Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERAL.

ADMINISTRATION FOR NATIVE

AMERICANS: A REVIEW OF THE SEDS

PROGRAM

VK' 
Richard P. Kusserow 
INSPECfOR GENERA 
9090 
OEI-03- EXECUTIVE  SUMMARY

PUROSE 
This report examines (1) the extent to which projects receiving social and economic 
development strategies (SEDS) grants from the Administration for Native Americans 
(ANA) have met their goals, (2) the adequacy of ANA's grant monitoring, and (3) 
whether SEDS has contributed to the social, economic, and governmental self
sufciency of Native American communities. 
BACKGROUN 
The Native American Programs Act of  93-644, title VIII) authorized a
1974  (PL. 
program of financial and technical assistance to promote social and economic self
suffciency for "American Indians, Alaskan Natives, Native Hawaiians, and Pacific 
Islanders." In the Administration for Children and Families (ACF), ANA is 
responsible for program administration. The ANA developed the SEDS funding 
approach in 1981 to allow Native American communities to determine their own 
strategy for achieving self-suffciency. 
The SEDS grants account for about $25 milion of ANA' s annual $30 million budget. 
Funding has remained constant for 10 years. The SEDS grants have three separate 
purposes: economic development, governance, and social development. 
METHODOLOY 
Our review covered fiscal years 1986 through 1988. During this period, ANA awarded 
560 SEDS grants totaling $75 millon. Ranging from $5 000 to $1.2 milion, the 
average grant was $134 000. We randomly selected 30 grants from each fiscal year. 
These grants funded 259 projects. We evaluated the long-term success of each project 
using information obtained from grant folder reviews, grantee intervews (including 
site visits), and discussions with ANA officials. 
FIINGS 
One-quarter of projects did not meet their goals. 
Although ANA has grant monitoring procedures, compliance with procedures 
was not systematic. 
Progress toward self-sufficiency cannot be determined. 
Grantees view flexibilty as the main strength of SEDS. 
Most grantees approved of ANA' s management of grants.  RECOMMATIONS 
The ANA should: 
Follow guidelines to target its grant monitoring to projects with the 
greatest risk
of failure. 
Provide grant applicants with information on the results of previous projects. 
Require that each grantee have a clearly delineated strategy for promoting self
suffciency. 
Develop standards to determine the adequacy and appropriateness of such 
strategies. 
Review SEDS grant applications to assure that grantee proposals will 
contribute to meeting established strategies and goals. 
Monitor grantee performance according to current guidelines and procedures to 
assure that activities reflect plans and commitments expressed in the grant 
proposal. 
COMM 
We received comments from ACF and the Assistant Secretary for Planng and 
Evaluation (ASPE). The ACF concurred with all except two findings and all but one 
recommendation. They non-concurred with our finding concerning the number 
successfu projects. However, their non-concurrence focused on the distinction 
between the words "project" and "objective." The ACF disagreed with our findig that 
progress toward self-sufficiency cannot be determined. They also disagreed with our 
recommendation that ANA should develop standards to measure grantee progress 
toward self-sufficiency. 
The ASPE generally agreed with our findings and recommendations. 
We have addressed ACF's concerns about both findings in the body of the report. 
continue to believe that ANA should develop standards which measure SEDS grants 
contribution to grantee progress toward self-sufficiency. This is consistent with 
findigs in an earlier study funded by ASPE. 
The full text of comments appears in Appendix E.  ......................................................................  
. . . . . . .. 
. . . . . . ..  ..  ..  ..  ...   ...   ...   ...   ...   ...   ...   ...   ...   ....    ....    ....  .   ....    ....    ....    ....    ....    ....  .   ....    ....    ....    ....    ....    ....  .   ....    ...   ...   ...   ...   ...   . ...   ...   ...   ...   ...  .  .. ..  . . . . . .. 
TABLE OF CONTENTS

EXCU SUMY

INODUCTON . 
FIINGS 
. . . . . . . . . . . . . . . . . . . 5 
RECOMMATIONS 
ENNO'f 
APPENIX A; Budget Comparon 
APPENIX B: Percentage of Fundig by Gratee Typ  B-1 
APPENIX C: Ditnbution by Project Typ ........................... C
APPENIX D: Analis of Project Not Meetig Goal. . . . . . . . . . . . . . . . . .. D
APPENIX E: 
Agency Comments

E .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INTRODUCTION

PUROSE 
This report examines (1) the extent to which projects receiving social and economic 
development strategies (SEDS) grants from the Administration for Native Americans 
(ANA) have achieved their goals, (2) the adequacy of ANA grant monitoring activities 
and (3) whether SEDS funding has contributed to the social, economic, and 
governmental self-suffciency of Native American communities. 
BACKGROUN 
ANA'  Lelatie Mandte 
In 1973 the then Department of Health, Education and Welfare established the Offce 
of Native American Programs (ONAP). The Native American Programs Act of 1974 
93-644, title VIII) authorized ONAP to provide financial and technical assistance 
(PL. 
to promote the goal of social and economic self-sufficiency for "American Indians 
Alaskan Natives, Native Hawaiians, and Pacific Islanders. 
In a 1977 departmental reorganization, ONAP became the Administration for Native 
Americans (ANA) in the Offce of Human Development Servces (OHDS). The ANA 
is now part of the recently formed Administration for Children and Familes (ACF). 
Prior to 1981, ANA primariy funded administrative support and social servces for 
tribes and Native American organizations. It sought to meet its legislative mandate 
through coordinating and evaluating programs servng Native Americans and 
administering grants. 
Developme of the SEDS Prgram 
1 suggested improvements to 
In 1978, an Offce of Inspector General (OIG) review
help ANA fulfll its legislative mandate. The ANA then worked with tribal and other 
Native American leaders to develop a new funding approach. They based their 
approach on three program goals: 
economic development: to foster the development of stable, diversified local 
economies and economic activities that provide jobs, promote economic well
being, and reduce dependency on welfare servces by starting or attracting new 
businesses; 
governance: to develop or strengthen tribal governments and Native American 
institutions and local leadership to assure local control and decision-making over 
3 such as funding to help the tribe in securing Federal recognition or 
all resources 
the development of tax codes and land use ordinances; and  soal development: to support local access to and coordination of programs and 
servces that safeguard the health and well-being of a community and its people. 
For example, these grants may develop employment skills, address housing needs 
or reduce teenage pregnancy.

