Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

HHS OVERSIGHT OF 

GRANTEES COULD BE 

IMPROVED THROUGH 

BETTER 

INFORMATION-SHARING 

Suzanne Murrin 

Deputy Inspector General 

for Evaluation and Inspections 

September 2015 

OEI-07-12-00110 
 

 

EXECUTIVE SUMMARY: HHS OVERSIGHT OF GRANTEES COULD BE 

IMPROVED THROUGH BETTER INFORMATION-SHARING 

OEI-07-12-00110 

WHY WE DID THIS STUDY 

The Department of Health and Human Services (HHS) is the largest grantmaking agency 

in the Federal Government. In fiscal year 2014, HHS awarded nearly $402 billion in 

grants. We conducted this study to assess how HHS’s grant-awarding agencies share 

information with each other about grantees and potential grantees to assess and mitigate 

risks of poor performance or misuse of grant funds. Assessing and mitigating grantee 

risk is a component of HHS’ strategic initiatives. Additionally, since 2007, the Office of 

Inspector General has identified grants management as a top management challenge for 

HHS. 

HOW WE DID THIS STUDY 

We conducted structured telephone interviews with the Chief Grants Management 

Officer and/or designated staff from each of 13 HHS awarding agencies. We also 

collected data from awarding agencies regarding alert memorandums and fraud 

memorandums from the National External Audit Review Center (NEARC). 

WHAT WE FOUND 

Awarding agencies’ grant officials use various sources of information and communication 

to mitigate grantee risks; however, grant officials noted limitations in some instances. 

For example, information available in databases assists staff from awarding agencies in 

managing grantee risks, but lack of integration poses challenges. NEARC memorandums 

contain important information about grantee risks, but not all awarding agencies receive 

them. Awarding agencies lack a systematic method of sharing information about grantee 

risks, and sharing occurs infrequently. However, grant officials in the majority of 

awarding agencies we reviewed would like to receive such information from other 

awarding agencies. 

WHAT WE RECOMMEND 

We recommend that the Assistant Secretary for Financial Resources (1) analyze whether 

to implement the use of integrated databases that contain adverse information on 

grantees’ past performance, (2) establish a departmentwide source of adverse information 

from audits of grantees, and (3) facilitate departmentwide information-sharing about 

grantees that have past performance issues. ASFR concurred with all three 

recommendations. 
 

TABLE OF CONTENTS 

Objectives ....................................................................................................1 

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

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

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

Awarding agencies’ grant officials use various sources of 

information and communication to mitigate grantee risks;
 

however, grant officials noted limitations in some instances ..........6 

NEARC memorandums contain important information about 

grantee risks, but not all awarding agencies receive them ...............7 

Awarding agencies lack a systematic method of sharing 

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

Conclusion and Recommendations ............................................................11
 

Agency Comments and Office of Inspector General Response.....................13 

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

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

B: Databases Used By Awarding Agencies to Mitigate Grantee 

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

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

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

 

 

 

OBJECTIVES 

To determine: 

1.	 how Department of Health and Human Services (HHS) agencies that 

award grants use information and communication to mitigate grantee 

risks; 

2.	 the extent to which these agencies use alert memorandums and fraud 

memorandums from the National External Audit Review Center 

(NEARC); and 

3.	 whether these agencies receive and/or share information on grantees 

that they are concerned about with regard to performance and/or 

accountability. 

BACKGROUND 

HHS is the largest grantmaking agency in the Federal Government. In 

fiscal year (FY) 2014, HHS awarded nearly $402 billion in grants, 

approximately 24 percent of which funded programs other than Medicaid 

and the Children’s Health Insurance Program.1 We conducted this study to 

assess how HHS agencies that award grants (hereafter referred to as 

awarding agencies) share information and mitigate risks. Assessing and 

mitigating this risk is a component of HHS’ strategic initiatives.2 

Since 2007, the Office of Inspector General (OIG) has identified grants 

management as a top management challenge for HHS. As discussed in 

OIG’s top management challenges, implementation of planned program 

integrity initiatives such as evaluating and monitoring risks and resolving 

reported audit findings regarding grantees would better position HHS to 

integrate program integrity into all aspects of its operations.3 

HHS Grants 

Within HHS’s Office of the Assistant Secretary for Financial Resources 

(ASFR), the Office of Grants and Acquisition Policy and Accountability 

(OGAPA) provides departmentwide leadership and management in the 

areas of grants and acquisition management. OGAPA achieves this 

through policy development, data systems operations and analysis, 

performance measurement, oversight and workforce training, 

development, and certification. Within OGAPA, the Division of Grants 

____________________________________________________________ 

1

 See Appendix A for the number and dollar amount of grants by awarding agency. 

