OF 

INSPECTOR GENERAL 

U.S.DEPARTMENT OFTHE INTERIOR 

MANAGEMENT ADVISORY 

Issues Identified With Wildlife 

Restoration Subawards to the 

University of Tennessee, National 

Bobwhite Conservation Initiative 

Report No.: 2020-WR-019 July 2020 
 

 

 

 

 

 

 

 

 

OFFICE OF 

INSPECTOR GENERAL 

U.S.DEPARTMENT OF THE INTERIOR 

Memorandum 

To: Aurelia Skipwith 

Director, U.S. Fish and Wildlife Service 

From: Melanie L. Sorenson 

Deputy Assistant Inspector General 

Office of Audits, Inspections, and Evaluations 

Subject: Management Advisory – Issues Identified With Wildlife Restoration Subawards to 

the University of Tennessee, National Bobwhite Conservation Initiative 

Report No. 2020-WR-019 

In 2019, the U.S. Fish and Wildlife Service (FWS) apportioned $673.6 million for grants 

to State1 fish and wildlife agencies under its Wildlife and Sport Fish Restoration Program 

(WSFR), through the provisions of the Pittman-Robertson Wildlife Restoration Act. States may 

provide WSFR funds in the form of a subaward to other non-Federal entities, such as 

universities, to accomplish grant objectives. 

We are nearing completion on multiple audits of grants awarded under WSFR and, 

during fieldwork on three of these audits, we observed issues with subawards to the University of 

Tennessee, National Bobwhite Conservation Initiative (NBCI), that have resulted in ineligible 

costs claimed on WSFR grants. 

The NBCI is a national initiative that provides data and tools to various States and 

external partners (such as nongovernmental organizations) for restoring bobwhite quail 

populations to target densities set by State wildlife agencies. State fish and wildlife agencies fund 

the NBCI through WSFR subawards and State hunting and fishing license revenues. The NBCI 

also receives subawards from external partners and direct grants from other non-FWS Federal 

agencies. 

This management advisory (1) summarizes our findings about NBCI cost allocation 

during audit periods prior to the NBCI’s 2017 implementation of a recharge center accounting 

methodology, (2) presents our determination why the currently used recharge center is not 

compliant with Federal regulations and WSFR guidelines, and (3) presents a potential 

opportunity for the NBCI to continue its work in a way that complies with Federal regulations. 

1 In this report, we use the term “State” to refer generally to any of the primary funding recipients, including States, 

Commonwealths, Territories, and the District of Columbia. 

Office of Audits, Inspections, and Evaluations | Lakewood, CO 
 

 

 

 

 

 

 

 

 

 

 

 

Improper Allocation of NBCI Costs Among Benefiting 

States and External Partners During Audit Periods 

During a 2019 site visit to the NBCI, we determined that the NBCI did not properly 

allocate costs among all participating States and other external partners. The NBCI did not have 

a policy or a sound and reasonable methodology to determine and allocate assignable costs in 

proportion to the received benefits. This was partially due to the NBCI’s accounting system, 

which has allocation limits that prevent proper allocation of Federal dollars.2

NBCI officials said they tried to allocate costs across accounts, but did not view the 

system’s allocation limit as a real issue because they considered their funding, in their words, as 

one “pot” of money from which to pay for activities that benefited all participating States and 

external partners. We found, however, that this practice does not ensure costs are properly 

allocated to Federal grants, as required by Federal regulations. 

Federal regulations at 2 C.F.R. § 200.403 state that to be allowable, costs must be 

necessary, reasonable, and allocable for the performance of the Federal award. Under 2 C.F.R. 

§ 200.405, a cost is allocable to a particular award if the goods and services involved are

chargeable or assignable to that Federal award in accordance with the relative benefits received.

When costs benefit both the Federal award and other work of a non-Federal entity, they are

allocable if they are distributed in proportions that may be approximated using reasonable

methods. Part (d) of that section states that if a cost benefits two or more projects or activities in

proportions that can be determined without undue effort or cost, the cost must be allocated to the

projects based on the proportional benefit.

Because the NBCI did not properly allocate the costs among all participating States and 

external partners in proportion to the received benefits, and because the NBCI did not distribute 

those costs using a reasonable methodology, the costs are considered unallocable and not eligible 

to be charged to Program grants. 

We have questioned these WSFR grant costs in our audits of the Pennsylvania Game 

Commission;

3 the Kansas Department of Wildlife, Parks, and Tourism; and the Kentucky 

Department of Fish and Wildlife Resources. However, we are aware that this issue also applies 

to WSFR grants to other States. 