Since 1981, ANA has used SEDS as the primary channel to carr out its legislative 
mandate. The SEDS approach supports tribal governments and Native American 
organizations in developing and implementing community-based, long-term 
governance, social and economic development strategies. 
The SEDS Grat Awad Proce 
The ANA periodically  Outside 
solicits grant applications through the  Federal Regiter. 
panels of individual readers knowledgeable about Native American affairs review grant 
applications. Based on wrtten criteria, these panels rate proposals to decide their 
lielihood of success. Applicants must state specific, measurable goals that are 
consistent with community needs and long-range social and economic strategies. The 
ANA staff make the final award determinations. Each grant consists of one or more 
objectives. The ANA awards approximately one grant for every three applications 
received. 
Fung 
Leels
Th  AN 
The ANA's funding has changed little over the last 10 years. It has remained constant 
at slightly over 1 percent of total Federal Native American funding (See Appendi A). 
The ANA's funding reached its peak at $41 milion in Fiscal Year 1976. Funding 
subsequently declined to a low of $27.7 milion in Fiscal Year 1986. Since then 
ANA' s budget has remained constant at approximately $30 milion per year. The 
SEDS grants account for approximately $25 milion of ANA' s annual budget. 
Prr Revs of ANA Acties 
In addition to the 1978 OIG study, ANA was reviewed three times during the 1980s. 
Maxus, Inc., under OHDS contract, issued a report in December 1983 that found 
SEDS was returning $3 to $43 for each dollar invested. The review also found SEDS 
was making progress in overcoming serious social problems. 
, the Assistant Secretary for Planning and Evaluation (ASPE) contracted with 
In 1983
CSR Inc. to evaluate the implementation of the SEDS program. The study found that 
most grantees were achieving at least one project goal and recommended that ANA 
identify broad indicators of self-sufficiency. 
A September 1989 OIG report concluded that a material internal control weakness 
existed in the monitoring of OHDS discretionary grants.s The weakness pertained to 
insuffcient documentation of monitoring activities.  METHODOLOGY 
Sample Seletin

Our review covered Fiscal Years 1986 through 1988. There were 560 SEDS grants 
totaling $75.1 milion awarded during this period. The grants ranged from $5 000 to 
$1.2 millon, with an average of $134 000. For the distribution of funding by grantee 
tye, see Appendi B. 
We randomly selected 30 grants from each fiscal year for a total of 90 grants. The 90 
grants consisted of 349 objectives. For the purpose of our analysis, we divided the 349 
objectives into two categories. 
One category contained 123 objectives. We grouped objectives linked by a 
common purpose into one project. The 123 objectives formed 33 projects. 
grant awarded to establish a Native American Arts Center ilustrates this process. 
The grant had three objectives: development of a business plan; acquisition of 
location, supplies and commencement of operations; and implementation of a 
review and evaluation plan. These three objectives represented one project, the 
establishment of an arts center. 
A second category included 226 objectives. Each of these objectives represented a 
distinct project. There were 226 projects in this category. 
The projects from both categories totaled 259. Our analysis and findings are based on 
these 259 projects (See Appendix C). 
Grants awarded in Fiscal Years 1986-88 were chosen to assure that the projects were 
fiished at the time of our review. This enabled us to assess the grants' final results 
and any ongoing impact they had on self-sufficiency. Three years of data allowed for 
an objective review if any abnormalities appeared in a particular year. Two grants 
were stil ongoing and incomplete at the time of our review. 
Rev Pres 
We reviewed wrtten grant monitoring policies and procedures. Through review of the 
, we identified project goals and determined 
offcial grant administration folders
compliance with monitoring procedures. We reviewed ANA literature to identify a 
definition of self-sufficiency and standards to measure it. 
We conducted structured intervews with grantees, including 23 in person and 66 by 
phone (one grantee had disbanded and could not be contacted). These intervews 
provided us with information on project achievements, ANA' s monitoring, grantee self
sufciency, and suggestions for improvements in the grant process. We also reviewed 
documentation supplied by grantees to support their responses.  In order to assess the impact of SEDS grants, we determined whether project goals 
had been met. We were able to examine the long-term accomplishments of projects 
after grant funds ended. For example, one grant was awarded to raise a crop that 
would earn enough money to raise more crops the next year and eventually become a 
self-supporting farming operation. Although the grantee raised and sold a crop, the 
profit was less than half what had been projected and the project ended after one 
year. Therefore, we concluded that the project goal had not been met. 
By dividing grants into individual projects we were able to acknowledge the 
achievements of some projects even if others under the same grant were not 
successful. In one case, a grantee was awarded funding to (1) develop codes and 
ordinances for tribal administration and development, (2) operate two power plants 
(3) open a factory, (4) establish a five-store shopping center, and (5) develop two 
support industries for fuel production. The goal of the first project was met but those 
of the remainng four were not. The fact that most of this grant s projects did not 
meet their goals does not reduce or negate the contribution of the one that did. 
Other projects consisted of several objectives with a common purpose. We first 
established a project goal. We then based our finding on the achievement of that 
goal. We could have deemed a project unsuccessful even if a majority of project 
objectives were completed. For example, one grantee received funding for a project 
to develop a cannery. The grantee met two of the project s three objectives 
developing a business plan and training tribe members in new processing technques. 
However, the overall project goal was not met because the cannery was not in 
operation. 
We reviewed 83 of the 90 grant casefolders. Two grant folders were unavailable 
because the grants were stil active at the time of our review. Five other grant folders 
were misplaced during a move and were not available. We were able to learn the 
nature of the projects but not ANA's monitoring activities for these five. We spoke to 
all of the groups for whom we had no grant folders. We had a folder for the one 
group which had ceased functioning and could not be contacted. 
We did not review the grant application process. Any information concerning the 
application process arose from our conversations with grantees or our analysis of 
project achievement.  ."'"'' . . - -  -- --.  .. 
FINDINGS

ME 
ONE-QUARTE OF PROJECf DID NOT  THIR GOAl. 
Six-two of 259 projects (24 percent) did not meet the grantees
' s ated goals (See 
Appendi D for a detailed analysis of these projects). The number of projects that did 
not meet their goals could rise to 87 (34 percent) projects if another 25 of the 259 
projects currently delayed in litigation or in the reguatory process do not meet their 
goals. Such projects involved water rights, land claims, and Federal recognition cases. 
These delays were beyond the grantees' control and were not included in our 
calculation of project success.

The chart below depicts goal achievement by project tye: 
Results by Project Type

eN = 259)

of p.oj ect:s

120 
100  n."... ..----n_" --n. ---.-.. n......... n."........ h -hn - un --unn".......... h- - --n."....... '''''--nn n" n"......

""..h_h---. - -. n.-. -................... Uh. ..h n. ....."........... UnOo.. un" n".... .....h. .---n. n"

"hh - - --- n.". -..................... h- --.-........... .--u --. noon"........ ----n_.-......

Unsuccessfu I  Total 
Proj ects*  PrOjects 
. This doe not include the 25 projects delayed by litigation or the regulatory proces.  Bus  th 
venes accoun for mot projects not meetig  goals. 
Business ventures account for over two-thirds of the unsuccessful projects. Fort-four 
of 97 (45 percent) Native American business ventures failed. According to the Small 
Business Administration (SBA), the estimated rate of failure for projects that received 
SBA loans between 1986 and 1988 is between 15 and 20 percent. This information is 
intended as a point of reference, not for direct comparison with ANA grantees 
business failure rate. 
One example of a business venture failure involved a 3-year grant to expand a feed 
production company and produce a unique tye of feed. The company went out of 
business after 3 years due to changes in technology which the tribe could not match. 
The tribe made some attempts to use the equipment. However, it currently sits in 
storage. 
plag 
Lack of  and managem was cied as the mot commn cause of proble 
Respondents described problems that prevented them from meeting their goals. We 
categoried these responses to learn the most common reasons projects were not 
successfu. Lack of planning and management was the reason almost half (30 of 62) 
of projects did not meet their goals. For example, some grantees mentioned 
inadequate market research and premature expansion as problems. 
Other projects did not meet their goals due to economic problems, project complexity, 
and changes in the tribal government. 
Problems simiar to those mentioned above were cited in a 1983 study funded by 
ASPE. The report noted diffculties with administrative skills, organizational structure 
and social and economic conditions as factors which impeded the implementation of 
the SEDS program. The study also found that a comprehensive planning system could 
implementation of SEDS. 
faciltate the successful 
Grantees mentioned a variety of other problems as impediments to project success. 
Since there was no common link, we grouped these into a miscellaneous category. 
Two cases ilustrate this. One grantee felt racism toward Native Americans prevented 
his tribe from getting a foothold in the marketplace. Another grantee cited union 
problems as the cause for failure. 
The major reasons given as to why project goals were not met are shown in the 
following chart and in Appendix D.  -''''''''.'''''''''''.'.''''-' '-'' '-''.'...' '-''.. - -  ''''. . - --  - 
Reasons Goals Were Not Met.

