Federal requirements, and our 
oversight framework. We present our findings for Title I and Title II together, because grantees 
from both Titles are expected to monitor their subgrantees similarly, and because the general 
findings apply to both Titles.  We highlight differences between Title I and Title II, when 
appropriate. Note that for the purposes of this report, we use the term subgrantees to refer to 
all sub-awardees of a grantee. 
4
Grantee Monitoring of Subgrantees   OEI-02-01-00641  We collected information about how Title I and Title II grantees monitor subgrantees from 
several data sources: (1) a review of documents of 100 subgrantees from 20 grantees, (2) 
interviews with these 20 grantees, (3) interviews with the 17 project officers who are 
responsible for these grantees, and (4) interviews with HRSA program officials. 
Selection of Grantees 
This inspection is based on 10 Title I and 10 Title II grantees. We selected these grantees 
based on several factors. Specifically, we ranked each grantee according to funding level and 
grant longevity, and selected 5 grantees that were in the upper 10 and 5 in the lower 10 for 
each factor and from each Title. Further, we aimed to select at least one grantee from each 
area where HRSA has a regional office.  We also included an eligible metropolitan area and its 
corresponding State for half of the grantees, and we made an effort to minimize our overlap 
with the grantees that were selected by the Office of Audit Services. We did not select the 
grantees based on their performance.  In total, the 20 selected grantees represent 38 percent of 
Title I funds and 41 percent of Title II funds.  They include the following: 
Title I  Title II 
Los Angeles, CA
 California 
Atlanta, GA
 Georgia 
Minneapolis, MN
 Minnesota 
Philadelphia, PA
 Pennsylvania 
New York, NY
 New York 
Kansas City, MO
 Alabama 
West Palm Beach, FL
 Massachusetts 
Norfolk, VA
 New Mexico 
Seattle, WA
 South Carolina 
Las Vegas, NV
 Utah 
To select the 100 subgrantees, we asked each grantee for a list of all of their subgrantees. We 
then selected 5 subgrantees from each grantee for a total of 100 subgrantees. When possible, 
we selected two subgrantees that had been identified by the grantee as having a concern or a 
corrective action plan in place. We also took into consideration that Title II grantees may rely 
on consortia to monitor subgrantees.  In these cases, we selected two of the grantees consortia 
and selected a total of five subgrantees from them. 
Document Review 
We reviewed key documents to assess grantees monitoring of subgrantees.  To do this, we 
requested documentation for FY 2000 from each grantee or consortium for the 5 selected 
subgrantees. We specifically requested copies of any contracts or formal agreements, program 
reports, fiscal reports, site visit reports, audits, and any other 
5
Grantee Monitoring of Subgrantees   OEI-02-01-00641  documentation used to monitor subgrantees.  We also asked for any existing corrective action 
plans. We reviewed these documents using a structured instrument and analyzed them using a 
statistical analysis software program (SAS). 
Interviews 
We conducted interviews with the 20 selected Title I and Title II grantees.  We asked each 
grantee about how they monitor their subgrantees, and how they identify and address 
subgrantee issues. We conducted interviews with consortia when the grantee relied on them to 
monitor subgrantees.  These interviews were completed between March and May 2002. 
We also conducted interviews with the 17 project officers who were responsible for monitoring 
the 20 selected grantees.  In total, at the time the inspection was conducted, there were 12 Title 
I project officers and 30 Title II project officers.1 Eight of these project officers that we 
interviewed were from Title I, and nine were from Title II.  These project officers were 
responsible for monitoring a total of 38 of all 51 Title I grantees and 21 of all 54 Title II 
grantees.  In our interviews, we asked project officers how they monitor their grantees and 
subgrantees, and how they identify and address any issues. We conducted these interviews in 
April 2002. 
Finally, we interviewed key program officials at the HIV/AIDS Bureau and at the former Office 
of Field Operations.  These interviews provided mostly background information about Title I 
and Title II and how the programs are administered. We conducted these interviews in 
December 2001. 
Standards 
We conducted this inspection in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
1
 These numbers are based on the information provided by the HIV/AIDS Bureau as of November 2001. 