2

 HHS, HHS Strategic Plan. Accessed at http://www.hhs.gov/strategic-plan/goal4.html 

on August 6, 2014. 

3

 OIG, 2014 Top Management & Performance Challenges. Accessed at 

https://oig.hhs.gov/reports-and-publications/top-challenges/2014/ on December 2, 2014. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 1 
 

 

 

 

 

 

provides technical assistance to the Department’s grant-awarding 

agencies; evaluates effectiveness of the grant programs and processes; 

develops pertinent departmentwide regulatory guidance, policies, and 

performance standards; and maintains and reports departmental 

grant/financial assistance award information.4 

Grantees may receive funding through multiple awarding agencies within 

HHS. For example, a community social service agency might receive 

funds from both the Administration for Children and Families (ACF) and 

the Substance Abuse and Mental Health Services Administration 

(SAMHSA). Similarly, grantees may receive funding through multiple 

offices within the same awarding agency. 

Federal Regulations and Departmental Guidance 

Awarding agencies must comply with Federal regulations and 

departmental guidance in issuing grants. Federal regulations contained in 

45 CFR part 74 establish uniform administrative requirements governing 

HHS grants to institutions of higher education, hospitals, and other 

nonprofit organizations. Federal regulations contained in 45 CFR part 92 

establish uniform administrative requirements governing HHS grants to 

State, local, and tribal governments.5 The HHS Grants Policy Directives 

(GPD) provide guidance on grants management issues to affected program 

offices at all organizational levels within the Department. The GPD are 

the highest level of departmental grants policy within the Department. 

The Awarding Agency Grants Administration Manual (AAGAM) 

implements the GPD by providing detailed guidance to awarding agency 

staff involved in grants administration. The AAGAM must be used by any 

awarding agency that does not maintain its own grants administration 

manual (GAM).6 The National Institutes of Health (NIH) is the only 

awarding agency with its own GAM. The Division of Grants is working 

on a new Grants Policy and Administration Manual that will incorporate 

the recently implemented “Uniform Administrative Requirements, Cost 

Principles, and Audit Requirements for Federal Awards”7 and will replace 

the AAGAM. 

____________________________________________________________ 

4

 HHS, Office of the Assistant Secretary for Financial Resources Functional Statement. 

Accessed at http://www.hhs.gov/asfr/asfr-functional-statement.html on January 26, 2015.
 5

 On December 19, 2014, 45 CFR pts. 74 and 92 were replaced by 45 CFR pt. 75, which 

adapts the Office of Management and Budget’s final guidance in 2 CFR pt. 200 with 

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

6

 AAGAM ch. 1.01.101-2. 

7

 The Department implemented Uniform Administrative Requirements, Cost Principles, 

and Audit Requirements for Federal Awards in 2 CFR pt. 300 and 45 CFR pt. 75. 

79 Fed. Reg. 75872, 75875 (Dec. 19, 2014). 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 2 
 

 

 

Databases Relevant to Grants and Grantees 

Many databases contain information about grantees and/or grant awards. 

Grant officials may consult these databases to obtain information about 

current or potential grantees. For example, grant officials can view 

payment histories from current and previous HHS grants in the Payment 

Management System. In another example, the System for Award 

Management identifies entities that are registered to do business with the 

Federal Government as well as those that are excluded. Appendix B lists 

these and other databases, describes the information they contain, and 

describes how they are used. 

Awarding Agency Staff Roles and Responsibilities 

The GPD outline the primary responsibilities of the awarding agency staff 

involved in the award and management of HHS grants.8 Each awarding 

agency head must designate an individual to serve as the HHS official 

responsible for the business and nonprogrammatic management aspects of 

its grants. This official is known as the Chief Grants Management Officer 

(CGMO). 

