AUDIT REPORT 

Audit of NRC’s Grant Management 

Program 

OIG-09-A-16 September 29, 2009 

All publicly available OIG reports (including this report) are accessible through 

NRC’s Web site at: 

http:/www.nrc.gov/reading-rm/doc-collections/insp-gen/ 
UNITED STATES 

NUCLEAR REGULATORY COMMISSION 

WASHINGTON, D.C. 20555-0001 

OFFICE OF THE 

INSPECTOR GENERAL 

 September 29, 2009 

MEMORANDUM TO: R. William Borchardt 

Executive Director for Operations 

 Stephen Burns 

General Counsel 

FROM: Stephen D. Dingbaum /RA/ 

 Assistant Inspector General for Audits 

SUBJECT: AUDIT OF NRC’S GRANT MANAGEMENT PROGRAM 

(OIG-09-A-16) 

Attached is the Office of the Inspector General’s (OIG) audit report titled, Audit of NRC’s 

Grant Management Program. The report presents the results of the subject audit. At a 

September 14, 2009, exit conference, agency senior executives provided suggested 

revisions to the discussion draft report. This report incorporates revisions made, where 

appropriate, as a result of the agency’s suggestions. 

Please provide information on actions taken or planned on each of the 

recommendations within 30 days of the date of this memorandum. Actions taken or 

planned are subject to OIG followup as stated in Management Directive 6.1. 

We appreciate the cooperation extended to us by members of your staff during the 

audit. If you have any questions or comments about our report, please contact me at 

415-5915 or Steven Zane, Team Leader, Financial and Administrative Audit Team, at 

415-5912. 

Attachment: As stated 
Electronic Distribution

Edwin M. Hackett, Executive Director, Advisory Committee on Reactor 

 Safeguards 

E. Roy Hawkens, Chief Administrative Judge, Atomic Safety and 

 Licensing Board Panel 

Stephen G. Burns, General Counsel 

Brooke D. Poole, Jr., Director, Office of Commission Appellate Adjudication 

James E. Dyer, Chief Financial Officer 

Margaret M. Doane, Director, Office of International Programs 

Rebecca L. Schmidt, Director, Office of Congressional Affairs 

Eliot B. Brenner, Director, Office of Public Affairs 

Annette Vietti-Cook, Secretary of the Commission 

R. William Borchardt, Executive Director for Operations 

Bruce S. Mallett, Deputy Executive Director for Reactor 

 and Preparedness Programs, OEDO 

Martin J. Virgilio, Deputy Executive Director for Materials, Waste, Research, 

 State, Tribal, and Compliance Programs, OEDO 

Darren B. Ash, Deputy Executive Director for Corporate Management 

 and Chief Information Officer, OEDO 

Vonna L. Ordaz, Assistant for Operations, OEDO 

Kathryn O. Greene, Director, Office of Administration 

Patrick D. Howard, Director, Computer Security Officer 

Cynthia A. Carpenter, Director, Office of Enforcement 

Charles L. Miller, Director, Office of Federal and State Materials 

 and Environmental Management Programs 

Guy P. Caputo, Director, Office of Investigations 

Thomas M. Boyce, Director, Office of Information Services 

James F. McDermott, Director, Office of Human Resources 

Michael R. Johnson, Director, Office of New Reactors 

Michael F. Weber, Director, Office of Nuclear Material Safety and Safeguards 

Eric J. Leeds, Director, Office of Nuclear Reactor Regulation 

Brian W. Sheron, Director, Office of Nuclear Regulatory Research 

Corenthis B. Kelley, Director, Office of Small Business and Civil Rights 

Roy P. Zimmerman, Director, Office of Nuclear Security and Incident Response 

Samuel J. Collins, Regional Administrator, Region I 

Luis A. Reyes, Regional Administrator, Region II 

Mark A. Satorius, Regional Administrator, Region III 

Elmo E. Collins, Jr., Regional Administrator, Region IV 
Audit of NRC’s Grant Management Program 

i 

EXECUTIVE SUMMARY 

BACKGROUND

Pursuant to the Atomic Energy Act of 1954, as amended, and in 

conjunction with the Federal Grant and Cooperative Agreement Act of 

1977, the U.S. Nuclear Regulatory Commission (NRC) may enter into 

arrangements to provide financial assistance to support programs with a 

public purpose that the Government wishes to encourage. Such 

assistance is provided through grants and cooperative agreements to 

educational institutions, nonprofit organizations, State and local 

governments, and professional organizations. 

