–

OFFICE OF 

INSPECTOR GENERAL 

U.S.DEPARTMENT OF THE INTERIOR 

CARES Act Flash Report 

Lessons Learned for CARES Act Awards 

The DOI received 

$756 million 

under the CARES Act to 

respond to impacts from 

the coronavirus: 

 $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

 $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

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

Relief, and Economic Security Act (CARES Act), which provided the 

U.S. Department of the Interior (DOI) with $756 million to support the 

needs of DOI programs, bureaus, Indian Country, and the Insular Areas. 

The DOI will award most of its CARES Act funding through contracts 

and financial assistance agreements (such as grants and cooperative 

agreements). Our past work demonstrates that these awards are a 

vulnerable area for the DOI. 

Moreover, awards made as part of emergency response are riskier than 

normal because they are awarded quickly and often without competition 

and have a higher purchase threshold than other acquisitions. In addition, 

each emergency situation presents its own unique characteristics and has 

the potential to grow rapidly in size, scope, or complexity. 

For all these reasons, awards under the CARES Act will need careful 

management and administration, particularly given the amount of 

money that will be awarded and the pace at which it will be awarded. 

To date, $437.1 million, or 58 percent, has been obligated. 

In this report we present lessons learned and risks identified in our 

prior work—both audits and investigations—that the DOI should 

consider as it makes awards and provides oversight under the CARES 

Act. We have found that the following factors are important for 

successful oversight, even of funds restricted to specific recipients or 

purposes: 

 Ensuring sufficient workforce capacity

 Ensuring use of the appropriate award vehicle (contract vs.

grant vs. cooperative agreement)

 Maximizing competition in the source selection process

 Ensuring background research and risk assessments of

potential recipients

 Monitoring documentation and use of funds by recipients

 Reviewing recipients’ performance and financial reports

CARES Act Flash Report • No. 2020-FIN-037 • Issued May 20, 2020 1 
 

 

Ensuring Sufficient Workforce Capacity 

The CARES Act established requirements for increased reporting for 

agencies and award recipients, detailed spending plans, and identifying 

and tracking of charge card transactions. The CARES Act also 

requires that all appropriations be obligated by September 30, 2021, 

and emphasizes speedy awards and implementation. These 

circumstances are causing a surge in workloads. 

In a 2010 report on the oversight of stimulus funds under the American 

Recovery and Reinvestment Act, we noted that successful 

implementation of the Act would depend on an acquisition workforce 

that was sufficient in number and had the necessary skills and 

strategies to address any challenges or shortfalls. Several bureaus 

stated they did not have enough contract staff to award and administer 

Recovery Act contracts. Other bureaus identified concerns in meeting 

Recovery Act requirements while managing awards made under 

annual appropriations. 

Award Selection 

Selecting the appropriate 

award vehicle depends on 

the following factors: 

 What goods or services

are needed

 Whether the project is

expressly exempted by

statute from any Federal

requirements

 Whether the goods or

services are for the

direct use or direct

benefit of the bureau

 Whether the goods or

services primarily

benefit the bureau’s

mission

 How much Federal

involvement in the work

is anticipated

 Whether the recipient

and the bureau will both

be substantially involved

in doing the work

Key Action: Successful planning, administration, and monitoring of 

awards will be critical in complying with existing laws and new 

CARES Act requirements. Effective and efficient administration of 

this funding depends on an acquisition workforce that is large enough 

and has the skills necessary for these types of procurements. 

Ensuring Use of the Appropriate 

Award Vehicle 

Our past work has identified instances of bureaus using incorrect 

award vehicles in their procurements. 

In a 2019 evaluation, we found that after a bureau failed to put a 

contract in place for operation and maintenance services for a water 

treatment research plant, the bureau instead issued a cooperative 

agreement for the work. We determined that this was an inappropriate 

award vehicle to fund operation and maintenance activities. 