noon n..u" un.."........ ..n............... - - un... n".......... '--.---.......

b .
"_uh-n........"""'. '--h_n.__....

o2 5.' 
"....-n-" - n- - n.".. un."................. Uh-.hn........... un....--. 
I 20 
f 10

Inadequlte  Bid  Too  CItI_ln "'''0. 
PI Inning  Ecano,..,  Campi..  a""t. 
Ind "'OL

*N = 62 (This doe not include the 25 projects delayed by litigation or the regulatory proces. 
ALTHOUGH ANA HA GRA MONIORIG PROCEDUR, COMPLICE
WI PROCDUR 
WAS NOT SYSTEMATIC.  do. 
Gra monirig predes are decred in two diferen 
(HDSM) sets forth policies and 
The  OHDS Grants Administration Staff Manual 
procedures covering all grants in our sample. The HDSM has been periodically 
updated since it was published in 1978. This document was the priary gude in our 
analysis of ANA compliance with monitoring procedures. 
establishes ANA guidelines within the HDSM 
The  ANA Operations Guide 
requirements. First published in August 1988 combined existing 
, the  Operations Guide 

reguations into one document. The  covered only 7
provisions of the  Operations Guide 

of the 90 grants in our sample because 83 grants were awarded prior to August 1988. 
The ANA expanded Part IV of the Guide in April  Monitoring 
1990 into a separate 
This addressed the material internal control weakness in OHDS grant 
Guide. 
monitorig cited by the OIG.  Operations Guide  produced in 1991 
A revised 
Operations and Monitoring Guides. 
consolidates the 

reqem.
AN do 
not meet aU of the grant monitorig 
Th 
Although ANA is responsible for many grant monitoring activities, we reviewed the 
three areas where ANA focuses its monitoring efforts: (1) progress reports, (2) site 
visits, and (3) certification of completion of program requirements. 
According to the HDSM, site visits should be targeted toward grantees with highest 
risk of failure. Other monitoring activities are the same for all grantees.  submiion and review was sporadic. 
Progress report 
Grantees did not submit almost half of all required progress reports and final 
evaluation reports. We also found no documentation that program specialists had 
reviewed submitted progress reports. This corroborates the previously noted internal 
control weakness finding in the September 1989 OIG report. 
Reguations concerning progress report submission were recently revised. The HDSM 
requies program officials to review all progress reports, but does not specify the form 
of review. Since August 1988, ANA has required quarterly Program Specialist 
Reports. This provision applies to only seven grants in our sample. None of the 
seven files contained program specialist reviews. In December 1989, ANA developed 
a standardized Grantee Status Review Form. They took this action in response to the 
OIG finding on OHDS grant monitoring. 
Site viits were inequent. 
There was little documentation concerning site visits to grantees in our sample. The 
information provided by ANA revealed that they had visited 10 of the 90 grantees (11 
percent) in our sample. However, we received site visit trip reports for only two 
grantees. Trip reports for three other grantees in our sample showed that ANA 
visited them to review different grants than those we had studied. There were no trip 
reports for the remainng five grantees. Consequently, we were unable to determine 
whether ANA visited them to monitor the grants in our review. 
We contacted grantees for more information concerning site visits. According to 
grantees, program office representatives had visited 27 of the 90 project sites (30 
percent) over the 3 years of our review.

The ANA was unable to provide specific written criteria for choosing grantees for site 
visits. Annual site visits by Program Specialists are "strongly encouraged" in the 
HDSM to review the grantees' capabilties and practices. Priority should be given to 
high risk" grantees, grantees having known problems, and new grantees. 
According to ANA officials, budget constraints have reduced travel funds in recent 
years. In its comments on the draft report, ANA indicated that it intends to monitor 
100 percent of a grantee base of 248 by the end of Fiscal Year 1993.

Prgrm  proedes. 
Specilits did not follow grant closeout 
Thirt-four of the 83 grant folders (41 percent) reviewed did not contain the required 
certification of completion of program requirements. At the end of the grant period 
the ANA Program Specialist is to complete a certification of completion of program 
requirements. This assures that the grantee has met all program requirements of the 
grant.  , "
We fowu no diect connctin between grant moniorig and project suces. 
For the projects we reviewed, we found no connection between grant monitorig and 
project success. Grantees who received more monitoring did not have a much higher 
rate of success than grantees who received little monitoring. We focused our review 
on three monitorig activities: progress reports, site visits, and certification of 
completion of program requirements. 
Revised reguations concerning progress report review, phone contact, and site visit 
documentation were not applicable at the time of our review. 
DETE. 
PROGRE TOWAR SEL-SUFICIENCY CANOT BE 
The impact of SEDS grants on grantees' progress toward self-sufficiency cannot be 
measured. 
Even though the 1988 amendments to the Native American Programs Act require the 
development and publication of general standards for evaluation of program and 
, we found no such standards. Furthermore, we found no 
project effectiveness
indicators, through document review, discussions with ANA offcials, or information 
provided by grantees, which could be used to measure the extent to which individual 
SEDS grants are contributing to grantee self-suffciency. The impact of SEDS grants 
on self-sufciency cannot be measured without such standards. 
Although our review found that three-quarters of projects met their goals, no 
standards exist which would enable ANA to equate successful projects with grantee 
progress toward self-suffciency. 
Lack of standards for the SEDS program is not a new issue. The ASPE raised the 
same concern over measuring progress in a report it funded in 1983. That report 
states, liAs the (SEDS) approach develops, there is a need to identify indicators of self
suffciency. . . Unless steps are taken to develop some uniform definitions and 
measurable indicators of self-suffciency, it wil not be possible to conduct an impact 
"6 This concern has stil not been 
evaluation of SEDS. addressed. 
In its comments on the draft report, ACF noted that there are ways to measure 
grantee progress toward self-sufficiency. According to ACF  progress is what 
(grantees) are accomplishing." However, as noted above, ANA has no wrtten 
standards or methods to systematically measure progress toward self-sufficiency. 
Examples of possible standards include reduced levels of dependence on Federal 
support, increased employment, increased levels of education, higher average incomes 
lower povert rates, the development of economic plans, and increased tribal 
revenues.  Such standards could be produced through a joint ANA-Native American effort. The 
ASPE' s earlier recommendations corroborate the feasibilty of this approach. 
th  selfsu. 
achig 
Over one- of grntees di not have a strateg for 
Discussions with grantees revealed that a significant number are not pursuig a long-
range self-sufciency strategy. Fort percent (36 of 90) said they did not have any 
long-range self-suffciency strategy at the time of their grant award. Few 
grantees
even mentioned self-suffciency as a benefit of the SEDS program. 
In its response to the draft report, ACF noted that grantees are required to have 
Strategies that enable them to get to the level of development at which a 
Native American (community) can control and internally generate resources to 
provide for the needs of its members and meet its own short and long-range 
social and economic goal which is self-sufficiency. 
Aspects of these long-range strategies which support and justif proposed projects are 
to be included in the grant application. However, we did not review grant applications 
and cannot say whether such strategies were addressed. 
FlIL 
GRA 
VIW  TH MA STGTH 
AS  OF SEDS. 
Grantees saw SEDS' abilty to respond to their dissimilar needs as its greatest 
strength. More than one-quarter of the grantees intervewed mentioned the broad 
scope of projects that could be funded by ANA as a strong point of the program. 
Ths allows these grantees to pursue developmental activities not funded by any other 
agency. 
Two examples ilustrate the divergent nature of SEDS grants. One grantee used a
year grant to promote tourism, increasing revenues by $150 000. With its grant 
another tribe expanded its packaging industry. It now generates an annual income of 
$260 000 and teaches job skills to tribe members. It was also able to purchase 
remodel, and resell three homes to low-income Native American familes. The tribe 
placed three families in these homes and provided construction training to six Native 
Americans. Both of these efforts have been a long-term success. 
Several mentioned that other funding agencies dictate the use of their funds, whereas 
ANA allows grantees the flexibilty to determine their own needs.  GRA 
GRA. 
MOS  APPROVED OF ANA'  MAAGEME OF 
Seventy of the 90 grantees (78 percent) had no problems with the way ANA managed 
their grants. Eighteen of the 70 grantees noted that ANA was very helpful in 
providing assistance when needed and they characterized their relationship with ANA 
as good. However, 26 of 90 grantees noted that the grant process could be improved 
if there was more direct contact with ANA through either technical assistance or on-
site monitoring. 
Suggestions for technical assistance focused on training for grant wrting and ANA' 
post-award requirements. Grantees wanted more site visits to give program specialists 
a better understanding of their circumstances. For those grantees visited, most had 
positive comments and strongly urged future visits. Some 
grantees suggested that
ANA provide them with information on the results of other grantees' projects. This 
would enable them to model proposals on successful projects and would prevent 
grantees from duplicating unsuccessful projects. 
Twenty-two grantees appreciated the personal contact they had with ANA. According 
to these respondents, they received personal attention from ANA, whereas with larger 
agencies they tend to get lost in the bureaucracy. 
Note: We shared the full list of grantee suggestions with ANA. Neither grantees nor 
individuals were identified on this list.  RECOMMENDA TIONS