The CGMO has the authority to appoint additional grants management officers 

(GMOs) for his or her awarding agency. GMOs are responsible for all Federal 

business management matters associated with the review, negotiation, award, 

and administration of grants to which they are assigned. They also interpret 

policies and provisions for grants administration. 

National External Audit Review Center 

Grantees that expend Federal funds totaling $500,000 or more in a year 

are required to have a single or program-specific audit conducted by a 

public accountant or by a Federal, State, or local governmental audit 

organization.9

 The National External Audit Review Center (NEARC)— 

part of HHS—is the point of receipt for these required audits of grantees. 

As part of its review of these audits, NEARC may determine that certain 

negative audit findings merit appropriate action by awarding agencies. 

For example, an audit may find that a grantee’s financial condition raises 

substantial doubt about the grantee’s ability to continue operations. In 

such cases, NEARC issues an alert memorandum to each awarding agency 

from which the grantee has received a grant, in addition to notifying 

OGAPA and certain regional and headquarters OIG staff. Alert 

memorandums also contain information about repeat negative audit 

findings, if such findings exist. 

____________________________________________________________ 

8 GPD pt. 1.04.
 9

 Pursuant to Office of Management and Budget Circular A-133, subpt. B. Effective 

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

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 3 
 

NEARC issues another type of memorandum, called a fraud alert, if an 

audit finds potential fraud (e.g., travel vouchers submitted for expenses 

not actually incurred). The distribution list for fraud alerts is the same as 

for alert memorandums, with the addition of notifying the Special Agent 

in Charge for the applicable regional OIG Office of Investigations. 

Until 2007, the HHS Office of Grants maintained an Alert List, which 

included grantees for which NEARC issued memorandums. The purpose 

of the Alert List was to safeguard Federal funds by alerting other awarding 

agencies to the potential risks of awarding funds to these grantees. In 

2007, the HHS Office of Grants suspended the use of the Alert List, 

pending a major redesign to increase internal control over its use and to 

better support postaward monitoring and oversight. To date, the Alert List 

has not been reinstated, nor has another departmentwide tool been 

implemented in its place for grant officials to obtain adverse information 

from audits. However, the AAGAM still refers to the Alert List.10 

METHODOLOGY 

Scope 

This evaluation included 13 awarding agencies, consisting of 10 HHS 

operating divisions (ACF, the Administration for Community Living 

(ACL), the Agency for Healthcare Research and Quality (AHRQ), the 

Centers for Disease Control and Prevention (CDC), the Centers for 

Medicare & Medicaid Services (CMS), the Food and Drug Administration 

(FDA), the Health Resources and Services Administration (HRSA), the 

Indian Health Service (IHS), NIH, and SAMHSA) and 3 HHS staff 

divisions (the Office of the Assistant Secretary for Preparedness and 

Response (ASPR), the Office of the Assistant Secretary for Health 

(OASH), and the Office of the National Coordinator for Health 

Information Technology (ONC)). To determine whether grantees 

continued to receive grant funds in subsequent years after being the 

subject of audit findings that warranted alert and/or fraud memorandums, 

we used the timeframe of FY 2011 as the baseline for this analysis. We 

reviewed the most current departmental and agency directives available at 

the time of our data collection. We did not access information in 

individual grantee files, nor did we determine whether grant funds were 

spent appropriately.

 ____________________________________________________________ 

10 AAGAM ch. 2.01.101. HHS departmental guidance regarding grants is in the process 

of being updated into a new Grants Policy and Administration Manual. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 4 
 

 

NEARC Alert and Fraud Memorandums 

We obtained and analyzed all 110 alert and fraud memorandums issued by 

NEARC in FY 2011 to determine the number of grantees with negative 

audit findings that NEARC determined to warrant the attention of 

awarding agencies for appropriate action. We identified the number of 

these grantees that continued to receive grant awards in FYs 2012 and 

2013. 

Departmental and Awarding Agency Directives 

We reviewed departmental and awarding agency directives to delineate 

awarding agencies’ responsibilities in these areas: analyzing a grantee’s 

past performance prior to initial award funding or continuation funding, 

sharing information about problematic grantees, and taking action as a 

result of receiving this information. We reviewed Departmental directives 

including the GPD and the AAGAM. For directives from awarding 

agencies, we reviewed the NIHGAM and any other directives that 

awarding agencies reported to us (e.g., standard operating procedures for 

risk mitigation). 