In a 2016 review of a bureau program, we found that similar contracts 

managed from different offices included different language and terms 

for price adjustments. The bureau’s price adjustment processes were 

unsupported and did not ensure that the rates paid were the best value. 

In addition to these contracts, the bureau issued cooperative 

agreements for related work that should have also been contracts. 

Further, the cooperative agreements included specified rates rather 

than reimbursing actual expenses (as required by Federal regulations). 

This resulted in inaccurate claims and allowed for potential profits, 

which is not allowed under a cooperative agreement. 

CARES Act Flash Report • No. 2020-FIN-037 • Issued May 20, 2020 2 
 

Key Action: Acquisitions staff will need to understand the award 

types and requirements to ensure best use of CARES Act funds. 

CARES Act spending to date: 

 $2.4 million obligated on

contracts

 $431.9 million obligated

on financial assistance

agreements

 $2.8 million in other

obligations (e.g., supplies,

purchase cards, and orders)

OIG Audit Planning 

We use risk attributes to help 

select for review the award 

recipients we identify as higher 

risk. Some factors we consider 

that increase risk include: 

 Lack of Federal award

experience

 Poor past performance on

other Federal awards

 Many subrecipients

 Cost-reimbursement type

agreements (as opposed

to firm-fixed-price)

 Multiple or large-dollar

agreement modifications

 Work scope in one of the

GAO’s high-risk areas

 Work scope in one of the

DOI’s targeted management

challenge areas

 Awards that are highprofile or made quickly for

disaster response or

emergency relief

 Awards made without

competitive bidding

Maximizing Competition in the Source 

Selection Process 

In past reviews we have found inappropriate use of sole-source 

awards, which are considered higher risk than competitive awards. 

Sole sourcing can be a useful tool to quickly make awards in 

emergency situations, but there is a risk of overreliance. Proper 

justification of sole-source awards ensures they are not used to 

circumvent competition and make awards to less-qualified bidders or 

related parties, which can lead to waste and inadequate accountability. 

In a 2015 audit of a scientific research program, we found that a bureau 

bypassed requirements for competition and public notice. Specifically, 

we reviewed 48 agreements totaling more than $13 million and found 

that 44 were sole-source agreements that had been announced only in 

the research network. Further, we found that 28 (or 58 percent) of the 

48 agreements had inadequate or missing sole-source justifications. 

In a 2013 program audit, we found missing justifications for solesource awards totaling nearly $1.4 million, and we questioned more 

than $1 million of that amount. Further, the award recipients avoided 

dollar thresholds and additional procurement requirements by using 

purchase orders for more than $1 million in goods and services that 

should have been charged directly to existing contracts. We also found 

that individuals with apparent or actual conflicts of interest were 

allowed to apply for, evaluate, manage, or benefit from Federal 

funding. Undisclosed conflicts of interest between key parties were at 

the core of 23 grants totaling roughly $16 million. We concluded that 

we had no assurance that prices paid were optimal or that Federal 

funds were equally available to all potential bidders. 

Key Action: Maximizing use of competition in making CARES Act 

awards can help ensure reasonable prices, improve recipient 

performance, and promote accountability for results. 

Ensuring Background Research and Risk 

Assessments of Potential Recipients 

In past reviews we have recommended background research and risk 

assessments to help ensure the DOI does not make awards to recipients 

who have been suspended or debarred, do not have the experience to 

handle the particular award, or have significant past performance problems. 

CARES Act Flash Report • No. 2020-FIN-037 • Issued May 20, 2020 3 
 

 

 

 

According to a recent study, 

organizations lose about 

5 percent of their revenue each 

year to fraud (in Government, 

“revenue” equates to the 

money received and then spent, 

for example on contracts and 

financial assistance awards). 

Using this analysis, an 

estimated $37.8 million of the 

DOI’s CARES Act funds would 

be vulnerable to fraud. This 

amount does not account for 

funds susceptible to waste or 

mismanagement. 