Our respondents believe that SEDS can be an effective tool in promoting Native 
American self-sufficiency, in spite of its limited funding. 
To improve the project achievement rate, the ANA should: 
grt 
Follow gudelies to taget its  monitorig to projec with the greatest rik of 
faure. Grants for business ventures should be watched closely since these 
projects are the least likely to meet their goals. 
grt 
Provde  applicats with inormation on the results of prevous projec. A 
summary of project outcomes could be included in the application package. 
To further their role in helping grantees become more self-sufficient, ANA should: 
Requie that each grantee have a clearly delieated strategy for promotig self
sufciency. 
Develop stadads to determe the adequacy and appropriatenes of such 
strtegies. 
Revew SEDS grant applications to assure that grantee proposals will contribute 
to meeting established strategies and goals. 
Monitor grtee performance according to current guidelines and procedures to 
assure that activities reflect plans and commitments expressed in the grant 
proposal. 
SUMY  COMM AN 
OF AGENCY  OIG REPONSE 
Admtin 
Famil 
for Chilen and  (ACF) 
The ACF concurred with all except two findings and all but one recommendation. 
They did not agree that one-quarter of projects did not meet their goals and that 
progress toward self-sufficiency cannot be determined. They also disagreed with our 
recommendation that ANA should develop standards to measure grantee progress 
toward self-suffciency. 
The ACF non-concurred with our finding concerning the number of successful 
projects. However, this non-concurrence focused on the distinction between the words 
project" and "objective.  We addressed their concerns about terminology in the body 
of the report.
 Concerning our finding on the frequency of site visits, ACF asked that we change the 
number of trip reports received from 14 to 50. The ANA provided us with a list of 
grantees visited from Fiscal Year 1987 through 1990 and trip reports documenting 
visits to these grantees. 
Our review of ANA's list revealed that 10 of the 90 grantees in our sample had been 
visited. However, we received site visit trip reports for only two of these. 
Trip reports 
for three other grantees in our sample showed that ANA visited them to review 
different grants than those we had studied. There was no documentation of site visits 
to the five remainig  we were unable to determine whether 
grantees. Consequently, 
ANA visited them to monitor the grants in our review. 
The ACF disagreed with our finding that progress toward self-suffciency cannot be 
determined. However, our review did not reveal standards to measure the impact of 
SEDS grants on grantees' progress toward self-sufficiency. This is true despite 1988 
amendments to the Native American Programs Act requiring such standards. 
The ACF also disagreed with our statement that over one-third of grantees did not 
have a strategy for achieving self-sufficiency. According to ACF, the grant application 
requies grantees to relate proposed projects to relevant aspects of their long-range 
development strategies. However, a significant number of grantees revealed that they 
do not have long-range strategies for pursuing self-suffciency. 
The ACF questioned our recommendation concerning the development of standards 
to measure grantees' progress toward self-sufficiency. They believe that locally 
determined standards can be used instead of uniform national standards. We agree 
that the basis for determining the success of each grantee s efforts should be its own 
strategy for promoting self-sufficiency. However, without standards, ACF cannot 
determine the adequacy of such strategies. Examples of possible standards include 
reduced levels of dependence on Federal support, increased employment, increased 
levels of education, higher average incomes, lower povert rates, the development of 
economic plans, and increased tribal revenues. We have modified our 
recommendation to reflect this approach. 
We recognize the steps ACF has taken to improve the administration of the SEDS 
program, despite reduced resources. We hope that ACF will use this report as a 
constructive tool to further enhance the condition of Native Americans. 
Astant 
Secretary for Planning and Evaluatin (ASPE) 
The ASPE generally concurred with our findings and recommendations. They believe 
this report should be useful in improving ANA's programs. They suggested that 
standards specifically focus on the impact of SEDS grants on self-sufficiency.  The ASPE questioned the inclusion of small business failure data from the Small 
Business Administration (SBA). The ANA suggested that we look at this data. 
It is 
included as a general point of reference, not for direct comparison with ANA 
grantees' business failure rate. 
The ASPE also stressed the need for increased technical assistance, as a means to 
We agree with the value of increased technical 
increase grantee success rate. 
assistance and point out its importance to grantees in the body of the report. 
fu 
The  text of comments appears in Appendix E.  , p. 
ENDNOTES

1. Department of Health, Education, and Welfare  Review of Implementation of 
Offce of Human Development Services 
Nativ3e American P4rograms Act 0of  .  1974 -

(1978), Audit Control Number 14-81300. 
2. U.S. General Servces Administration  1990 Catalog of Federal Domestic Assistance
3. Department of Health and Human Servces  Commitment to Self-Suffciency: 
Social and Economic Development Strategies of Native American Communities 
(1987), p. 8. 
4. Ibid.  8.. 
5. Department of Health and Human Services Awarding and Monitoring 
Discretionary Grants  Office of Human Development Servces (1983), Audit 
Control Number 12-89-00142. Included in this review were grants and cooperative 
agreements made under the OHDS Coordinated Discretionary Funds Program 
(CDP). Our inspection concerns SEDS grants, not CDP grants. The ANA follows 
the same procedures for both tyes of grants. 
6. 
A Short Term Evaluation 
Assistant Secretary for Planning and Evaluation (ASPE), 
of the Initial Implementation of the Social and Economic Development Strategies of 
The Administration for Native Americans  1983, Contract Number HS-1oo-82-oo28 
p. IV.