This report focuses on NRC’s grant program, which has grown 

significantly since fiscal year 2005 in response to legislation authorizing 

the agency to increase its nuclear education grants to universities for 

course and curricula development, fellowships, scholarships, and faculty 

development. 

PURPOSE

The purpose of this audit was to determine whether NRC has established 

and implemented an effective system of internal controls for grants 

management. 

RESULTS IN BRIEF

NRC’s grant program has grown considerably over the past several years. 

While the agency (a) recently achieved compliance with a Federal 

requirement to post monthly data on its grant spending on a Federal 

Government Web site, NRC (b) lacks overarching guidance concerning 

the current grant program, (c) does not require grants staff to have grantspecific training, (d) has incomplete and inconsistent grant files, and (e) 

has not issued a Federal regulation on debarment and suspension of 

irresponsible grantees. As a result of these program weaknesses, NRC 

lacks assurance of adequate oversight of the grant program, which can 

adversely affect the proper use of funds. 

RECOMMENDATIONS

This report makes recommendations to improve controls over the grants 

management program. A consolidated list of these recommendations 

appears in Section VI of this report. 
Audit of NRC’s Grant Management Program 

ii 

AGENCY COMMENTS

At a September 14, 2009, exit conference, agency senior executives 

provided suggested revisions to the discussion draft report. This report 

incorporates revisions made, where appropriate, as a result of the 

agency’s suggestions. 
Audit of NRC’s Grant Management Program 

iii 

ABBREVIATIONS AND ACRONYMS 

2 CFR Title 2, Code of Federal Regulations

DC Division of Contracts 

HR Office of Human Resources 

MD Management Directive 

NRC Nuclear Regulatory Commission 

OGC Office of the General Counsel 

OIG Office of the Inspector General 

OMB Office of Management and Budget 

RES Office of Nuclear Regulatory Research 

SBCR Office of Small Business and Civil Rights 
Audit of NRC’s Grant Management Program 

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Audit of NRC’s Grant Management Program 

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TABLE OF CONTENTS 

EXECUTIVE SUMMARY ......................................................................... i 

ABBREVIATIONS AND ACRONYMS.....................................................iii 

I. BACKGROUND ..............................................................................1 

II. PURPOSE.......................................................................................3 

III. FINDINGS .......................................................................................4 

 A. NRC ACHIEVED COMPLIANCE WITH DATA 

 POSTING REQUIREMENT................................................................4 

B. AGENCY LACKS COMPREHENSIVE GUIDANCE ON GRANTS................6 

C. NRC DOES NOT REQUIRE GRANTS TRAINING...............................10 

D. GRANT FILES ARE INCONSISTENT AND INCOMPLETE.......................13 

E. NRC HAS NOT ISSUED A REGULATION ON 

 DEBARMENT AND SUSPENSION ....................................................18 

IV. CONCLUSION ..............................................................................20 

V. AGENCY COMMENTS .................................................................21 

VI. CONSOLIDATED LIST OF RECOMMENDATIONS .....................22 

APPENDICES 

A. SCOPE AND METHODOLOGY....................................................23 

B. BEST PRACTICES .......................................................................25 
Audit of NRC’s Grant Management Program 

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Audit of NRC’s Grant Management Program 

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I. BACKGROUND 

Pursuant to the Atomic Energy Act of 1954, as amended, and in 

conjunction with the Federal Grant and Cooperative Agreement Act of 

1977, the U.S. Nuclear Regulatory Commission (NRC) may enter into 

arrangements to provide financial assistance to support programs with a 

public purpose that the Government wishes to encourage. Such 

assistance is provided through grants and cooperative agreements to 

educational institutions, nonprofit organizations, State and local 

governments, and professional organizations. 

Both grants and cooperative agreements are legal instruments for 

transferring money, property, or services to a recipient. However, 

Government involvement with the recipient differs for the two forms of 

assistance. For cooperative agreements, “substantial involvement” is 

expected between the Federal agency and the recipient. In contrast, for 

grants, there is no substantial involvement between the Federal agency 

and the recipient. 