The same study found that 

43 percent of the initial 

detection of fraud is via tips, 

and that organizations with 

fraud awareness training 

gathered 56 percent of tips 

through formal reporting 

mechanisms, compared to 

37 percent for organizations 

without such training. We have 

been giving fraud awareness 

training for years and will make 

CARES Act-specific training 

available across the DOI. 

In a 2014 audit of funds related to Hurricane Sandy relief and recovery 

efforts, we found that inadequate background research resulted in the 

bureau paying extreme markups—ranging from 417 percent to 

1,035 percent—for heavy equipment rentals on three contracts under the 

same contractor. We found no evidence that contracting staff identified 

ordinary fair-market value for these equipment rentals during the bidding 

phase. The bureau should have recognized how extreme the contractor’s 

markups were and expanded its efforts to find potential bidders. 

We also learned that same contractor had no prior experience with 

Federal contracts and was unfamiliar with the Federal Acquisition 

Regulation. They had no apparent segregation of financial and 

accounting system duties and did not have any written accounting 

policies or procedures. The bureau’s contractor selection process was 

flawed and should have identified these risk factors. 

In a 2016 audit, we found insufficient documentation of the bureau’s 

pre-award steps for a cooperative agreement. The bureau did not 

properly assess the agreement’s risk level and did not adequately 

support its decision not to compete the award. The award recipient was 

a small company that had never received a Government contract or 

grant, had no internal controls, and had never worked in the 

agreement’s area of expertise. Bureau staff improperly completed the 

internal risk assessment form, resulting in a low risk score. We were 

unable to determine the value of the services provided by the recipient, 

and we questioned as unsupported the entire $256,100 paid and 

identified $2,123 in duplicate costs claimed. 

In a 2019 investigation, we found that a debarred contractor created 

four companies through family members and another associate and 

improperly obtained Federal contracts from 2013 to 2015 with total 

value of over $5 million. In October 2018, he pleaded guilty to one 

count of wire fraud and one count of conspiracy to defraud the United 

States. He was later sentenced to 10 months of confinement, 36 months 

of supervised release, and a $300 assessment. 

In another 2019 investigation, we found that a bureau contract 

specialist steered three contracts to a vendor because of a personal 

relationship, a violation of Federal ethics regulations. The contract 

specialist left the DOI after learning of our investigation. 

Key Action: For CARES Act acquisitions, attention to the pre-award 

steps will help bureaus identify recipients or activities that require 

additional monitoring and focus limited monitoring resources on the 

awards that require the most oversight. Proper background research on 

bidders also ensures that awards are not made to debarred or related 

parties. 

CARES Act Flash Report • No. 2020-FIN-037 • Issued May 20, 2020 4 
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A Closer Look at 

Questioned Costs 

Our audits identify the 

following types of questioned 

costs: 

 Unsupported costs are

costs that either have no

documentation or the

documentation is not

adequate.

 Unallowable costs are

costs that are prohibited

by the terms and

conditions of a Federal

award (such as costs

for lobbying or

entertainment).

 Ineligible costs are costs

that are not related to the

award or program being

audited.

 Unreasonable costs are

costs that exceed what

would be paid by a

prudent person in the

same circumstances.

 Funds to be put to better

use are amounts that

could be used more

efficiently.

Monitoring Documentation and Use of 

Funds by Recipients 

In past reviews we have found insufficient documentation by award 

recipients, which often results in questioned costs. Lack of support 

for costs claimed can indicate that moneys have been misused, 

misappropriated, or even embezzled. 

In a 2018 audit of a tribal transportation program, we found that a tribe’s 

accounting system and procedures were not configured to manage 

Federal funds. Specifically, the tribe commingled all funds received, so 

tracking its funding by agreement or allocating expenses by project— 

which are important and required steps for such funding—was 

impossible. Commingling can therefore result in unallowable costs being 

charged to Federal awards. We found similar commingling of funds in a 

2015 audit of a different tribe, which deposited funds from two DOI 

agreements in an account that also received deposits unrelated to the 

agreements. Further, the account was used to pay unauthorized expenses. 

