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 

OEI-03-9090 
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 selfsufciency of Native American communities. 

BACKGROUN 

The Native American Programs Act of 1974 (PL. 93-644, title VIII) authorized a

program of financial and technical assistance to promote social and economic selfsuffciency 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 selfsuffciency. 

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 

APPENIX C: Ditnbution by Project Typ ........................... CAPPENIX D: Analis of Project Not Meetig Goal. . . . . . . . . . . . . . . . . .. DAPPENIX E: Agency Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

B-1 
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 

to promote the goal of social and economic self-sufficiency for "American Indians 

Alaskan Natives, Native Hawaiians, and Pacific Islanders. 

(PL. 

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 

In 1978, an Offce of Inspector General (OIG) review1 suggested improvements to 

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 wellbeing, 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 

all resources 3 such as funding to help the tribe in securing Federal recognition or 

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 solicits grant applications through the Federal Regiter. Outside 

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. 

Th AN Fung Leels

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. 

In 1983, the Assistant Secretary for Planning and Evaluation (ASPE) contracted with 

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 

offcial grant administration folders, we identified project goals and determined 

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 selfsufciency, 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


ONE-QUARTE OF PROJECf DID NOT ME 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 venes accoun for mot projects not meetig th 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. 

Lack of plag 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 

faciltate the successful implementation of SEDS. 

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 . "_u h-n........"""'. '--h_n.__....


25' 

o . "....-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. 

Gra monirig predes are decred in two diferen do. 

(HDSM) sets forth policies and 

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. 

The OHDS Grants Administration Staff Manual 

establishes ANA guidelines within the HDSM 

requirements. First published in August 1988, the combined existing 

The ANA Operations Guide 

Operations Guide 


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

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 1990 into a separate Monitoring 

This addressed the material internal control weakness in OHDS grant 

monitorig cited by the OIG. A revised Operations Guide produced in 1991 

Guide. 

consolidates the 
 Operations and Monitoring Guides. 

Th AN do not meet aU of the grant monitorig reqem.

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. 
Progress report submiion and review was sporadic. 

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 Specilits did not follow grant closeout proedes. 

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. 

PROGRE TOWAR SEL-SUFICIENCY CANOT BE DETE. 

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 

project effectiveness, we found no such standards. Furthermore, we found no 

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 selfsuffciency. . . Unless steps are taken to develop some uniform definitions and 

measurable indicators of self-suffciency, it wil not be possible to conduct an impact 

evaluation of SEDS."6 This concern has stil not been 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. 

Over one-th of grntees di not have a strateg for achig selfsu. 

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. 

GRA VIW FlIL AS TH MA STGTH 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. 
MOS GRA APPROVED OF ANA' MAAGEME OF GRA. 

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 onsite 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: 

Follow gudelies to taget its grt 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. 

Provde grt 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 selfsufciency. 

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 OF AGENCY COMM AN OIG REPONSE 

Admtin for Chilen and Famil (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 grantees. Consequently, we were unable to determine whether 

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 

increase grantee success rate. We agree with the value of increased technical 

assistance and point out its importance to grantees in the body of the report. 

The fu 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 

(1978), Audit Control Number 14-81300. 

Native American Programs Act of 1974 -


2. U.S. General Servces Administration 340. 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. Assistant Secretary for Planning and Evaluation (ASPE), A Short Term Evaluation 

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 

SOURCE: Budget Views and Estimates for Fiscal Year 1991 for 

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. 

Non- Fedeia I T i bes	 Nat i ve Hawa i i ans 

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 Development Business Ventures (44) 

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). 

Develop (fishing) cannery enterpriselProblem fidig a company to ru 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 

busines (plang 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 

felt it wa not attable (plang 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 tr to set 

without ANA funds (plang 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. 

Busines has yet to develop (plang and management). 

Start lumber sawmil business (40 employees )/Could not obta fiancig (plang and management). 

Set up furniture manufacturing company on reservation/ Cantr school on 

resIVtion wa dicontiued, school was to have evolved into busines 

(p1ann g and management). 