Structured Interviews With CGMOs 

We conducted structured telephone interviews with the CGMO of each of 

the 13 awarding agencies and/or his or her designated staff. We asked 

questions about awarding agencies’ use of NEARC memorandums, their 

activities for analyzing a grantee’s past performance prior to initial award 

funding or continuation funding, and their sharing of grantee-related 

information with other awarding agencies. We also solicited suggestions 

for mitigating grantee risks. To the extent possible, we validated interview 

responses with the oversight practices described in written procedures. 

We analyzed the structured interviews for common themes across 

respondents. 

Limitations 

We obtained information from awarding agencies’ grants officials through 

open-ended questions in structured interviews. Regarding the themes that 

emerged, we counted only responses that were explicitly stated and did not 

follow up with all respondents to determine whether they shared the same 

perspectives. Therefore, when we point out issues raised by a subset of 

respondents, we may not have related views from all 13 awarding agencies. 

Standards 

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 5 
 

FINDINGS 

HHS is the largest grantmaking agency in the Federal Government, 

awarding nearly $402 billion in grants in FY 2014. We conducted this 

study to assess how HHS awarding agencies share information about 

grantee-related risks and how they mitigate these risks. Awarding 

agencies’ grant officials use various sources of information and 

communication to mitigate grantee risks; however, grant officials noted 

limitations in some instances. NEARC memorandums contain important 

information about grantee risks, but not all awarding agencies receive 

them. Less than half of awarding agencies share grantee information with 

other agencies; however, grant officials report that they would like to 

receive this information. There is no requirement or systematic method to 

share grantee information across awarding agencies. 

Awarding agencies’ grant officials use various 

sources of information and communication to mitigate 

grantee risks; however, grant officials noted 

limitations in some instances 

Information available in databases assists awarding agency staff to 

manage grantee risks, but lack of integration poses challenges. Grant 

officials named a variety of sources of information about grantees that are 

available in searchable databases. Appendix B lists these databases, 

describes the information they contain, and describes how they are used. 

Grant officials from 3 of the 13 awarding agencies voiced concerns about 

a lack of integration with regard to the databases they use to identify 

potential grantee risks. For example, one grant official suggested that 

there should be one portal from which to access the various databases that 

verify the legitimacy of grantee organizations. Grant officials from two 

awarding agencies noted concerns about conflicting information 

(e.g., grant award numbers) across various databases. 

Grant officials review reports to mitigate grantee risks, but these reports 

may be late and do not include descriptive information. Grant officials 

from 6 of the 13 awarding agencies mentioned the importance of 

reviewing grantees’ Federal Financial Reports and/or progress reports in 

mitigating risks. Two of these six grant officials said that late and/or 

inaccurate reporting can be early warning signs that grantees are 

experiencing problems. However, one grant official commented that 

Federal Financial Reports indicate only the amount of funds expended, not 

how the funds were spent or whether they were spent properly. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 6 
 

 

 

Communication among GMOs, program officers, and grantees help to 

mitigate grantee risks, but lapses in communication pose challenges. 

Grant officials from 8 of the 13 awarding agencies told us that 

communication has helped their awarding agencies to mitigate grantee 

risks. This included communication between program officers and 

grantees and between program officers and GMOs. Grant officials noted 

that having close interaction with grantees can help prevent grantees from 

doing something improper. For example, when a grantee knows that it can 

call its program officer to obtain guidance before taking an action, this 

guidance can prevent the grantee from inadvertently making a prohibited 

expenditure. Grant officials from two awarding agencies noted that 

turnover of grantee staff can be high, which underscores the need for 

establishing and maintaining ongoing communication with grantees. 

Grant officials noted the importance of timely communication between 

program officers and grants management staff (e.g., GMOs) regarding 

grantee actions. Grant officials from 2 of the 13 awarding agencies noted 

that time lapses in program officers’ communication of negative 

information can impact the enforcement actions that grants management 

staff would take.11 Therefore, program officers need to report any “red 

flags” right away. 

