OFFICE OF 

INSPECTOR GENERAL 

U.S.DEPARTMENT OF THE INTERIOR 

CARES Act Flash Report 

Lessons Learned From 

Oversight of the Coastal 

Impact Assistance 

Program Grants 

On March 27, 2020, the President signed into law the Coronavirus Aid, 

Relief, and Economic Security Act (CARES Act). To date, the CARES 

Act has provided the U.S. Department of the Interior (DOI) with $909.7 

million, which includes direct apportionments of $756 million to 

support the needs of DOI programs, bureaus, Indian Country, and the 

Insular Areas, and a $153.7 million transfer from the U.S. Department 

of Education (ED) to the BIE. 

In this report, we present lessons learned from and the risks identified 

in our earlier audit and investigation work related to the Coastal 

Impact Assistance Program (CIAP). Under CIAP, the DOI disbursed 

$1 billion in grant funds across six States—Alabama, Alaska, 

California, Louisiana, Mississippi, and Texas—to respond to impacts 

from offshore drilling. We particularly highlight our 2013 CIAP audit 

report because, like the CARES Act, CIAP provided significant 

funding to recipients through a series of grants that were primarily 

managed from afar. Our findings in that report detailed the impact of 

the mismanagement that occurred because of ineffective oversight. 

We believe that many of the same risks present themselves today and 

that careful attention to our earlier work can help the DOI avoid some 

of the mistakes that occurred then. 

As of August 31, 2020, the DOI has obligated nearly $522 million of 

its CARES Act funding—in addition to more than $102 million in 

CARES Act funding the DOI received from the ED—using grants, 

cooperative agreements, and direct payments. Our previous CIAPrelated work demonstrated that grant awards can present substantial 

risks. For example, our 2013 audit of funds provided to Mississippi 

questioned almost $30 million, which represented 27.4 percent of the 

total funding the State expected to receive. In addition to the inherent 

risks associated with using grants as a funding mechanism, emergency 

situations have the potential to grow rapidly in size, scope, or 

complexity, thus exacerbating these concerns. 

CARES Act Flash Report • No. 2020-ER-057 • Issued October 19, 2020 1 

The DOI received 

$909.7 million 

under the CARES Act to 

respond to impacts from 

COVID-19: 

• $453 million for the

Bureau of Indian Affairs

• $157.4 million for DOI

operations (Office of the

Secretary)

• $69 million for the Bureau

of Indian Education (BIE)

o $153.7 million for the

BIE transferred from the

U.S. Department of

Education

• $55 million for the Office

of Insular Affairs

• $12 million for the Bureau

of Reclamation (BOR) water

resources

• $8.1 million for the BOR

policy and administration

• $1 million for the Office of

Inspector General

• $500,000 for the BOR

Central Utah Project

Completion Act
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Using our earlier work to illustrate areas of particular risk, we highlight the following factors as essential to 

successful oversight of the DOI’s CARES Act funds: 

• Review grant applications to ensure proposals seek to use grant funds for the intended purposes

• Conduct risk assessments of potential recipients to understand grant recipient backgrounds

• Ensure the grant recipients have proper internal controls, such as segregation of duties and conflict-ofinterest policies

• Maximize competition when awarding contracts using grant funds

• Monitor the grant recipients’ documentation and use of grant funds

• Review the grant recipients’ performance and financial reports

Review Grant Applications To Ensure Proposals Seek To Use Grant 

Funds for the Intended Purposes 

The CARES Act appropriated funds to the DOI to support the needs of territories and tribal governments to 

prevent, prepare for, and respond to the coronavirus, both domestically and internationally. The Act further 

suggests specific uses of the funds, some of which include providing for major water programs; the safety and 

welfare of and social assistance to Indian Country; DOI cleaning costs and law enforcement activities; overtime 

for DOI employees; assistance to the territories; and oversight activities. 

Similarly, the Energy Policy Act of 2005 required CIAP grant recipients to use all funds for specifically 

authorized uses, which included conservation and protection of coastal areas; mitigation of damage to fish, 

wildlife, or natural resources; implementation of conservation plans; mitigation of the impact of Outer 

Continental Shelf activities; or administrative costs of complying with the requirements. 

We found in our CIAP audit, however, that the DOI approved several grant projects in which the applications 

themselves did not meet the established criteria and should not have been allowed. We found that these projects 

wasted more than $1.2 million dollars and led to another $4.6 million in funds to be put to better use. CARES 

Act funds could be subject to a similar risk if the DOI does not ensure that grant applications meet criteria 

established by the Act and that grant recipients use the funds for the intended purposes. 

Recipients are awarded funds to carry out the goals and objectives of the CARES Act. Improper use of these 

resources diminishes their impact, creates public distrust, and could indicate intentional misuse. 

Key Action: The DOI’s successful planning, administration, and monitoring of awards will be critical to 

promote compliance with CARES Act requirements. Grants managers must scrutinize grant applications to 

ensure the applications meet the proper uses established by the Act. 