Grants and cooperative agreements differ significantly from contracts, 

which are used to acquire supplies or services for the direct benefit or use 

of the Government. While agencies must monitor contractor performance 

closely to ensure work is performed satisfactorily and in a timely manner, 

the standards for monitoring grantees are less prescriptive. Federal 

grants staff are expected to exercise prudent oversight of Government 

funds; however, there is no statute or governmentwide rule or policy 

governing grant monitoring. Title 2, Code of Federal Regulations (2 CFR), 

“Grants and Agreements,” contains some requirements that prescribe or 

limit activities or information (e.g., site visits, reports) needed for 

monitoring, but beyond this, it is left to agencies to develop their own 

specific monitoring expectations. 

This report focuses on NRC’s grant program, which has grown 

significantly since fiscal year (FY) 2005 in response to legislation 

authorizing the agency to increase its nuclear education grants to 

universities for course and curricula development, fellowships, 

scholarships,1

 and faculty development. In FY 2005, NRC provided 

approximately $564,000 in assistance to outside entities, and in FY 2006, 

about $1.5 million.2

 In FY 2007, the agency provided approximately $7 

million in grants, and in FY 2008, this figure increased to about $20 

million. 

 

1

 Scholarship money is also provided to trade schools and community colleges. 

2

 Data for FYs 2007 and 2008 was provided by the Division of Contracts and covers grant dollars only. 

Data for FYs 2005 and 2006 is from USASpending.gov, a Federal Government Web site developed for 

agencies to report publicly on financial assistance spending. USASpending.gov data for NRC includes 

both grants and cooperative agreements. 
Audit of NRC’s Grant Management Program 

2 

There are no deliverables associated with NRC’s education grants, except 

for project and financial progress reports. According to an Office of 

Human Resources (HR) employee who manages NRC’s education grant 

program, there are no deliverables because the grant money is provided 

to the grantee to use for its program. The manager said that if a grantee 

is found not to have performed the work per the grant agreement, the 

grantee would place itself at risk of not receiving another grant. 

Grant Awards 

NRC administers two types of grants: competitive and noncompetitive. 

Competitive grants are awarded – after an NRC review and evaluation 

process – to applicants who responded to an NRC funding opportunity 

announcement for a grant award. Noncompetitive grants are awarded to 

entities that write to NRC at any given time and propose a project that 

NRC determines aligns with its mission, provided money is available to 

fund the effort. These two types of grants are also referred to as solicited 

and unsolicited. 

Grants are awarded and administered by staff in the Division of Contracts 

(DC) and monitored by grant “project officers” in the NRC office that 

recommended a particular grant should be awarded. When an NRC office 

decides a grant should be made, it transmits a request for procurement 

action to DC to initiate the grant award process. DC reviews the grant 

proposal to ensure conformance with 2 CFR requirements and negotiates 

with prospective grantees before awarding the grant. Also prior to award, 

staff in the Office of the General Counsel (OGC) and the Office of Small 

Business and Civil Rights (SBCR) review the request for procurement 

action package, which includes the grant application. The purpose of 

OGC’s review, of proposed awards valued over $25,000, is to determine 

whether the grant application complies with the terms of the grant 

opportunity announcement, a grant is the proper type of instrument, and 

that there are no apparent conflicts of interest posed by the grant 

application. SBCR’s review is to determine if potential grantee is in 

compliance with Federal civil rights requirements. 

Currently, there are three offices that manage grants: HR, the Office of 

Nuclear Regulatory Research (RES), and SBCR. 

Grant Spending 

Ninety percent of NRC’s FY 2007 and FY 2008 grant spending was for 

competitive, educational grants managed by HR. Table 1 provides a 

breakdown of NRC grants awarded in FY 2007 and FY 2008 by managing 

office. 
Audit of NRC’s Grant Management Program 

3 

Table 1. Grants Awarded in FYs 2007 and 2008 by NRC Office* 

Managing 

office 

FY 2007 

# grants 

FY 2007 

$ awarded

FY 2008 

# grants 

FY 2008 

$ awarded 

HR 37 4.94M 96 19.72M 

SBCR 5 0.47M 6 0.41M 

RES 13 1.57M 11 0.29M 

TOTAL 55 6.98M 113 20.42M

*Source: Office of the Inspector General (OIG) generated using data provided 

by DC. 