6
Grantee Monitoring of Subgrantees   OEI-02-01-00641 F I N D I N G S  
Grantees monitoring of subgrantees is limited 
We found that 15 of the 20 selected grantees did not have comprehensive documentation to 
demonstrate that they are monitoring their subgrantees systematically. We determined that 
three key documents, a contract or formal agreement, a program report, and a fiscal report 
would provide minimum monitoring information. These grantees did not have all three 
documents needed to monitor their five selected subgrantees, and two of these grantees did not 
have all three documents for any of their five subgrantees.  Grantees did not have these 3 
documents for a total of 41 of the 100 subgrantees that we reviewed (see Appendix C). 
Program reports. Not all grantees had program reports for each of their subgrantees. 
Specifically, 2 of the 20 grantees did not have a program report for any of their 5 subgrantees 
that we reviewed (see Figure 2). Another six grantees did not have such documentation for 
between one and four of their subgrantees. In total, program reports were missing for 23 of the 
100 subgrantees. Program reports commonly included goals and objectives, client 
demographics, client and service utilization data, and program narratives.  Without a program 
report, the grantee cannot monitor the extent to which subgrantees have met program goals and 
objectives, nor can the grantee detect problems early. 
Figure 2: Grantees that Did Not Have Program Reports 
Number of Subgrantees Missing Reports 
Five  Four  Three  Two  One 
Number of grantees that did not 
2  1  1  2  2 
have all program reports (n=20) 
Source: OEI Documentation Review, 2002 
Even though not all had program reports for their subgrantees, all 20 selected grantees report 
that they require their subgrantees or consortia to submit program reports at least quarterly. 
Grantees commonly report that they use program reports to track subgrantees progress 
toward meeting goals and objectives.  They also reconcile program reports with the 
subgrantees fiscal reports and assess whether the subgrantee is performing at the level stated in 
their contract. Three mention using program reports to assess technical assistance needs, and 
one adds that they use them to gather information on barriers and accomplishments. 
In addition, grantees report that they require subgrantees to submit data on client characteristics 
and services rendered. Grantees then compile the data for the Annual 
7
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Administrative Report that they are required to submit to HRSA.  Not all grantees report using 
the data to monitor subgrantees. Fifteen of 20 grantees use the data to help make funding 
decisions or to track clients and services. Grantees do not typically provide the data to their 
subgrantees to help them gauge their own performance. 
Fiscal reports. Not all grantees had fiscal reports for each of their subgrantees (see Figure 3). 
Eleven grantees did not have a fiscal report, invoices, or vouchers for between one and four of 
their subgrantees. In total, fiscal reports were missing for 20 of the 100 subgrantees. Fiscal 
reports most commonly included spreadsheets that matched expenditures with proposed 
budgets as well as invoices and vouchers. Without the subgrantee fiscal reports, the grantee 
cannot track whether expenditures are consistent with performance and correspond to the 
approved agreement. 
Figure 3: Grantees that Did Not Have Fiscal Reports 
Number of Subgrantees Missing Reports 
Five  Four  Three  Two  One 
Number of grantees that did not 
0  1  1  4  5 
have all fiscal reports (n=20) 
Source: OEI Documentation Review, 2002 
Even though grantees could not supply fiscal reports for each of their subgrantees, all 20 of the 
grantees report that they require their subgrantees to submit fiscal reports and/or invoices. 
Sixteen of the 20 grantees require subgrantees to submit fiscal reports along with the 
accompanying invoices. The remaining four grantees require subgrantees to submit either 
invoices or a fiscal report. Most grantees (16) require fiscal reports on a monthly basis or 
quarterly basis. They use these reports to track subgrantees fiscal performance by matching 
their expenditures to the proposed budgets that they submit at the start of the grant cycle. 
Grantees also use fiscal reports to monitor overspending and underspending, and whether funds 
are being distributed in a timely manner. 