NEARC memorandums contain important information 

about grantee risks, but not all awarding agencies 

receive them 

Not all awarding agencies maintain NEARC memorandums. Grant 

officials for 10 of 13 awarding agencies reported that they receive 

NEARC memorandums and maintain them either electronically or in hard 

copy. Grant officials from five awarding agencies offered that historical 

files of NEARC memorandums were useful for pre-award assessments of 

grantees.12 

For example, a grant official from one awarding agency reported that the 

agency has maintained an electronic spreadsheet, updated weekly, of 

NEARC memorandums since 2007. This informs grants management 

staff of grantees’ previous audit findings. Similarly, grant officials from 

another awarding agency reported that the agency has maintained a 

____________________________________________________________ 

11 An awarding agency may take enforcement actions if a grantee does not comply with 

the terms and conditions of the award. Examples of enforcement actions include 

temporarily withholding cash payments and requiring a grantee to spend its own money 

up front and submit receipts for reimbursement. 

12 Grant officials from five awarding agencies volunteered this information about the 

usefulness of NEARC memorandums; we do not know whether the remaining grant 

officials found them useful. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 7 
 

hardcopy file of NEARC memorandums since 2006. These grant officials 

reported that this file had been helpful during pre-award assessments, 

particularly for grantees with which they had no prior experience. 

The grant officials for the remaining three awarding agencies reported that 

they either did not receive NEARC memorandums or did not maintain 

them. The grant official for one awarding agency stated that she did not 

receive NEARC memorandums13 and the grant officials for the other two 

awarding agencies stated that they saw no need to maintain memorandums 

if their respective agencies did not have current grants with the audited 

grantees. 

NEARC memorandums communicate grantee risk information to awarding 

agencies. In FY 2011, NEARC issued alert and/or fraud memorandums 

regarding 90 unique grantees. Of these grantees, 56 percent (50 of 90) 

received HHS grant funds in FYs 2012 and/or 2013. Figure 1 provides 

information from the two alert memorandums that NEARC issued in 

2011—one in January 2011, one in March 2011—for one grantee. 

Figure 1: Example of Information From NEARC Memorandums 

 January 2011—NEARC’s review of the grantee’s 2008 audit 

report revealed that $174,411 of Federal funds were drawn 

down in excess of the grantee’s immediate needs and an audit 

report was received nearly 6 months late. 

 March 2011—NEARC’s review of the grantee’s 2009 audit 

revealed that the grantee had experienced continuing losses 

from operations, had a liability to the Internal Revenue 

Service in the amount of $212,362 for payroll taxes and 

associated penalties and interest, and had a cash shortage of 

$61,464. NEARC stated in the memorandum that it appeared 

that “program funds were used for non-program purposes.” 

NEARC further stated that “these conditions raise substantial 

doubt about the Organization’s ability to continue as a going 

concern. If the Organization is unable to continue operations, 

the objectives of the Federal programs may not be met, and 

the Federal funds advanced may be at risk.” 

The grantee cited in the example above received funds from only one HHS 

awarding agency during the years covered by the audit reports; however, 

the grantee continued to receive grant funds in FYs 2012 and 2013 from

 ____________________________________________________________ 

13 In August 2014, NEARC confirmed that the grant official was on its distribution list. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 8 
 

 

 

two HHS awarding agencies totaling $2.2 million and $1.8 million, 

respectively. 

Awarding agencies lack a systematic method of 

sharing information about grantee risks, and sharing 

occurs infrequently 

Less than half of awarding agencies share information about grantees 

with other agencies. Grant officials from 6 of 13 awarding agencies 

reported that they had shared information with another awarding agency. 

Of these six grant officials, one said that he occasionally receives requests 

from other grant officials asking about a grantee’s past performance. 

However, the grant official expressed reluctance to answer such inquiries, 

stating that he provides information about the grantee’s timeliness in 

submitting financial and progress reports, but does not provide further 

detail. 

Of the officials from the six awarding agencies that share information with 

other awarding agencies, those from two awarding agencies volunteered 

that they contact other awarding agencies with information more 

frequently than they receive information from other awarding agencies. 