Lean Six Sigma Review 

In October 2008, NRC initiated a Lean Six Sigma3 review of the agency’s 

grant process to reduce overall processing time and implement a formal, 

electronic tracking system. The Lean Six Sigma review team includes 

representatives from the multiple offices involved in NRC’s grant process: 

DC, HR, SBCR, RES, OGC, and the Office of the Chief Financial Officer. 

A July 2009 article in the NRC Reporter noted that the Lean Six Sigma 

team for grants had recently reported to agency senior managers that the 

review was in its final phase, which involves assigning specific 

responsibility for the improvement tasks identified and ensuring that all of 

the agreed-on items are closed out. During the briefing, the team’s 

spokesman noted that the Lean Six Sigma grants review had already 

reduced the average time for awarding noncompetitive grants from 191 to 

108 days and for closing out grants from 77 to 33 days, resulting in a 

savings of about 2,700 days a year. 

II. PURPOSE 

The purpose of this audit was to determine whether NRC has established 

and implemented an effective system of internal controls for grants 

management. See Appendix A for information on the audit scope and 

methodology. 

 

3

 Lean Six Sigma is a methodology that facilitates the review of processes, both technical and 

administrative, to identify opportunities for process improvements. The results are intended to enhance 

efficiency, effectiveness, and knowledge management. 
Audit of NRC’s Grant Management Program 

4 

III. FINDINGS 

NRC’s grant program has grown considerably over the past several years. 

While the agency (a) recently achieved compliance with a Federal 

requirement to post monthly data on its grant spending on a Federal 

Government Web site, NRC (b) lacks overarching guidance concerning 

the current grant program, (c) does not require grants staff to have grantspecific training, (d) has incomplete and inconsistent grant files, and (e) 

has not issued a Federal regulation on debarment and suspension of 

irresponsible grantees. As a result of these program weaknesses, NRC 

lacks assurance of adequate oversight of the grant program, which can 

adversely affect the proper use of funds. 

A. NRC Achieved Compliance with Data Posting Requirement 

Prior to May 2009, NRC was not in compliance with Federal requirements 

to provide the public, via a Federal Government Web site 

(USASpending.gov), with accurate, timely information on Federal 

assistance. However, during the course of this audit, NRC corrected the 

issue and populated the designated Web site with updated information on 

assistance funds. 

Reporting Requirements 

All Federal agencies are required to report accurate and timely information 

on agency spending via USASpending.gov, a Federal Government Web 

site designed and designated for this purpose. The Web site was 

developed pursuant to the Federal Funding Accountability and 

Transparency Act of 2006, which was signed into law on September 26, 

2006. The act required the Office of Management and Budget (OMB) to 

create a single searchable Web site, accessible for free by the public, 

which included information on each Federal award. The act also required 

OMB to issue guidance and instructions to Federal agencies on populating 

the Web site. On March 6, 2008, OMB issued guidance requiring Federal 

agencies to submit monthly data on awards and providing technical details 

on how to submit data. 
Audit of NRC’s Grant Management Program 

5 

NRC in Compliance 

At the start of this audit, the USASpending Web site contained no 

information on NRC financial assistance to outside entities, a problem 

noted in a March 2009 letter from a Senate subcommittee4

 ranking 

member to the OMB Director. During the course of this audit, however, 

NRC corrected problems it was having populating the Web site, and now 

the site contains information on NRC assistance funds. 

The NRC official responsible for submitting information to the 

USASpending Web site explained that although no NRC data appeared on 

the Web site prior to May 2009, NRC had been submitting the requested 

information to OMB each month. The official said that due to data 

compatibility problems, OMB had been unable to add NRC’s data to the 

USASpending site. NRC ultimately resolved the problem by working with 

an NRC contractor to generate a compatible report. As a result, 

information concerning NRC awards is now available on the USASpending 

Web site. 

 

4

 Senate Subcommittee on Federal Financial Management, Government Information and International 

Security. 
Audit of NRC’s Grant Management Program 

6 

B. Agency Lacks Comprehensive Guidance on Grants 

NRC lacks a comprehensive guidance document describing the agency’s 

grant policy and process to ensure the program functions as intended and 

that staff fulfill their responsibilities. Before such guidance can be written, 

the agency needs to complete its effort to define the competitive grant 

process. Without comprehensive guidance that includes options for 

managing grants, staff employ inconsistent approaches to managing 

grants. Additionally, NRC staff lack a clear understanding of the roles and 

responsibilities of the various individuals and offices involved in the grant 

process. 