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Conduct Risk Assessments of Potential Recipients To Understand 

Grant Recipient Backgrounds 

To ensure effective monitoring, the DOI should conduct thorough risk assessments of potential CARES Act 

grant recipients to understand recipient backgrounds. Such risk assessments help awarding agencies identify 

grantees or grant activities that require additional monitoring to ensure accountability for Federal funds. Risk 

assessments also help ensure that agencies focus their limited monitoring resources on grantees requiring the 

most oversight. 

In our CIAP audit, we found that, while the Bureau of Ocean Energy Management, Regulation, and 

Enforcement (BOEMRE), which was originally directed to manage the program, conducted risk assessments, 

the FWS did not independently conduct its own assessments.

1 The FWS had no prior experience with most of 

the recipients, yet, rather than applying closer scrutiny, it instead relaxed monitoring requirements established 

by BOEMRE as a result of the weaknesses identified in those risk assessments. 

Specifically, Mississippi’s Department of Marine Resources (DMR), which received 65 percent of the State’s 

CIAP funds, did not respond to questions regarding conflict-of-interest policies. It moreover stated it had 

procurement policies in place to promote competition when it awarded contracts, but we found it still 

inappropriately awarded sole-source contracts. More generally, all four of the State’s grant recipients had a 

history of failing to conform to required conditions in past awards. All four recipients also had consistently 

submitted required audit reports late. 

Even though FWS officials had no prior experience with three of the four grant recipients in Mississippi, the 

FWS still did not independently assess grantee risk. In addition, we learned from FWS officials that the FWS 

did not believe any one grantee presented greater risks than any other but did not develop or apply tools that 

would allow it to actually assess risk levels for the various recipients. 

In addition, FWS officials waived an important monitoring option that should have been considered only after 

independently determining grantee risk. Specifically, officials allowed grantees to submit financial and 

performance reports annually, the lowest frequency of available monitoring. While the performance of many 

grantees supported this frequency of reporting, if the FWS had conducted its own risk assessments, it would 

have recognized that some of the CIAP-eligible entities in Mississippi required closer monitoring and should 

have been required to submit these reports more frequently. Therefore, the FWS should have conducted its own 

risk assessments and put monitoring requirements in place instead of solely relying on the risk assessments 

BOEMRE had performed. 

Without conducting risk assessments and adjusting compliance requirements accordingly, agencies cannot 

effectively monitor grant projects to prevent fraud, waste, and mismanagement. Because the DOI will award, 

and has already awarded, some of its CARES Act funding through grant agreements, it must conduct risk 

assessments and institute appropriate monitoring mechanisms to safeguard CARES Act funds. 

Key Action: The DOI must conduct thorough risk assessments and review the grantee’s background to ensure 

it assigns the appropriate level of monitoring. The DOI can mitigate any risks discovered during its assessment 

of the recipients by using more frequent reporting or other monitoring mechanisms. 

1 The Secretary of the Interior delegated oversight of these funds to the Minerals Management Service, which had initial responsibility of approving 

State plans and the continuing responsibility of reviewing, approving, and monitoring grants. In June 2010, the Minerals Management Service 

reorganized into BOEMRE. On October 1, 2011, the DOI transferred the responsibility to manage the ongoing grants and award the balance of the 

funds to the FWS. 

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Ensure the Grant Recipients Have Proper Internal Controls 

Internal controls are the plans, methods, policies, and procedures an entity uses to fulfill its mission, strategic 

plan, goals, and objectives and are essential to the proper management of Federal funds. Internal controls are 

crucial to grant management because they safeguard funds from misuse, abuse, and fraud; help ensure financial 

reliability; promote program effectiveness; and help ensure that recipients adhere to Federal statutes, 

regulations, and terms and conditions. 

In our 2013 audit of CIAP funds awarded to Mississippi, we found that the DMR did not have such controls in 

the form of policies pertaining to conflicts of interest or defining segregation of duties. The DMR and county 

officials placed CIAP funds at risk by allowing individuals with apparent or actual conflicts of interest to apply 

for, evaluate, manage, or benefit from CIAP funding. We found that 23 grants totaling roughly $16 million of 

the almost $39 million we reviewed implicated a variety of undisclosed actual and potential conflicts of interest 

between a DMR CIAP official, a DMR senior official, the Mississippi Gulf Coast National Heritage Area, and 

their family members and friends. 

We reported these conflicts to our Office of Investigations, which, in a joint investigation with the FBI, 

uncovered a fraud scheme by the DMR senior official. We determined that the senior official and a family 

member misused Federal funds, including DOI funds, as part of a conspiracy to defraud the Government. They 

both pleaded guilty to Federal program fraud, mail fraud, and conspiracy to commit fraud and were ordered to 

pay joint restitution to multiple Federal agencies. Because the DMR did not have proper internal controls, such 

as conflict-of-interest policies, the FWS, as the awarding bureau, should have monitored these awards more 

closely. If CARES Act recipients do not have proper internal controls—and cannot put controls in place before 

the award—the DOI must carefully monitor those awards. 

Key Action: The DOI needs to ensure grant recipients have proper internal controls in place and needs to 

understand the design, implementation, and effectiveness of those internal controls to safeguard Federal funds. 