An official from one awarding agency stated that the agency’s staff use the 

Tracking Accountability in Government Grants System to determine 

awarding agencies with which they have grantees in common. At the end 

of each year, this official sends emails to grants staff at other awarding 

agencies regarding concerns about those common grantees. Officials from 

three awarding agencies noted that information about problematic grantees 

affecting multiple awarding agencies is shared at the Department level, 

either through guidance or during in-person meetings. 

Grant officials in the majority of awarding agencies we reviewed would 

like to receive grantee risk information from other awarding agencies; 

however, there is no requirement or systematic method to share grantee 

information across awarding agencies. Officials from eight awarding 

agencies stated that they would like to receive information about other 

awarding agencies’ concerns regarding grantee performance expectations 

and/or accountability requirements. Further, officials from six awarding 

agencies responded that receiving this type of information could improve 

their respective agencies’ abilities to mitigate grantee risks. As one 

official stated, “If someone had already identified a prior problem [with a 

grantee meeting its] terms and conditions, it would help us focus our 

resources on problems.” Another official stated that being aware of other 

awarding agencies’ experiences with grantees would assist the official’s 

own agency in taking a proactive approach to grantees with known 

problems. In contrast, two grant officials pointed out that although such 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 9 
 

 

 

information might be helpful, a grantee’s history at one awarding agency 

does not necessarily mean that the grantee will have the same problem at 

another. The grant officials said that the applicability of the information is 

dependent on the nature of the work that the grantee is to perform. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 10 
 

 

CONCLUSION AND RECOMMENDATIONS 

HHS is the largest grantmaking agency in the Federal Government, 

awarding nearly $402 billion in grants in FY 2014. We conducted this 

study to assess how HHS awarding agencies share information and 

mitigate risks. To mitigate this risk, awarding agencies’ grant officials use 

various sources of information and communication to mitigate grantee 

risks; however, grant officials noted limitations in some instances. 

NEARC memorandums contain important information about grantee risks, 

yet not all awarding agencies receive them. Finally, no systematic method 

of sharing grantee risk information across awarding agencies exists, and 

sharing occurs infrequently. Therefore, we recommend that ASFR: 

Analyze whether to implement the use of integrated databases 

that contain adverse information on grantees’ past 

performance 

ASFR should analyze whether to implement the use of databases that 

would integrate various sources of existing information on entities 

applying for or receiving Federal funds. For example, the Department of 

the Treasury’s “Do Not Pay” Web site integrates the HHS List of Excluded 

Individuals and Entities, the System for Award Management, the Social 

Security Administration’s Death Master File, and the Treasury Offset 

Program Debt Check. Use of integrated databases could provide 

risk-relevant information in a more efficient manner than checking 

numerous separate databases. 

Establish a departmentwide source of adverse information 

from audits of grantees 

ASFR should establish a departmentwide source of adverse information 

from audits of grantees. ASFR should ensure that grant officials have 

timely access to this information to use it in pre-award assessments and to 

mitigate grantee risks. 

During the course of our review, the Office of Management and Budget’s 

(OMB) updated guidance on Uniform Administrative Requirements, Cost 

Principles, and Audit Requirements for Federal Awards became effective 

on December 26, 2014. Implementation of this guidance may change 

NEARC’s involvement in issuing alert and fraud memorandums in the 

future. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 11 
 

Facilitate departmentwide information-sharing about grantees 

with past performance issues 

ASFR should facilitate information-sharing among awarding agencies’ 

grant officials regarding grantees that have experienced performance 

issues. ASFR could facilitate internal meetings or develop an internal 

database of grantees’ performance problems and points of contact. 

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AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

ASFR concurred with all three of our recommendations. 

In responding to our first recommendation, ASFR stated that OMB is in 

the process of promulgating a new regulation that will require awarding 

agencies to report the following: awards that are terminated because of 

noncompliance with the award terms and conditions; actions to resolve a 

suspension or debarment proceeding; and any finding that a non-Federal 

entity is not qualified to receive a given award on the basis of prior 

performance under Federal awards. The regulation will require awarding 

agencies to report this information to a designated integrity and 

performance system. HHS will publish a Grants Policy Administration 

Manual chapter providing supplementary guidance associated with the 

regulation and will provide training to CGMOs. 