Emerging Risk: Implementation of Recharge Center 

Accounting Methodology at the NBCI 

In 2017, the University of Tennessee conducted an internal audit of the NBCI’s cost 

allocation methodology. To address the issues identified in the internal audit, in late 2017 NBCI 

officials implemented a “recharge” accounting methodology or accounting system. In the 

2 The University of Tennessee accounting system used by the NBCI can allocate a cost across a maximum of 16 accounts. NBCI 

costs often apply to more than 16 accounts; therefore, the accounting system is unable to allocate costs as Federal regulations require. 3 We also questioned the cost of the Pennsylvania Game Commission’s subaward to the NBCI due to the Commission’s refusal to 

refund budgeted amounts that remained unused at the end of the subaward period. This would constitute a fixed-price subaward, 

which is unallowable under the Program. 

2 
 

 

 

 

 

recharge methodology—which was implemented after the audit periods described in the previous 

section—costs are incurred by the NBCI and cumulate in the recharge accounting system. The 

NBCI seeks to cover these costs by charging subaward agreements a predetermined activity rate 

per activity day. Recharge centers are considered “specialized service facilities” under Federal 

regulations at 2 C.F.R. § 200.468, which states the costs of services at such facilities (such as a 

wind tunnel or a nuclear research reactor) must be charged directly to awards based on the usage 

of the services and a schedule of rates. The goal of the recharge center is to “break even,” that is, 

at the end of the fiscal period, to have the costs incurred equal the total revenues received from 

activity rate charges. 

We have identified multiple issues and concerns regarding use of the recharge center 

methodology, leading us to conclude that it does not comply with Federal regulations and WSFR 

criteria. Our concerns include the following: 

• The current subaward agreements operate as fixed-amount subawards, which are

unallowable under WSFR grants and applicable Federal regulations.

• Costs are not charged to grants according to the relative benefits received, as required

by Federal regulations.

• The NBCI and auditors cannot verify the activity days used in the recharge center to

assign cost rates.

• The recharge center uses different rates for Federal and non-Federal activities, which

is prohibited by Federal regulations.

• In situations where States provide funding to the NBCI via license revenue (nongrant)

funds, potential diversions of license revenues may have occurred.

Agreements Operate as Unallowable Fixed-Amount Subawards 

The way the recharge center determines budgets for the work it performs for its partners 

results in agreements that operate as fixed-amount subawards, which are unallowable under 

WSFR grants and applicable Federal regulations. 

The recharge center has established separate rates for five activities it performs. These 

rates are used to determine the budgeted amount of funding a partner should provide to receive a 

specified level of benefits. However, when we reviewed the subaward budgets, we determined 

that the recharge center’s approach to preparing budgets is faulty: Each partner State specifies to 

the NBCI how much it would like to provide in funding, and then the NBCI calculates the 

number of hours per activity that would result in the specified funding amount, instead of the 

other way around. This practice constitutes a fixed level of funding that does not change based 

on the benefits received. 

Therefore, these subawards are fixed-amount agreements, which are unallowable under 

WSFR. 

3 
 

 

 

 

 

 

 

 

 

 

Costs Are Not Related To Benefits Received 

NBCI officials told us that the amount a State contributes does not affect the level of 

benefits received. For example, if Texas were to contribute less than Delaware, it would still 

receive the same benefits from NBCI activities. Recharge centers are traditionally established to 

charge for internal use of resources such as wind tunnels or nuclear research reactors. Because 

the NBCI’s recharge center rates are based on “activity days” and States receive the same level 

of benefit regardless of the actual activity days used, the NBCI’s rate measurements are arbitrary. 

As a result, the amount of costs charged to a WSFR grant for NBCI activities does not correlate 

to the benefits received. 

The NBCI and Auditors Cannot Verify Rate Measurements 

The rate measurements (activity days) used in the recharge center to allocate rates cannot 

be verified from NBCI and University of Tennessee records. When the NBCI established the 

recharge center, it relied on prior personnel records that detailed employees’ tasks. These tasks 

were used to establish the five recharge center activities and their associated rates. Auditors 

should be able to determine the actual number of “activity days” that are being consumed so that 

they can verify the amounts charged to State subawards—but NBCI employees do not record 

their time with an associated activity rate, and the University of Tennessee’s accounting system 

does not track costs at an activity level. As a result, labor and direct costs are not associated with 

a specific recharge center activity, and we are unable to verify the actual expenditures per 

activity. In addition, the NBCI is unable to verify the accuracy of individual activity rates. 

University of Tennessee policy requires that recharge center rates be reviewed for accuracy at 

least biennially. 

Recharge Center Rates Differ for Federal and Non-Federal Activities 

The recharge center uses a combination of Federal and non-Federal rates with different 

costs, but using different rates for Federal and non-Federal activities is unallowable per Federal 

regulations. 

Four of the recharge center’s activity rates are specified as federally allowable, and the 

fifth activity rate is used for costs that are not allowable under Federal awards. These 

unallowable costs are typically related to political activities, fundraising, promotion, and 

outreach. In the recharge center, all costs are charged to a single account and billed externally 

based on established activity rates. Federal regulations specify that specialized service facilities 

may not discriminate between (i.e., use different rates for) activities under Federal awards and 

other activities of the non-Federal entity. In addition, because the NBCI is unable to verify the 

rates used for individual activities (as described in the previous section), it will also be unable to 

confirm that Federal awards are not being charged a share of unallowable costs. 