7. Ibid., p.30.  APPENDIX A

BUDGET COMPAR I SON - ANA VS.  OVERALL FEDERAL

NA T I VE AMER I CAN FUND I NG  FY 1975 - 1990

C DOLLAR AMOUNTS I N THOUSANDS)

FISCAL YEAR  ANA  OVERAll FEDERAL  PERCENT AGE 
1975  $32, 000  105  373 
1976  000  756  276 
1977  000  386  626 
1978  33, 000  200, 639  1 5 
1979  , 100  579  483 
1980  33, 800  572, 698 
1981  800  555  189 
1982  000  246  669 
1983  000  340  603

1984  000  255  189

1985  000  268  218

1986  742  254  299

1987  989  315  028

1988  679  421  937

1989  975  409  186

1990  711  850  120  1 . 1 
for 
SOURCE:  Budget Views and Estimates  for  Fiscal Year 1991 
Indian Programs Under the  urlsdlctlon of the Senate Select 
Committee on Indian Affa Irs , March 1990, p. 59.  APPENDIX 

PERCEAGE OF FUING BY GRAE TYE 
The SEDS program funds four groups: 
(1)	 Federally recognized tribes, Alaskans, and Native Americans served through 
consortia arrangements; 
(2)	 Non-federally recognized tribes, urban groups, and rural 
groups; 
(3)	 Native Hawaiians; and 
(4)	 Other special grantees or organizations representing Native Americans not 
included in these first three groups. 
The chart below ilustrates the distribution of funds (figures are in percentages) by 
grantee for Fiscal Years 
1986 - 1988: 
Dist	 ibution of Funding 
by Giantee Type

Fede  a I T  i bes 
61 . 
Na t i 
Ame  i can 
Qigan i zat ions 
13. 
Nat i ve Hawa i i ans 
Non- Fedeia I T  i bes	
21.  APPENDIX 
DISTUTON BY PROJECf TYE 
The 259 projects in our sample are divided into nine tyes of projects: 
Ecnomic Deelopment Project: 
Business ventures: 97 projects (37 percent). Examples: sale of tribal crafts 
the operation of a fishery.

Economic planning: 28 projects (11 percent). Example: conducting a

feasibilty study into the expansion of the tribal print shop.

Goernance Project: 
Natural resource management: 39 projects (15 percent). Examples: 
conducting land use studies, helping in water rights claims. 
Government: 32 projects (12 percent). Examples: deciding the best form of 
tribal government, setting up a tribal court system. 
Codes/Ordinances: 24 projects (9 percent). Laws and reguations that govern 
tribes or Native American organizations. 
Federal Recognition: 15 projects (6 percent). During this process, the tribe 
acquires rights and responsibilties of a separate nation whose government 
recognized by the U.S. government. 
Soal Development Project: 
Job training and placement: 15 projects (6 percent). Examples: providing 
training to develop marketable skils, establishing an employment servce. 
Housing: six projects (2 percent). Examples: building low income housing, 
developing options to conventional mortgages. 
Environmental protection: three projects (1 percent). Examples: developing a 
plan to remove hazardous waste on tribal grounds, agreeing to protect wildlife. 
Note: Percentages total 99 due to rounding. The common denominator for all 
computations is 259. 
C - 1
 APPENDIX D

ANALYSIS OF PROJECTS NOT MEETING GOAL 
L Economic  (44) 
Development  Business Ventures 
Sample

No. 
Description of Project/Reason Goal Was Not Met (Reason Category)

Develop a winter tourism industryrrryg to resolve land isues (plang and 
management). 
Develop a community dock facility/Lgalliabilty problems (plang and 
management). 
ru 
Develop (fishing) cannery enterpriselProblem fidig a company to  the 
caery 
lanning and management). 
Develop fishing industry/Resistace from communty to Natie America 
(millaneous). 
Establish a self-sustaining tribal arts enterprise/Lsing money due to 
overstag (plang and management). 
Market gift basketsffe manufacter who supplied baskets went out of 
(plang 
busines  and management). 
Develop a new invention - "jet-a-boat" propulsion device/Lkig for capita
(plang 
and management). 
Create a subsidiary for-profit corporationlPut on hold due to change in 
governent (change in tnbal governent). 
Establish a Native American for-profit contractorlProject abandoned when it 
attable (plang 
felt it wa not  and management). 
Clear land, plant and raise crops for expected resale of  $150 000IRan  for onl 
one year with saes of $60 00. Cuentl lease the land Afected by drought 
and equipment vadam. Alo had problems with tuover in tnbal 
governent (micellaneous). 
Start a tribal business (undisclosed nature )/Ran out of tie, wi 
(plang  tr to set 
without ANA funds  and management). 
D - 1  Increase annual tribal revenues by $250 000 through Regional Fisheries 
Development Program/Eanded too quickl, curently in debt and behid in 
taes (plang 
and management). 
Develop a business around tribal campgroundlProblem in land acquiition. 
(plang 
Busines has yet to develop  and management). 
Start lumber sawmil  obta fiancig
business (40 employees )/Could not 
(plang 
and management). 
Cantr 
Set up furniture manufacturing company on reservation/  school on 
resIVtion wa dicontiued, school was to have evolved into busines 
(p1ann  g and management). 
litte hope for futue 
Establish birchbark basket project/Iabilty to market, 
saes (plang and management) 
Create another 75 jobs in an industrial plantlPlant opened eight month late.
Orgial 
hied 55, few sti employed. Demand for product has declied due to 
changes in the industr. No longer makg money (bad economy). 
Increase level of production and number of employees at doll cottage 
manufacte a product at a cost to make a profit (plang 
industry/Could not 
and management). 
exped 
Exand aquaculture project/90 percent of fih died, no profits  for 5
yea (plang 
and management). 
Establish a parts assembly workshop train and employ five/Workshop unable to 
get any contrct, now closed down (bad economy). 
Exand aquaculture business/Sti being developed, seekig prite fuds
(plang 
and management). 
fudig (plang 
Establish mini-mall/Could not get additional  and 
management). 
Establish comcmaegrci al canning operation/Water lies not large enough to handle 
(plang 
commercial  operation  and management). 
199. 
Establish ethanol production facilitylFederal subsidy expired  Without 
(plang 
subsidy, would operate at a loss  and management). 
rier 
Operate hydroelectric installation at two sites/Study showed silt from 
would daage the turbines, project abandoned (plang and management). 
D - 2
 Develop a marketing center for Pueblo crafts/Marketig center wa not 
establihed followig delays which included the de obligation of par of the 
fudig 
projec'  (micellaneous). 
Establish a joint venture to operate sand and gravel businesstrnbe wa not 
(plang 
prepared to fiance or manage the operation  and management). 
Produce graphite composition parts for aerospace industrylBuses operated 
for 3 year with 10-15 employees, no longer operatig due to lack of revenue. 
Too smal to compete for contract (bad economy). 
Establish cut and sew operation for Defense Department/ Busines never 
unown 
(micellaneous). 
establihed reasons 
Generate $400 000 in annual sales from ice cream franchiselBusines losing 
money due to lack of road trafc and slow growth of area (bad economy). 
Establish "denturism" lab/Lb project ended due to lack of space in buidig
(plang 
and management). 
Establish convenience storelPlan for convenience store delayed by tnbal 
elecons (change in tnbal governent). 
Establish training track for horsestrraig trck not developed due to lack of 
(plang 
inestor interest  and management). 
Establish manufacturing plant on tribal landtrwaed by unon problems and 
economic factors (micellaneous). 
Establish a plastics plant with neighboring city and a private companylDo not 
inastrctre 
have the  in place, objecte too ambitious. Used money to 
support tnOO (too complex).