In responding to our second recommendation, ASFR stated that audit 

reports submitted in accordance with OMB Circular A-133 provide HHS 

awarding agencies with assurances relating to whether resources have 

been safeguarded, funds have been properly expended, and program 

results have been achieved. We note that in July 2015, the Federal Audit 

Clearinghouse was temporarily taken offline for maintenance and testing 

because of a U.S. Census Bureau information technology security 

investigation. This is an example of a contingency that ASFR should take 

into account in considering whether it should establish a departmentwide 

source of adverse audit information. We also suggest that ASFR consider 

how OMB’s guidance that became effective on December 26, 2014, may 

impact notification of grantees’ adverse audit information to grant officials 

through NEARC. 

In responding to our third recommendation, ASFR stated that HHS will 

leverage existing forums within the Department, such as the Executive 

Committee on Grants Administration Policy, to enhance and make routine 

the practice of sharing information among awarding agencies regarding 

recipients that have experienced performance issues, and to understand 

recipient performance in the context of risk. 

For the full text of ASFR’s comments, see Appendix C. 

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APPENDIX A 

Table A-1: FY 2014 Grant Awards by Awarding Agency 

Awarding Agency Number of 

Awards 

Percentage 

of Awards 

Dollar Amount of 

Awards 

Percentage of 

Dollar Amount 

ACF 7,353 9% $49,583,810,932 12% 

ACL 2,127 3% $1,668,282,990 <1% 

AHRQ 648 1% $174,173,273 <1% 

CDC 4,304 5% $5,128,117,929 1% 

CMS* 1,399 2% $309,737,682,047 77% 

FDA 589 1% $126,517,378 <1% 

HRSA 6,341 8% $7,607,869,591 2% 

IHS 916 1% $2,418,038,503 1% 

NIH 51,868 65% $21,818,409,722 5% 

Office of the Secretary 698 1% $428,752,444 <1% 

SAMHSA 2,967 4% $3,232,758,168 1%

 Total 79,210 100% $401,924,412,977 100% 

Note: Percentages do not sum to 100 percent due to rounding. 

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

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

April 22, 2015. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 14 
 

 

APPENDIX B 

Table B-1: Databases Used By Awarding Agencies to Mitigate Grantee Risks 

Name of Database Function of Database How Awarding Agencies 

Use Database 

Data Universal 

Numbering System 

Grant applicants are required to have a unique identification 

number from this system for each physical location of their 

business 

To verify the identity of the 

grantee organization 

Employer 

Identification 

Number 

Internal Revenue Service identification number for business 

entities 

To verify the identity of the 

grantee organization 

Federal Audit 

Clearinghouse 

Database of audits conducted as required by Office of 

Management and Budget circular A-133 

To view grantee 

organizations’ audit findings 

HHS List of 

Excluded 

Individuals and 

Entities 

Provides information regarding individuals and entities excluded 

from participation in Federal health care programs 

To prevent payments to 

excluded individuals and 

entities 

Payment 

Management 

System 

Provides awarding agencies and grantees with the tools to 

manage grant payment requests and disbursement reporting 

activities 

To view payment histories 

from current and previous 

HHS grants 

Public Health 

Service 

Administrative 

Action Report 

Includes the names of individuals who currently have 

administrative actions imposed against them by the Office of 

Research Integrity, the Assistant Secretary of Health, and/or HHS 

To prevent payments to 

suspended or debarred 

researchers 

System for Award 

Management 

Identifies entities registered to do business with the Federal 

Government as well as excluded entities 

To prevent payments to 

excluded entities 

Tracking 

Accountability in 

Government 

Grants System 

Serves as a central repository for HHS grants which tracks 

obligated grant funds at the transaction level 

To view HHS awards from 

current and previous HHS 

grants 

Source: Analysis of OIG interviews with CGMOs, 2014. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 15 
APPENDIX C 

Agency Comments 

DEPARTM ENT OF H EALTH & HUMAN SERVICES 	 Office of the Secretary 

Washington , D.C. 20201 

AUG 0 4 2015 

TO: Suzanne Murrin 

Deputy Inspector General 

for Evaluation and Inspections 

FROM: Ellen G . Murray 

Assistant Secretary for Pinancial Resources and Chief Financial Officer 

SUBJECT: HHS Comments on OIG Draft Report: HHS Oversight ofGrantees Could Be 

Improved Through Better Infimnation Sharing. OEI-07-12-00110 

The Department of Health and Human Se rvices (1-IHS) appreciates the opportunity to review and 

comment on the Office of Inspector Gene ral 's draft report HHS Oversight ofGrantees Could Be 

Improved Through Beller Information Sharing, OEI-07-12-00 II 0 . 