In the same 2018 audit mentioned above, we also found more than 

$7,000 in unallowable purchases made with agreement funds, such as 

a holiday party and gifts. The bureau did not review the tribe’s 

financial status reports in a timely manner or identify these 

unallowable purchases. 

In both previously mentioned 2014 audits related to Hurricane Sandy 

relief and recovery efforts, we found insufficient or incorrect 

documentation for costs claimed for property or equipment rental. 

In one audit, we found that equipment inspection reports were not 

completed and the contractor was billing for 8 hours of daily use for 

equipment that was in fact not used for that length of time. In the other 

audit, we found that subcontractors were billing and being paid for 

equipment without sufficient supporting documentation. We also 

questioned whether the rates the subcontractor billed for equipment 

rentals were reasonable. In a comparison of the rates billed for four 

equipment items to the daily rental rates charged by market 

competitors for similar items, we determined that the subcontractor 

charged an average markup of 293 percent. 

In a 2015 investigation, we uncovered a fraud scheme by the executive 

director of a State marine resources agency. We determined that the 

executive director and his son misused Federal funds, including DOI 

funds, as part of a conspiracy to defraud the Government. The two 

men pleaded guilty to multiple fraud charges and were ordered to pay 

joint restitution to multiple Federal agencies. 

In a 2019 investigation (different from the two mentioned previously), 

we found that a contractor did not fully compensate its subcontractor for 

construction services on two projects at a national park. The contractor 

CARES Act Flash Report • No. 2020-FIN-037 • Issued May 20, 2020 5 
 

submitted false payment applications to the bureau, certifying that the 

subcontractor had been paid for its work when it had not. The contractor 

pleaded guilty to making false statements and was sentenced to 

22 months in prison and 3 years of supervised release and ordered to 

pay restitution totaling $135,507. 

Key Action: Acquisitions staff will need to thoroughly monitor 

recipient use of CARES Act funds to ensure that expenditures are 

allowable, reasonable, and have been appropriately documented. 

Reviewing Recipients’ Performance and 

Financial Reports 

In past reviews we have found instances of insufficient bureau review 

of performance and financial reports (including SF-425s) submitted by 

award recipients. 

In the 2018 audit of a tribal transportation program cited above (under 

“Monitoring Documentation and Use of Funds by Award Recipients”), 

we found that the bureau did not complete timely reviews of financial 

status reports or identify errors in the reports when reviewed. Bureau 

officials told us that they did not review reports submitted by the tribe 

in 2013 and 2014 until the fall of 2016. They also told us they had 

difficulty reviewing the financial reports because they were not 

familiar with how to review them and had not received training. 

In a 2019 audit of four tribal agreements, we found deficient review of 

financial status reports submitted by another tribe. The bureau staff 

responsible for financial oversight told us they were not trained or 

qualified to review financial status reports and relied on the tribe’s 

single audit and accounting records. The tribe made mathematical 

errors on its SF-425s that resulted in an underreporting of expenses. 

Bureau staff told us they did not have written procedures or guidance 

to aid them in their SF-425 reviews. 

Required reports: 

 Single Audit: Organizationwide audit required

annually for recipients of

Federal award dollars

 Federal Financial Report,

or SF-425: Required at

least annually, to submit

financial information about

individual Federal awards

Other reports that may 

be required: 

 Program reports on

progress toward goals and

objectives

 Project status reports that

summarize financial or

narrative information

about the project

 Final performance report

on or before the end of the

period of performance Key Action: Accurate and timely review of performance and 

financial reports will be key to successful management of CARES Act 

awards. 

CARES Act Flash Report • No. 2020-FIN-037 • Issued May 20, 2020 6