Potential Diversions of License Revenues May Have Occurred 

States are potentially diverting license revenues when they provide funding to the NBCI 

using their license revenues. In these cases, the State does not receive a contract or agreement, 

4 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and these fixed-amount contributions are not dependent on a specified level of service. We 

observed one instance where a State provided a fixed amount of $10,000 to the NBCI and did not 

even request a receipt. The State communicated that it had no expectation of a contract or 

agreement. Although we could not confirm whether the $10,000 was license revenue, a 

requirement for participation in WSFR is that license revenues must be used solely for the 

administration of a State’s fish and game agency. Since license revenue contributions are 

essentially donations to the NBCI, instead of expenditures for the direct administration of the 

State fish and game agency, they may be diversions of license revenues. 

Opportunity for the NBCI To Consider 

We have identified a potential funding opportunity for the NBCI to consider. The main 

cause of the NBCI’s inability to comply with Federal regulations and WSFR requirements is its 

attempt to allocate costs among many partners with various contracts, performance periods, and 

funding sources, both Federal and non-Federal. If the NBCI could contract with a single granting 

agency, it would likely not have these cost allocation challenges. The FWS already administers a 

grant program for projects or initiatives that benefit many States, known as the Multistate 

Conservation Grants Program (MSCGP). 

The MSCGP funds projects that address regional or national priorities of State fish and 

wildlife agencies. It was established by the Wildlife and Sport Fish Restoration Programs 

Improvement Act of 2000, which made available up to $6 million each year for projects that 

benefit at least 26 States, a majority of the States in an FWS region, or a regional association of 

State fish and game departments. Because the NBCI benefits at least 25 States ranging in size 

from Texas to Delaware, it could be eligible to apply for funding under the MSCGP. This could 

alleviate the NBCI’s challenges in allocating costs between multiple contracts. Instead, the NBCI 

would charge actual allowable costs directly to the MSCGP grant. 

Conclusion and Recommendations 

The NBCI provides mostly homogenous services to various States and external partners, 

some of which provide non-Federal funds. During our WSFR audits, we questioned costs 

charged to WSFR grants related to subawards to the NBCI because it did not properly allocate 

costs among all benefiting States and external partners. In response to an internal audit, the 

NBCI has since implemented a recharge center accounting methodology in an attempt to better 

comply with Federal regulations regarding cost allocability. In our opinion, this methodology 

does not comply with Federal regulations. Specifically, the agreements between the NBCI and 

States contributing Federal funding are fixed-amount subawards; costs charged to States are not 

related to the benefits received; recharge center rates cannot be measured or verified in the 

NBCI’s accounting system; the recharge center rates differ for Federal and non-Federal 

activities; and, in situations where States contribute license revenues, potential diversions of 

license revenues may have occurred. 

The MSCGP offers an opportunity for projects that benefit multiple States or FWS 

regions (such as the NBCI) to apply for funding. Participating in the MSCGP could alleviate the 

NBCI’s issues related to allocating costs among various external partners and funding sources. 

5 
 

 

 

 

We recommend that the FWS: 

1. Require WSFR States to discontinue providing grant and/or license revenue funding

to the NBCI

2. Resolve the amount of questioned costs related to subawards to the NBCI before and

after implementation of the recharge center

3. Identify other similar programs or grantees receiving WSFR awards or subawards

that may also have the issues outlined in this advisory, and take corrective action

4. Work with the NBCI to develop and implement policies and procedures that comply

with Federal regulations

Response to Report 

Please provide us with your written response by August 5, 2020. The response should 

provide information on the actions you have taken or planned to address the recommendations, 

as well as target dates and titles of the officials responsible for implementing these actions. 

Please send your response to aie_reports@doioig.gov.

The information in this management advisory will be included in our semiannual report 

to Congress and posted on our website no later than 3 days from the date we issue it to you. 

Please contact me at 303-236-9243 if you have any questions. 

6 
Report Fraud, Waste,

and Mismanagement

Fraud, waste, and mismanagement in

Government concern everyone: Office 

of Inspector General staff, departmental 

employees, and the general public. We 

actively solicit allegations of any 

inefficient and wasteful practices, fraud, 

and mismanagement related to 

departmental or Insular Area programs 

and operations. You can report 

allegations to us in several ways.

 By Internet: www.doioig.gov

 By Phone: 24-Hour Toll Free: 800-424-5081

Washington Metro Area: 202-208-5300

 By Fax: 703-487-5402

 By Mail: U.S. Department of the Interior

Office of Inspector General

Mail Stop 4428 MIB

1849 C Street, NW.

Washington, DC 20240