Establish joint oil and gas business with private drillng company and a local 
bank/o not have the inastrctre in place, objece too ambitious. Use 
money to support tnbe (too complex). 
Establish a mortgage company/ Mortgage company not 
establihed, no investors
(plang 
and management). 
Establish a profitable sign companylBusines operated for 3-4 year, then went 
out of business (micellaneous). 
Establish a non-profit co-op to market Native American goods/Dntiued 
(micellaneous). 
D - 3  Develop fisheries resources, provide four jobsrrermated projec due to loss of 
market for product and economic distress (bad economy). 
Chese 
Create trading company with China/Unstable relationship with 
governent (too complex). 
Establish graphite manufacturing enterpriselProject has been put on hold (too 
complex). 
retu 
Establish profitable convenience store/No measurble  (bad ecnomy). 
Manufacture container components/Eployed 25-30 peple at one tie, now 
defuct (micellaneous). 
L Economic  Economic Planning (3) 
Development 
Develop a lO-year management plan for tribe s restaurant and hotel/Not yet 
(plang 
develope  and management). 
succ 
Attract business to industrial building/id not  due to remotenes of 
(plang 
area  and management). 
bas 
Develop and utilze data base for business opportunitieslData  created but 
utid 
not  due to a turnover in tnbal governent (change in tnbal 
governent). 
Resoure Management (5)
IL Governnce 

Provide training to tribal communities on how to conduct land 
transfersrrrag wa not underten (micellaneous). 
Negotiate settlement to land claimlDid not begi due to a digreement over 
which pares should parcipate (micellaneous). 
Negotiate settlement to land claim/Grantee no longer representig th tnbe 
(millaneous). 
preliar 
Establish legal title to water rights/Grantee did some  work, now 
handled by another attorney (micellaneous). 
(plang 
Exend water and sewer servcelEP A unable to provide funding  and 
management). 
D - 4
 II  Govern 
(4) 
Governnce 
Set up tribal courts in five villages/ltial effort abandoned (too complex). 
Establish Tribal Enterprise BoardlDefuct administrtion tued over (change 
in tnbal governent). 
Establish an Economic Development AuthoritylDefuct fudig subsuentl 
(plang 
withdrwn  and management). 
Develop staff through management training/Sta has left (millaneous). 
II 
Cod/Ordinnces (2) 
Governnce 
Establish tribal court to enforce regulations concerning the takig of marine 
(plang 
mammals/Not able to establih, ran out of money  and management). 
Develop zoning ordinance/No ordinance developed (millaneous). 
II  Recognn 
Federal  (1) 
Governnce 
proc 
Obtain Federal recognitionrrnbe is now defuct  dicontiued 
(millaneous). 
III Socl 
Jobs Training (2) 
Development 
Place 30 residents in jobs/Not completed due to slowdown in ecnomy (bad 
ecnomy). 
Employ six youths through youth cooperative which will operate concessions at 
sumer drama project/No longer operatig, cuentl lookig for fudig
(plang 
and management). 
III Socl 
Development  Envionmntal Prtectin  (1) 
Serve as legal consultant to ensure that the Native American exemption from 
the general moratorium on taking marine mammals remains in place/Gratee 
preliar 
did some  work, now handled by another attorney (millaneous). 
D - 5
 APPENDIX 