Formal agreements. Not all grantees had a contract or formal agreement for each of their 
five subgrantees that we reviewed (see Figure 4).  Seven grantees did not have a contract or 
agreement for between one and four of their subgrantees.  In total, grantees did not have such 
documentation for 14 of the 100 subgrantees.  Of the grantees with documentation, 80 of the 
100 subgrantees had a contract, contract renewal, or contract amendment, and 6 had a notice 
of award or memo of understanding.  Without a contract or formal agreement, the grantee 
cannot ensure that the subgrantee is meeting program requirements. 
8
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Figure 4: Grantees that Did Not Have Contracts or Formal Agreements 
Number of Subgrantees Missing 
Reports 
Five  Four  Three  Two  One 
Number of grantees that did not 
0  1  1  2  3 
have all contracts (n=20) 
Source: OEI Documentation Review, 2002 
Even though not all grantees had a contract or formal agreement for all five of their subgrantees, 
grantees commonly report that they use the contract to monitor subgrantees program and fiscal 
performance. They mention matching expenditures to proposed budgets included in the contract 
agreement.  They also report using the contract to ensure that subgrantees are adhering to the 
required administrative caps, that subgrantees are serving only eligible clients, and that 
subgrantees are meeting the payer of last resort requirements. 
Site visits. In addition to three key documents necessary for subgrantee monitoring, we also 
determined whether grantees conducted site visits of subgrantees. We found that not all 
grantees had site visit reports for each of the five subgrantees that we reviewed (see Figure 5). 
Three of the 20 grantees did not have a site visit report documenting that they visited any of their 
5 subgrantees. Another 13 grantees could not document site visits for between 1 and 4 of their 
subgrantees. In total, grantees did not have site visit reports for 42 of the 100 subgrantees. 
Without a routine site visit and the accompanying documentation, the grantee cannot verify the 
program and fiscal information submitted by the subgrantee during the grant cycle. 
Further, our review of the site visit reports that grantees submitted shows that grantees conduct a 
wide range of activities on-site. Grantees may review subgrantees records, including financial 
statements and program objectives, conduct chart reviews and/or desk audits, meet with 
directors and program staff and/or clients, hold discussions with grantees about barriers and 
accomplishments, or assess technical assistance needs. 
Figure 5: Grantees that Did Not Have Site Visit Reports 
Number of Subgrantees Missing 
Reports 
Five  Four  Three  Two  One 
Number of grantees that did not 
3  3  1  3  6 
have all site visit reports (n=20) 
Source: OEI Documentation Review, 2002 
9
Grantee Monitoring of Subgrantees   OEI-02-01-00641  When questioned about site visits of subgrantees, 15 of the 20 selected grantees report that 
they conduct site visits at least annually.  Several note that they aim to do this, but that it is 
difficult. As one grantee notes, they were only able to visit agencies with problems last year, 
not the great job agencies.  Thirteen of the 20 grantees report that they review client records 
and fiscal records on-site to monitor subgrantees. Additionally, 17 grantees report that they 
conduct non-routine site visits of grantees.  They use these visits to attend meetings, assess 
technical assistance needs, respond to grantees concerns, and follow up on any issues. 
Close Contact.  We found that all 20 grantees believe that their monitoring of subgrantees is 
effective. They attribute their effectiveness to having strong relationships and close contact with 
their subgrantees. Ten grantees report meeting with subgrantees and/or consumers at least 
quarterly. One grantee noted that the community is relatively small, and subgrantees do not 
hesitate to call. Another two grantees commented that they are very involved and consult with 
their subgrantees on a daily basis. 
Nevertheless, grantees are aware of some subgrantee problems 
Despite limited monitoring, grantees have identified some problems that their subgrantees are 
facing. Based on our review of the documents, the 20 selected grantees had evidence of issues 
for 78 of the 100 subgrantees.  We are not able to determine whether grantees had evidence of 
all problems that subgrantees were facing, but we do know that when grantees were monitoring 
they were aware of and documented some issues. 
Specifically, grantees had corrective action plans that address specific issues for 19 of the 100 
selected subgrantees.  Grantees had audits that included findings for 10 of the 100 subgrantees. 