1. 	 Analyze whether to implement the usc of integrated databases that contain adverse 

information on grantees' past performance 

1-IHS concurs with this recommendation . 1-11-IS currently employs several systems to prevent 

improper payments, fraud , waste, and abuse. Systems such as the System for Award 

Management (SAM) are being used to determine if an applicant or grantee, or an employee 

or agent of an applicant or recipient, has been debarred , suspended or otherwise excluded by 

any federal agency. Other systems, such as Do Not Pay are also being used to help determine 

eligibility for payments. In an effort to strengthen and streamline the already rigorous preaward screening and post-award monitoring of grants recipients , OMB is in the process of 

publishing the regulation , " Guidance for Reporting and Use of Information Concerning 

Recipient Integrity and Performance," in 2 CFR Subtitle A, Chapter I, Part 180, Chapter II 

Part200. 

The "Guidance for Reporting and Use of Information Concerning Recipient Integrity and 

Performance" regulation will require all federal awarding agencies to report information 

about any termination of an award due to a material failure to comply with the award tenns 

and conditions ; any administrative agreement with a non-federal entity to resolve a 

suspension or debarment proceeding; and, any finding that a non-federal entity is not 

qualified to receive a given award, if the finding is based on criteria related to the non-federal 

entity's integrity or prior performance under federal awards . Currently, the designated 

integrity and performance system is the Federal Awardee Performance and Integrity 

Information System (FAPIIS). FAPIIS , an integrated information system, is intended to 

enhance the scope of information that is available to awarding agencies as they assess the 

integrity and performance of prospective recipients. The information provided via FAPIIS 

will significantly improve HI-IS's access to information pertaining to entities applying for , or 

receiving, federal funds. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07 -12-0011 0) 16 
 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 17 
 

ACKNOWLEDGMENTS 

This report was prepared under the direction of Brian T. Whitley, Regional 

Inspector General in the Kansas City regional office. 

Tricia Fields served as the team leader for this study. Other Office of 

Evaluation and Inspections staff from the Kansas City regional office who 

conducted the study include Dennis Tharp. Central office staff who 

provided support include Lucia Fort, Evan Godfrey, Althea Hosein, 

Christine Moritz, and Talisha Searcy. 

HHS Oversight of Grantees Could Be Improved Through Better Information-Sharing (OEI-07-12-00110) 18 
Office of Inspector General

http://oig.hhs.gov 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services 

(HHS) programs, as well as the health and welfare of beneficiaries served by those 

programs. This statutory mission is carried out through a nationwide network of audits, 

investigations, and inspections conducted by the following operating components: 

Office of Audit Services 

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 

audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying 

out their respective responsibilities and are intended to provide independent assessments of 

HHS programs and operations. These assessments help reduce waste, abuse, and 

mismanagement and promote economy and efficiency throughout HHS. 

Office of Evaluation and Inspections 

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 

HHS, Congress, and the public with timely, useful, and reliable information on significant 

issues. These evaluations focus on preventing fraud, waste, or abuse and promoting 

economy, efficiency, and effectiveness of departmental programs. To promote impact, OEI 

reports also present practical recommendations for improving program operations. 

Office of Investigations 

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With 

investigators working in all 50 States and the District of Columbia, OI utilizes its resources 

by actively coordinating with the Department of Justice and other Federal, State, and local 

law enforcement authorities. The investigative efforts of OI often lead to criminal 

convictions, administrative sanctions, and/or civil monetary penalties. 

Office of Counsel to the Inspector General 

The Office of Counsel to the Inspector General (OCIG) provides general legal services to 

OIG, rendering advice and opinions on HHS programs and operations and providing all 

legal support for OIG’s internal operations. OCIG represents OIG in all civil and 

administrative fraud and abuse cases involving HHS programs, including False Claims Act, 

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG 

also negotiates and monitors corporate integrity agreements. OCIG renders advisory 

opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG 

enforcement authorities.