Establish birchbark basket project/Iabilty to market, litte hope for futue 

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 

industry/Could not manufacte a product at a cost to make a profit (plang 

and management). 

Exand aquaculture project/90 percent of fih died, no profits exped 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). 

Establish mini-mall/Could not get additional fudig (plang and 

management). 

Establish commercial canning operation/Water lies not large enough to handle 

commercial cag operation (plang and management). 

Establish ethanol production facilitylFederal subsidy expired 199. Without 

subsidy, would operate at a loss (plang and management). 

Operate hydroelectric installation at two sites/Study showed silt from rier 

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 

projec' fudig (micellaneous). 

Establish a joint venture to operate sand and gravel businesstrnbe wa not 

prepared to fiance or manage the operation (plang 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 

establihed reasons unown (micellaneous). 

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 

inestor interest (plang 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 

have the inastrctre 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). 

Create trading company with China/Unstable relationship with Chese 

governent (too complex). 

Establish graphite manufacturing enterpriselProject has been put on hold (too 

complex). 

Establish profitable convenience store/No measurble retu (bad ecnomy). 

Manufacture container components/Eployed 25-30 peple at one tie, now 

defuct (micellaneous). 

L Economic Development Economic Planning (3) 

Develop a lO-year management plan for tribe s restaurant and hotel/Not yet 

develope (plang and management). 

Attract business to industrial building/id not succ due to remotenes of 

area (plang and management). 

Develop and utilze data base for business opportunitieslData bas created but 

not utid due to a turnover in tnbal governent (change in tnbal 

governent). 

IL Governnce 
 Resoure Management (5)

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). 

Establish legal title to water rights/Grantee did some preliar work, now 

handled by another attorney (micellaneous). 

Exend water and sewer servcelEP A unable to provide funding (plang and 

management). 

D - 4

II Governnce Govern (4) 

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 

withdrwn (plang and management). 

Develop staff through management training/Sta has left (millaneous). 

II Governnce Cod/Ordinnces (2) 

Establish tribal court to enforce regulations concerning the takig of marine 

mammals/Not able to establih, ran out of money (plang and management). 

Develop zoning ordinance/No ordinance developed (millaneous). 

II Governnce Federal Recognn (1) 

Obtain Federal recognitionrrnbe is now defuct proc dicontiued 

(millaneous). 

III Socl Development Jobs Training (2) 

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 

did some preliar work, now handled by another attorney (millaneous). 

D - 5

APPENDIX 


AGENCY COMMNT


E -

.. ::. .. ?

//' CL". -1 	 ., Y) .. 

DEFARTMENT OF HEALTP &. HUSI.AN SERVICES 	 .-x 

(E- 2 J 

ADMINISTRATION FOR CHILDREN AND FAMILIE 

.:-=D 39l	 ffice of the Assistant Secretary. SUite 600 

370 !.Enfant P'omenaae, S. 

Vasn1ngron. JC. :0447 

Richard P. Kusserow


Inspector General


oep.artme of Health and Human Services 

FROM: !r Assistan 	Secretary 

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


Thank you for the opportunity to review and comment on your draft 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 

def ini tions be added to the report: 

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 

grant which carries out the purposes of the authorizing 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 

We do not concur with this finding. The statements in this 

finding on page 4 refer to each project objective as a "project, 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. 

Progress report submission and review was sporadic. 

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 Program Specialists kept 

their notes on grantees' progress in working files. In 1989, a 

system was established that transmits the notes to the official files. 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 

received and placed in the official files. 

A system for tracking all grantee reports transmitted 

to the support office for the official files and 

documenting their receipt in ANA working files. 

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 

program staff, working with their assigned grantees, to 

routinely identify significant problems or issues 

including compliance with grant requirements. 

other corrective actions taken by ACF since this OIG review to


improve grant monitoring are as follows:


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 

reviews were documented in writing. A IIproject Officer 

certification" form was also developed to be used for 

all continuation awards and grant closeouts. 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


site visits were infrequent. 