Grantees had program, fiscal, and site visit reports that highlighted issues for other subgrantees. 
Examples of the issues that were identified include inadequate staffing, late submission of 
required documents, failure to maintain accounting records on a current basis, and failure to tag 
fixed assets with a unique identification number that allows them to be tracked by auditors. 
Issues that generated a corrective action plan included reallocation of funds following client 
complaints, missing signatures, and triple-billing for services. 
Despite identifying subgrantee issues, grantees emphasize that they do not have serious 
concerns with any of their current subgrantees. When asked about whether they have had any 
serious issues with any of their subgrantees, grantees note that only eight of all their current 
subgrantees have ever had a serious issue. Additionally, four grantees report ever having 
suspected any of their subgrantees of misuse. This misuse includes insufficient documentation, 
payment for inappropriate services, poorly tracking personnel time, and a double set of books. 
All four took action in response, and two resulted in funds being reimbursed. 
Grantees also appear to rarely have taken action against subgrantees that are not meeting 
program requirements.  Our document review shows that 1 grantee terminated a subcontract 
with only 1 of the 100 selected subgrantees in FY 2000 for failing to submit required 
documentation.  When asked if they had ever taken any enforcement actions 
10
Grantee Monitoring of Subgrantees   OEI-02-01-00641  against a grantee, five grantees report terminating subgrantee contracts for failing to meet 
contract goals. Three grantees report having drawn down the amount a subgrantee can expend 
each month as a means of corrective action.  Six have withheld payment or disallowed payment 
as a means of ensuring compliance. Other actions that have been taken include terminating the 
executive director, increasing the frequency of site visits, and moving a subgrantee from unit-
cost payment to reimbursement. 
HRSA does not always require grantees to report how they monitor
subgrantees, and HRSA does not systematically monitor grantee
oversight of subgrantees 
HRSA allows Title I and Title II grantees to establish their own standards for how they monitor 
their subgrantees, provided they adhere to Federal requirements.  Grantees are required to 
describe how they monitor their subgrantees in the Title-specific grant application.  Grantees 
are also required to submit signed assurances as part of the application, and HRSA relies on 
these assurances to ensure grantees are adhering to application guidelines. 
However, HRSA does not require grantees to provide monitoring information in all instances. 
In FY 2002 Title I guidance, HRSA required grantees to describe their monitoring of 
subgrantees in order to apply for the supplemental portion of the grant only. In FY 2002 Title 
II guidance, HRSA required grantees to describe their fiscal and program monitoring only if 
the information has changed since their last submission. 
HRSA requires different information from Title I and Title II grantees on their monitoring of 
subgrantees. In the FY 2002 Title I application, HRSA asked grantees to describe the 
frequency of and protocols for site visits, reporting, and corrective actions for both the program 
and fiscal monitoring of their subgrantees. In the Title II application, HRSA asked grantees to 
describe the frequency of required fiscal reports and their contents, and the frequency of site 
visits. Grantees were also asked to provide information describing the process of initiating 
corrective actions and addressing audit findings. Regarding their program monitoring, the 
guidance asked grantees to describe the States/territorys requirements for reporting and 
monitoring rates of utilization of funds by contractor/subcontractors, including how the 
State/territory takes action if contractors or consortia are in noncompliance with programmatic 
and fiscal reporting. 
Further, HRSA does not appear to use the information that Title I or Title II grantees provide in 
order to monitor grantees oversight of subgrantees. As detailed in the companion report, 
Monitoring of Ryan White CARE Act Title I and Title II Grantees, OEI-02-01-00640, 
project officers report that they do not typically focus on grantees monitoring of subgrantees. 
This is also confirmed by the grantees that we interviewed. Further, one HRSA official notes 
that they do not see monitoring grantees oversight of their subgrantees as part of HRSAs 
responsibility, and that relying on the signed assurances from grantees is adequate. 