AGENCY COMMNT

E -
 ~~~
.. 
-=-::... " " ?--
//' CL". -1 	 ., Y) .. 
.-x 
DEFARTMENT OF HEALTP 
&. HUSI.AN SERVICES 	
(E- 2 J 
ADMINISTRATION FOR CHILDREN AND FAMILIE 
ffice of the Assistant Secretary. 
.:-=D  39l	 SUite  600 
!.Enfant P'omenaae, S. 
370 
Vasn1ngron. JC. :0447 
Richard P. Kusserow

Inspector General

oep.artme  of Health and Human Services 
FROM: 
A!r ssistan S	 ecretary 
for Children and Families

SUBJECT:	 Response to the Office of Inspector General Draft

Report: 
"Administration for Native Americans: A

Review of the SEDS Program, " OEI-03-90-00390

for the opportunity to review and comment on your draft 
Thank  you 
report entitled: "Administration for Native Americans: A 
Review 
of the SEDS Program.  The report contains five major findings
and six recommendations. 
Following are our general comments on 
the report, our responses to the findings and recommendations

and our technical comments on specific parts of the 
report. To

supplement our response we have attached a discussion paper,
developed by ANA staff, on the fundamental policy and program

bases employed by ANA when it funds Native American communities

to carry out its legislative mandate.

General Comments

The Report contains some important and interesting discussions

about the social and economic development strategies employed by

American Indian Tribes, Alaska Native Village 
governments, and

other Native American organizations, however it 
has some

structural flaws that should be corrected to preserve the
integrity of the discussions. 
There are also some basic study
conclusions with which we disagree and terminology that should be

clarif ied.

The terms "project,  grant 
" and "objective" are used
inconsistently throughout the report and create confusion for the
reader. We believe that clarification of the terms 
is critical 
to a complete response, therefore, we suggest that the following 
report: 
def ini tions be added to the 
A "grant" is a reward of financial assistance in -::-,e 
form of money, or property in lieu of 
money, by the
Federal Government to an eligible recipient. 
=::G
.:/IG 
=== .3EC 
SENT  (E-3)

Page 
2 - Richard P. Kusserow 
A " project" is the identified activity funded by a 
authorizing
grant which carries out the purposes of the 
legislation. 
Each project has one or more "objectives" to be
achieved. 
For the projects sampled in this study, the
number of obj ecti ves per proj ect ranged from 1 to 32. 
OIG Findinq

ONE-QUARTER OF PROJECTS DID NOT MEET THEIR OBJECTIVES. 
ACF Response 
statements in this 
We do not concur with this finding. The 
project, 
finding on page 4 refer to each project objective as a "
resulting in 264 projects instead of 90 projects. We recommend 
that the phrase: "264 projects" in this finding be changed to 
"264 objectives.  We further suggest that this change be made
throughout the report. 
OIG Findinq

THE ANA HAS GRAT MONITORING PROCEDURES.  HOWEVER, COMPLIANCE 
WITH PROCEDURES WAS NOT SYSTEMTIC. 
sporadic. 
Progress report submission and review was 
ACF Response 
We concur with this finding. It should be noted that this OIG 
finding applied to OHDS-wide, not just ANA. During the period 
covered by this review (1986-1988) ANA Programf iSlpeecsi.a lists kept 
their notes on grantees' progress in working  In 1989, a 
sfyislteesm .w as established that transmits the notes to the official
Further, in April 1990 ANA instituted a series of 
enhancements of procedures and systems to assure that all ANA 
support off ice, and grantee requirements are met on a timely
basis: 
ANA now holds periodic working meetings with the 
support office charged with fiscal and administrative 
oversight of ANA grantees to assure all reports are 
files. 
received and placed in the official 
A system for tracking all grantee reports transmitted 
to the support office for the official files and 
files. 
documenting their receipt in ANA working 
A computerized procedure to track all grantee report 
due dates and to follow up on missing or incomplete
reports.  (E-4 )

Page 
3 - Richard P. Kusserow 
Introduction of an early warning system enabling 
grantees, to 
program staff, working with their assigned 
routinely identify significant problems or issues 
requirements. 
including compliance with grant 
other corrective actions taken by ACF since this OIG review to

follows:

improve grant monitoring are as 
The Office of Management Services developed a "Grant 
Monitoring statement" for use by project officers to 
ensure that program progress reviews were made of 
performance reports and that the results of such 
IIproject Officer 
reviews were documented in writing. A 
certification" form was also developed to be used for 
closeouts. 
all continuation awards and grant  These 
documents were sent to all Central and Regional Office 
staff by transmittal memorandum signed by the Director 
of Management services , dated May 1, 1990. 
OIG Findina

infrequent. 
site visits were 
ACF ResDonse

We concur with this finding. ACF strongly agrees that annual 
site visits should be made. We also agree that priority should 
be given to "high risk" grantees, grantees with known problems, 
and new grantees. However, this can only be accomplished if 
available. 
travel funds and staff are made  In the last six-seven 
entire 
years, travel funds have been severely curtailed for the 
agency. The general criteria for site visits are in the Grants
Administration Manual. 
ANA has gone further than this with
staff. 
addi tional guidance for managers and 
The Report is silent on a couple of very important factors in 
this regard--how the staffing level and travel funds affect ANA' 
on-site monitoring capacity. The number of ANA staff is almost 
80-82. 
half what it was in FY  Grant loads per persons are 
substantial and additional tasks and requirements continue to 
accrue as staff cuts also continue. To not take this into 
consideration in an analysis of the program diminishes the 
validity of the findings. 
corrected: 
Finally, two statements under this finding should be 
In the1 d)is cussion on trip reports provided by ANA, (page 7
para.  "14 grantees II should be  grantees. 
changed to "50  ( E- 5 J 
?age 4 - Richard P. Kusserow

In para. '*, the statement: "
They intend to visit each 
gran  ee at least once every 3 years. II should be corrected to 
read as follows: "ANA will have monitored 100% of a grantee 
base of 248 by the end of fiscal year 1993. 
OIG ?indinq

Program Specialists did not follow grant closeout

procedures. 
ACF Response 
finding. 
We concur with this  FOllow-up to obtain certifications 
by the Grants Management staff has not always been successful.

Oftentimes the project officer was no longer employed by 
ANA.

ANA agrees that closeout procedures must be instituted for all

completed. 
grants that have been  There is a specified time

numer of things to 
period after a grant is over for a  occur or
be completed, including audits. 
OIG Findinq

We found no direct connection between grant monitoring

and proj ect success.

ACF Response 
finding. 
We concur with this  Revised ANA and OMS procedures for 
documenting receipt of grantee progress reports and their review
telephone contacts, and si te visits 
, are now in place to 
alleviate this deficiency.

OIG Findinq

PROGRESS TOWAR SELF-SUFFICIENCY CANOT BE DETERINED 
Although ANA has defined self-sufficiency, the

definition is not realistic given the size and scope of

the SEDS program.

ACF Response 
We do not concur with this finding. The ANA def ini tion of self
suff iciency 
is not based on the size and scope of the ANA 
program, but rather on what the attainment of it should be for
ati ve Americans 
(and parenthetically for States , counties, and 
municipali ties.  tion of social 
To limit or constrict the def  ini 
and economic self-sufficiency of Native Americans to the budget
limi tations of one Federal program would be shortsighted.  ... 
(E-
6 J 
?age 5 - Richard P. Kusserow

he riA definition of self-sufficiency is the goal that A

toward. All 
romotes and which Native American entities work 
the examples in the Report of what grantees are accomplishing 
iciency. 
Hi th ANA grants show progress toward self-suff 
On the one hand the study infers that grantee accomplishments

social, 
such as jobs, businesses, the development of community 
economic and governance infrastructures and other very important 
basic developmental accomplishments are not ascertainable as

progress toward self-sufficiency, and on the other it

categorically states that 
SEDS projects may be too 
insignificant to have a maj or impact on self-sufficiency. II This 
raises questions about the analysis bases, the structure of the

study design and the OIG measures for determining progress and

signif icance.  issues. 
The study is silent on these 
For ANA to expect that one-to-three year projects, averaging 
$134, 000 , could achieve total social and economic self-
sufficiency for Native Americans would imply that it does not 
have a realistic programmatic and Native American knowledge base. 
OIG Findinq

Over one-third of grantees did not have a strategy for 
achieving self-sufficiency. 
ACF Response 
finding. 
e do not concur with this  The ANA Program 
Announcements and application documents are clear about the 
locally-determined SEDS strategies under the ANA social, economic 
and governance goals. ANA does not request or require a long-
range " self-sufficiency strategy, " but rather those social and 
economic development strategies that enable them to get to the

level of development at which a Native American can control and 
its 
internally generate resources to provide for the needs of 
embers and meet its own short and long range social and economic 