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 

travel funds and staff are made available. In the last six-seven 

years, travel funds have been severely curtailed for the entire 

agency. The general criteria for site visits are in the Grants Administration Manual. ANA has gone further than this with addi tional guidance for managers and staff. 

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 

half what it was in FY 80-82. 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. 

Finally, two statements under this finding should be corrected: 

In the discussion on trip reports provided by ANA, (page 7 para. 1) "14 grantees II should be changed to "50 grantees. 
( 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 

We concur with this finding. 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


grants that have been completed. There is a specified time


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

OIG Findinq


We found no direct connection between grant monitoring


and proj ect success.


ACF Response 

We concur with this finding. 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. To limit or constrict the def ini tion of social 

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


romotes and which Native American entities work toward. All 

the examples in the Report of what grantees are accomplishing 

Hi th ANA grants show progress toward self-suff iciency. 

On the one hand the study infers that grantee accomplishments


such as jobs, businesses, the development of community social, 

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. The study is silent on these issues. 

For ANA to expect that one-to-three year projects, averaging 

$134, 000 , could achieve total social and economic selfsufficiency 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 

e do not concur with this finding. 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 

internally generate resources to provide for the needs of its 

embers and meet its own short and long range social and economic 

goal which is " self-sufficiency. II To the extent that there 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


We concur with this finding. The statements and examples in this 

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


We concur with this finding. 

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 

their obj ecti ves. 

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 

To improve the project achievement rate, the ANA should provide 

grant applicants with information on the results of previous

projects. A sumary of project outcomes could be included in the 

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 

grantee progress toward self-sufficiency. 

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 

of the eligible applicants successfully compete for funding. 

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 

in ANA' s highly competi ti ve process. 

Federallv-imDosed standards for self


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


And while there are no 


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 

delineated strategy for promoting self-sufficiency. 

ACF ReSDonse 

l'le concur with this recommendation. The entire ANA grant 

competi tion process, which was not reviewed by the OIG Team, is 

predicated on funding only projects with a carefully planned, 

fully documented, and locally determined strategy (action) for 

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; 

since that time, procedures have been instituted to ensure that 

grants are being monitored properly. 

Technical Comments


In the discussion on page 8 about the definition for selfsufficiency it is stated: "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. 

In the chart on page 4: "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 

grant award and management occurs during the project period. 

In the chart on page 5 and on page D-1 (sample no. 24) the

term "unstable" Tribal government is used. Even if used by 

the interviewees, the use of this term for Tribes 

inappropriate in the sense that all governments, including 

the U. S. Government change administrations after elections 

at specified times, as do the Tribes and Native American 

Boards of Directors. Problems are experienced and projects 
(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 

pages 5 and D-1 of the report. 

The first sentence on page 8 should be corrected to ref lect 

the ANA mission: " . . . to 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 

DEPARTMENT OF HEALTH & HUMAN SERVICES Offce of the Secetary (E-ll) (1- fC" C. '0201

:lUG 2 a :991 IG 

e/ 

PDIG ?:t;

-:0 : rtichard P. Kusserow DIG-AS 

DIG-EX Inspector General DIG-Or 

AIG-MP ??OH: Assistant Secretary for 

Planning and Evaluation OGC/IG 

EX SEC 


SUBJECT: Comments on "Administration forDATRtratSE 'f I '2 ve ans Review of the SEDS Program" t3' LThis 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 

achieving self-sufficiency. 

Require that potential grantees clearly delineate how 

the SEDS grant will promote long-term increased tribal 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


developing measurable and sound strategies to achieve self 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


Native American business venture failure rates and failure 

ates for programs funded by the Small Business Administrative (SEA). While interesting, it is unclear 

,vhether this is an appropriate comparison. 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 

warrant further analysis or explanation. 

There is an inherent assumption made regarding grant 

monitoring--that increased monitoring will lead to increased project success. As a matter of federal responsibility, all grants should be monitored. However, increased monitoring 

may not lead to increased proj ect success, rather provision 

of technical assistance might increase their chances. 

you have any question concerning this memorandum, please call 

(245-1858) or Bob RaYmond on my staff (245-7316). 

Attachment