11
Grantee Monitoring of Subgrantees   OEI-02-01-00641  R E C O M M E N D A T I O N S  
The findings are based on documents from 100 subgrantees from 20 grantees.  These 20 
grantees receive 38 percent of all Title I funds and 41 percent of all Title II funds. The 
inconsistencies in monitoring that we found with the grantees reviewed suggest that Title I and 
Title II grantees monitoring of subgrantees needs to be strengthened. We are aware that since 
this inspection was conducted, HRSA has consolidated its grants management offices, 
relocated most Title II monitoring responsibilities from regional offices to headquarters, and 
redefined the Office of Field Operations as the Office of Performance Review. These changes 
may better position the agency to address the following recommendations. Specifically, we 
recommend that HRSA: 
	 Set standards for grantees monitoring of subgrantees that, at a minimum, require a 
contract or formal agreement, a program report, and a fiscal report, and some 
consideration of regular site visits 
	 Require grantees to report how they monitor their subgrantees in accordance with these 
standards as part of every application 
	 Increase efforts to monitor grantees oversight of subgrantees, including using 
information grantees report to HRSA regarding subgrantee activities 
Agency Comments 
We received comments on our draft report from HRSA. The full text of these comments can 
be found in Attachment D.  HRSA concurs with all but one of our recommendations, and adds 
that significant administrative changes have occurred since this inspection was conducted. 
These changes may better position the agency to address the grantee monitoring activities 
discussed in this report. 
HRSA did not fully concur with the original OIG recommendation as it appeared in our draft 
report and required grantees to report how they monitor their subgrantees as a part of every 
annual application. In its comments to the Inspector General, HRSA reports that starting with 
the fiscal year 2004 grant guidance, they will require Title II grantees to submit a 
comprehensive application every other year instead of annually.  As such, we have reworded 
this recommendation to reflect this new policy, and now OIG recommends that HRSA require 
grantees to report subgrantee monitoring information in every application. 
12
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Appendix A 
HRSA/HAB ORGANIZATIONAL STRUCTURE

Administrator 
Bureau of  HIV/AIDS 
Bureau of  Maternal and Child 
Primary Health  Bureau 
Health  Health Bureau 
Care 
Division of Community Based 
HRSA STAFF OFFICES  Programs 
Office of Communications 
Office of Policy and Program 
Office of Equal Opportunity and Civil Rights 
Development 
Office of Management and Program Support 
Office of Legislation 
Office of Planning and Evaluation 
Division of Service 
Office of Information Technology 
Systems 
Office of Performance Review* 
Office of Minority Health 
Officer of Rural Health Policy  Office for the Advancement 
Office of Special Programs  of Telehealth 
Office of Financial Policy and Oversight 
Office of International Health Affairs 
Office of Program Support 
*formerly Office of Field Operations 
Office of Science and 
Epidemiology 
Division of Training and 
Technical Assistance 
13
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Appendix B 
OIG Grants Oversight Framework 
Requirements 
	 What performance and financial requirements have the Operating Division developed 
for the grantee? 
  Do grantees receive the performance and financial requirements? 
  Do grantees fully understand the performance and financial requirements? 
Reports 
  Are performance and financial reports received in a timely manner? 
  Are performance and financial reports clearly presented and complete? 
  Are audits completed in a timely fashion? 
	 Is the Operating Division sharing reports, as appropriate, with the Department and 
Office of Audit Services? 
Reviews 
	 Has the Operating Division designated responsibilities for the grants management and 
program officers? 
  Are performance and financial reports reviewed in a timely fashion? 
  Are there criteria for evaluating performance and financial reports? 
  How is information in performance and financial reports verified? 
  Are site visits conducted on schedule, with standard guidelines? 
  What other contact/ communication is there between grantee and Operating Division? 
Enforcement 
  What enforcement authority does the Operating Division have? 
  Are there standards for addressing identified problems? 
  What actions has the Operating Division taken to address problems with grantees? 
14
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Appendix C 
Grantee Monitoring Documents Provided 
for Sampled Subgrantees 
X= Documents contained in the subgrantee file maintained by the grantee. 