self-sufficiency. II To the extent that there 
goal which is " is a 
long range SEDS strategy, we concur that it should be part of the
application.  (E-7 J

Page 6 - Richard P. Kusserow

OIG Findinq

GRATEES VIEW FLEXIBILITY AS THE MAIN STRENGTH OF SEDS. 
ACF ResDonse

this 
We concur with this finding. The statements and examples in 
section present an excellent portrayal of social and economic
self-sufficiency for Native Americans. 
This flexibility, which 
allows ANA grantees to pursue developmental activities not funded 
elsewhere by any other agency, is a strength of the SEDS program. 
OIG Findinq

GRATEES APPRECIATED PERSONAL CONTACT WITH ANA 
ACF ReSDonse

finding. 
We concur with this 
OIG Recommendation 
To improve the proj ect achievement rate, the ANA should 
follow guidelines to target grant monitoring projects with the 
greatest risk of failure. Grants for business ventures should be 
watched closely since these projects are the least likely to meet 
ecti ves. 
their obj 
ACF ReSDonse 
We concur with this recommendation. It should be noted in the 
report that the review covered the period of 1986-1988; since 
that time, procedures have been instituted to ensure that grants
are being monitored properly. 
OIG Recommendation 
rate, 
To improve the project achievement  the ANA should provide 
grant applicants with information on the results of previous
could be included in the 
projects. A sumary of project outcomes 
application package. 
ACF ReSDonse

We concur with this recommendation. ANA has plans to make 
successful project information available to grant applicants in 
the near future. The idea to put this information in the ANA 
application kits is a good one.  (E-8 J

Page 7 - Richard P. Kusserow

OIG Recommendation 
To further their role in helping grantees become more self-

sufficient, ANA should develop standards which measure overall 
self-sufficiency. 
grantee progress toward 
ACF ReSDonse 
We do not concur with this recommendation. The implication is

that merely setting standards for social and economic self
suff iciency is the way to measure grantee progress. ANA is a 
competitive grant program. In any given year, only about a third 
funding. 
of the eligible applicants successfully compete for 
This conclusion is also an assumption that standards for social 
and economic self-sufficiency should be based upon a uniform set 
of Federal guidelines. 
ANA does not agree with the statement on page 8, para.
"wi thout 
any standards, the success of the SEDS program cannot be
determined.  There are other measures that can be and are used 
to make this assessment. For this universe, the progress is what 
they are accomplishing. 
It should be emphasized that a policy based on locally-determined 
standards of self-sufficiency is not at all a policy of "
standards. 
.. The applicant for an ANA grant must rigorously 
define its project goals and objectives if it hopes to be funded 
ti ve process. 
in ANA' s highly competi 
Federallv-imDosed standards for self

And while there are no 

sUfficiency--nor should there be given the sovereign status and

enormous breath of diversity of these communities--it must be

understood that the ANA grant competition process is predicated

on funding only proposed proj ects with carefully planned, fully 
documented and locally-determined strategies.

OIG Recommendation 
ANA should require that potential grantees have a clearly 
sufficiency. 
delineated strategy for promoting self-
ACF ReSDonse 
l'le concur with  grant 
this recommendation. The entire ANA 
Team, is 
competi tion process, which was not reviewed by the OIG 
planned, 
predicated on funding only projects with a carefully 
(action) for 
fully documented, and locally determined strategy 
social, economic or governance self-sufficiency.  (E-9 J

age 8 - Richard P. Kusserow

The ANA commissioner makes the final funding determination after 
reviewing an independent assessment from program staff. He 
places great emphasis on the degree to which the applicant has 
developed a strategy which moves the community toward greater
self-sufficiency. 
OIG Recommendation 
The ANA should monitor grantee performance in accordance with

current guidelines and procedures to assure that acti vi ties 
reflect objectives described in the grant proposal.

ACF Response 
We concur with this recommendation. It should be noted in the 
report that the review covered fiscal years 1986 through 1988; 
that 
since that time, procedures have been instituted to ensure 
properly. 
grants are being monitored 
Technical Comments

self-
In the discussion on page 8 about the definition for 
stated: 
sufficiency it is  "Defined in this way, SEDS 
projects may be too insignificant to have a major impact on 
self-sufficiency. " The Report does not state what a major 
impact would be or how project "insignificance" would be
determined. 
4: "
In the chart on page  Environment & Housing" should be 
changed to "Environmental protection" in order to be 
consistent with usage of the term on pages C-2 and D-6. 
On page 5 under the discussion on tbe reasons objectives 
were not met: "inadequate planning and management" .is used 
in the text and "lack of planning and management" is used in 
the chart. The term " inadequate" is not synonymous with the
term "lack of. 
We further suggest that "planning" and 
management" not be lumped together, as they are two
distinct functions. 
Planning usually occurs prior to a 
period. 
grant award and management occurs during the project 
In the chart on page 5 and on page D-1 (sample no. 24) the
used. 
term "unstable" Tribal government is  Even if used by 
the interviewees, the use of this term for Tribes 
inappropriate in the sense that all governments, including 
elections 
the U. S. Government change administrations after 
at specified times, as do the Tribes and Native American 
projects 
Boards of Directors. Problems are experienced and  (E-10 J

Page 9 - Richard P. Kusserow

are canceled or put on hold at all levels--Federal , state 
and local when there is a change of administration, but they
are not called "unstable. 
Therefore, we recommend that the 
insensitive use of this term for Tribes be deleted from 
report. 
pages 5 and D-1 of the 
lect 
The first sentence on page 8 should be corrected to ref 
. . . to 
the ANA mission: "  promote the goal of social and 
economic self-sufficiency. 
We look forward to the opportunity to discuss this report with

you. If I 
may be of further assistance, please do not hesitate 
to contact me.

Attachment: 
ANA Discussion Paper
 / ' ::/ ? ' -
':.
/ y:"i.

jAc-u 
(1- DEPARTMENT OF HEALTH & HUMAN SERVICES  Offce of the Secetary 
(E-ll) 
e/ 
fC"  ?:t; C. '0201
PDIG 
:lUG 2 a 
:991 IG 
-:0 :  rtichard P. Kusserow  DIG-AS 
DIG-
Inspector General  EX
DIG-
Or 
??OH:  Assistant Secretary for  AIG-MP
Planning and Evaluation  OGC/IG 
EX SEC 

trat 'f I '2
SUBJECT:  Comments on "Administration forDATR SE  ans
ve 
Review of the SEDS Program"  t3'  L-
This memorandum is to provide ASPE comments on the IG report

entitled "Administration on Native Americans (ANA): Review of 
"che SEDS Program.  Generally, I believe that the findings should
be useful in improving ANA 1 S programs, but I do have a number
comments: 
Given that this inspection deals expressly with the 
SEDS 
program, and that SEDS funding is only a small part of 
federal funding for Native Americans, the recommendations 
relating to self sufficiency obj ectives should be targeted 
specifically to the SEDS proj ects.. For example, the third 
and fourth recommendation should be revised to read as 
follows: 
"Develop obj ective standards which help measure the 
contribution of the SEDS grant to grantee progress in 
sufficiency. 
achieving self-
Require that potential grantees clearly delineate how 
tribal
the SEDS grant will promote long-term increased 
self-sufficiency. " 

Given the rate and type of project failure, the IG should

consider recommending that ANA use feasibility or capacity
building grants that include the provision of technical

assistance as a precursor to multi-year development grants. 
In 1983, ASPE conducted a short-term evaluation of the SEDS 
program under task order contract with CSR, Inc. The CSR

study examined many of the same issues as the OIG inspection
and their recommendations also deal with grantees in

self
developing measurable and sound strategies to achieve 
sufficiency. 
Judging by the nature of SEDS proj ects,
seems that technical assistance should focus on economic and
housing development. 
A copy of this study' s executive 
summary is attached. A full copy of the report is available

through our Policy Information Center (PIC).  ( E-12 J 
? age  - Richard P. Xusserow 
On page 4 of the report, a comparison is made between the

failure 
Native American business venture failure rates and 
ates for programs funded by the Small Business
Administrative 
(SEA). While interesting, it is unclear 
an appropriate comparison. 
,vhether this is  SEDS failure 
rates may be attributable to undercapitalization and the 
lack of continuation of funding after a three year grant
period. 
They may also be attributable to lack of community
resources and readily available markets. 
This finding may 
explanation. 
warrant further analysis or 
There is an inherent assumption made regarding grant 
monitoring--that increased monitoring will lead to increased
project success. As a  all
matter of federal responsibility, 
grants should be monitored. 
However, increased monitoring 
proj ect 
may not lead to increased  success, rather provision 
of technical assistance might increase their chances. 
call 
you have any question concerning this memorandum, please 
(245-1858) or Bob RaYmond on my staff (245-7316). 
Attachment