Maximize Competition When Awarding Contracts Using Grant Funds 

The Federal Government encourages competition when awarding contracts to reduce costs, and entities should 

maximize competition whenever possible. Notwithstanding these general principles, sole-source contracting can 

be a useful tool when there is a lack of available vendors or when funds need to be awarded quickly in 

emergency situations, but entities should be mindful of over relying on this tool. The risks associated with solesource awards are exacerbated in emergency situations, because these awards may have a higher purchase 

threshold than other acquisitions and have the potential to grow rapidly in size, scope, or complexity. When 

entities decide a sole-source award is appropriate, they should provide proper justifications to demonstrate they 

did not use a sole-source award to circumvent competition and, as a result, award funds to less-qualified bidders 

or related parties, potentially leading to waste and inadequate accountability. 

In our audit of CIAP funds awarded to Mississippi, we found that four grant recipients circumvented Federal 

and State procurement rules by continually awarding sole-source contracts without adequate justifications. The 

recipients avoided dollar thresholds and other procurement requirements by using purchase orders (POs) for 

services that should have been charged directly to existing contracts. The four grant recipients issued solesource contracts and POs totaling nearly $1.4 million and paid more than $1 million for associated goods and 

services. 

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Excessive reliance on sole-source contracting provides little assurance that grantees paid the optimal price for 

services or that Federal funds were equally available to all potential contractors. As recipients begin to award 

contracts to assist with carrying out grant objectives, the DOI should ensure these recipients are adhering to 

Federal and other applicable procurement regulations. 

Key Action: The DOI should ensure its recipients maximize competition when awarding contracts using 

CARES Act funds to ensure reasonable prices and promote accountability for results and justify the use of solesource contracting when they cannot. 

Monitor the Grant Recipients’ Documentation and Use of Funds 

Federal grant regulations require specific and accurate accounting of all grant transactions to ensure that funds 

are fairly spent and accurately recorded. In addition, agencies awarding Federal funds must ensure that 

expenditures are allowable, allocable, and reasonable. We identified several mishandled accounting and 

financial issues with CIAP grant funds in Mississippi, including an improper recording of transactions in the 

financial management system, unsupported payroll expenses, unsupported indirect costs, and unreported 

program income. 

We also found the DMR and its subgrantees charged a variety of supplies, services, and equipment items to 

CIAP grants. To be eligible for Federal reimbursement, such expenses must be adequately supported by price 

quotations, invoices, receipts, and similar documentation. We found, however, that the DMR spent $23,967 on 

unallowable promotional items, incurred $2,229 in unallocable and unreasonable registration costs for a 

conference, and awarded a subgrant that resulted in $203,847 in unsupported costs. 

Further, the DMR expended $195,743 of CIAP grant funds on equipment for employees who did not charge 

work hours to CIAP grants. We also identified instances in which DMR staff misused CIAP equipment, leading 

us to question $107,443 of these costs. 

Given these types of risks, State personnel and DOI employees overseeing CARES Act awards will be 

instrumental in ensuring proper oversight. Both have a role in deterring, detecting, and disclosing wrongdoing 

and mismanagement at the DOI. 

Key Action: The DOI must ensure that personnel overseeing awards made under the CARES Act understand 

Federal grant regulations and know how to report any wrongdoing. Federal guidelines detail the techniques to 

thoroughly monitor recipient use of funding to ensure that expenditures are allowable, reasonable, and have 

been appropriately documented. The DOI OIG has resources on its website available for reporting concerns. 

Review the Grant Recipients’ Performance and Financial Reports 

Grant recipients must provide the awarding agency with their financial and performance information through 

reports to assist the agency with its oversight of the grant. These reports are a key monitoring tool, especially 

absent site visits. In a review of DMR files during our audit of CIAP funds awarded to Mississippi, however, we 

found nearly 28 percent of the required financial reports were submitted late or were absent, and in one 

instance, the grant recipient unilaterally changed the scope of a grant in a performance report, resulting in 

$293,748 that may not have supported the original purpose of the grant. Grant officials must preapprove any 

scope changes. FWS personnel should have identified the change in scope as a clear violation of the grant 

agreement, but it went unnoticed. In addition, the FWS did not conduct site visits, which could have detected or 

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prevented these types of problems, making timely submission and careful review of these reports even more 

important. 

 

While site visits permit more effective monitoring of grant funds, the DOI may manage a large percentage of 

the CARES Act funds from afar. To do so effectively, the DOI must ensure it carefully reviews performance 

and financial reports to monitor grant progress and spending. Regulations require at least annual reporting, but 

the DOI could require quarterly reporting requirements for higher risk recipients to ensure more oversight. 

Key Action: The DOI should review performance and financial reports to successfully manage CARES Act 

awards and consider if recipients should be subject to more frequent reporting. 

The DOI has a large responsibility to award more than $900 million in CARES Act funds quickly to combat the 

impact of the COVID-19 pandemic. Strong implementation plans and oversight are instrumental to protect 

taxpayer interests, as well as to ensure that expenditure of these funds leads to desired outcomes. The DOI 

should carefully manage and monitor CARES Act recipients to ensure funds are used for their intended 

purposes and expenditures maximize the benefits to all recipients, the Federal Government, and the public. 

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