ID  Subgrantee  Program Report  Fiscal Report  Contract/  Site Visit Report 
Number  Agreement 
Grantee 1  1  X  X  X 
2  X  X  X 
3  X  X  X 
4  X  X  X  X 
5  X  X  X  X 
Grantee 2  1  X 
2  X  X 
3  X  X 
4  X  X 
5  X  X  X  X 
Grantee 3  1  X  X  X 
2  X  X  X 
3  X  X  X  X 
4  X  X  X  X 
5  X  X  X 
Grantee 4  1  X  X  X  X 
2  X  X  X  X 
3  X  X  X  X 
4  X  X  X  X 
5  X  X  X  X 
Grantee 5  1  X  X  X  X 
2  X  X  X  X 
3  X  X  X  X 
4  X  X  X 
5  X  X  X  X 
Grantee 6  1  X  X  X  X 
2  X  X  X  X 
3  X  X  X  X 
4  X  X  X  X 
5  X  X  X 
15
Grantee Monitoring of Subgrantees   OEI-02-01-00641  ID  Subgrantee  Program Report  Fiscal Report  Contract/  Site Visit Report 
Number  Agreement 
Grantee 7  1  X  X  X 
2  X  X  X 
3  X  X  X 
4  X  X  X 
5  X  X  X 
Grantee 8  1  X  X  X 
2  X  X 
3  X  X  X 
4  X  X  X 
5  X  X  X  X 
Grantee 9  1  X  X 
2  X  X  X 
3  X  X 
4  X  X 
5  X  X 
Grantee 10  1  X  X  X  X 
2  X  X  X  X 
3  X  X  X 
4  X  X  X 
5  X  X  X  X 
Grantee 11  1  X  X 
2  X  X  X 
3  X  X  X 
4 
5 
Grantee 12  1  X  X  X 
2  X  X  X  X 
3  X  X  X 
4  X  X  X 
5  X  X  X 
Grantee 13  1  X 
2  X  X 
3  X  X 
4  X  X  X 
5  X  X 
Grantee 14  1  X  X 
2  X  X  X  X 
3  X  X  X 
4  X  X 
5  X  X 
16
Grantee Monitoring of Subgrantees   OEI-02-01-00641  ID  Subgrantee  Program Report  Fiscal Report  Contract/  Site Visit Report 
Number  Agreement 
Grantee 15  1  X  X  X  X 
2  X  X  X  X 
3  X  X  X 
4  X  X  X  X 
5  X 
Grantee 16  1  X  X  X  X 
2  X  X  X 
3  X  X  X  X 
4  X  X  X  X 
5  X  X  X  X 
Grantee 17  1  X  X  X  X 
2  X  X  X  X 
3  X  X  X  X 
4  X  X  X 
5  X  X  X 
Grantee 18  1  X  X 
2  X 
3  X  X  X  X 
4  X  X  X  X 
5  X  X  X 
Grantee 19  1  X  X  X  X 
2  X  X  X 
3  X  X 
4  X  X  X 
5  X  X 
Grantee 20  1  X  X 
2  X  X 
3  X  X 
4  X  X  X 
5  X  X 
Subgrantees that had these 
77  80  86  58 
documents 
17
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Appendix D 
Agency Comment 
In this appendix, we present the full text of comments from the Health Resources and Services 
Administration (HRSA). 
18
Grantee Monitoring of Subgrantees   OEI-02-01-00641  19
Grantee Monitoring of Subgrantees   OEI-02-01-00641  Grantee Monitoring of Subgrantees  21
Grantee Monitoring of Subgrantees   OEI-02-01-00641  22
Grantee Monitoring of Subgrantees   OEI-02-01-00641  23
Grantee Monitoring of Subgrantees   OEI-02-01-00641  A C K N O W L E D G M E N T S  
This report was prepared under the direction of John I. Molnar, Regional Inspector General for 
Evaluation and Inspections in New York, and Jodi D. Nudelman, Assistant Regional Inspector 
General. Other principal Office of Evaluation and Inspections staff who contributed include: 
Vincent Greiber, Project Leader  Alan Levine, Program Specialist 
24
Grantee Monitoring of Subgrantees   OEI-02-01-00641