Comprehensive Guidance Document 

To ensure the grants management program runs effectively, NRC 

employees need a comprehensive guidance document. Such guidance 

should include the roles and responsibilities of individuals and offices with 

program responsibility and policies and procedures conveying 

management expectations for program operation. 

NRC Lacks Comprehensive Guidance 

NRC lacks a comprehensive guidance document describing the agency’s 

current grants policy and process. NRC’s Management Directive and 

Handbook (MD) 11.6, Financial Assistance Program, addresses grants but 

contains outdated guidance and does not describe the current competitive 

grant program. There is also a short section in MD 11.1, NRC Acquisition 

of Supplies and Services, that some employees refer to for processing 

unsolicited (noncompetitive) grant proposals; however, the section actually 

refers to contracts and not to grants. 

Furthermore, MD 11.6 does not describe the competitive education grant 

program currently in place at NRC or provide guidance on monitoring of 

grantees to ensure that grant funds are used for their intended purpose. 

Although MD 11.6 describes (1) solicited and unsolicited proposals; (2) 

how to determine whether the proposal is appropriately funded by a grant, 

cooperative agreement, or contract; (3) factors to consider in evaluating 

proposals; and (4) SBCR’s and OGC’s roles in the process, much of the 

guidance is outdated. While MD 11.6 refers several times to a review 

process for solicited RES grants – when RES does not currently have any 

solicited grants – it makes no mention of the competitive HR grant 

program through which most of NRC’s grant dollars are currently awarded. 

Furthermore, while MD 11.6 contains information on receiving proposals, 

reviewing proposals, making awards, recordkeeping, and several other 

topics, the guidance is silent on appropriate methods for monitoring 

grantees to ensure the grant money is being used as intended. 
Audit of NRC’s Grant Management Program 

7 

Although the purpose of MD 11.1 is to address the acquisition of supplies 

and services through procurement actions at NRC, some program office 

staff involved with noncompetitive grants reported they found it useful for 

the evaluation of unsolicited grant proposals. MD 11.1 contains a brief 

section on evaluating and processing unsolicited proposals; however, it is 

written specifically for contracts and refers readers to MD 11.6 for 

information on grants. As noted in the background section of this report, 

the Government has significantly less involvement with grantees than with 

contractors, and the purpose of a grant is to accomplish a public purpose 

of support or stimulation, which is fundamentally different from the 

contract’s purpose to acquire supplies and services for the Government. 

Agency staff from offices involved with the grant process acknowledged 

the importance of developing a management directive that describes 

NRC’s current grant program. The Lean Six Sigma team also recognizes 

this as a major issue that needs to be resolved. 

NRC Needs To Resolve Matters 

NRC lacks overarching guidance describing the current grant program 

because such guidance cannot be written until the agency completes its 

effort to define the competitive grant process. The Lean Six Sigma grants 

review team has worked to define both the noncompetitive and competitive 

processes. While the team has agreed on the noncompetitive process, it 

has been unable to agree on the competitive process and, thus far, that 

process is undocumented. 

During a July 2009 briefing to NRC’s Deputy Executive Directors for 

Operations, the Lean Six Sigma team conveyed the issues that need to be 

resolved before a comprehensive management directive can be written. 

These unresolved issues included: 

 Defining the competitive process, including issuing the agency grant 

announcement and the use of letters of intent to potential grantees. 

 Uniformity of competitive process at NRC. 

 Handling of multiyear awards. 

 Post-award administration (roles and responsibilities). 

 Location and process of updating one, shared electronic file. 

 Existence of one grants office or team within an existing office. 

 Scope of SBCR reviews. 
Audit of NRC’s Grant Management Program 

8 

Some of the difficulties reaching agreement may be attributable to the 

different grant backgrounds held by staff in DC and HR. To help manage 

NRC’s expanded grant program, both offices hired staff with grant 

experience from other Federal agencies. However, these staff have 

different views on how the program should be run, based on their prior 

experience, which has made it difficult to reach agreement on some of the 

Lean Six Sigma issues. 

Inconsistencies and Lack of Clarity on Roles and Responsibilities 

Without comprehensive guidance that includes options for managing 

grants, staff employ inconsistent approaches to managing grants. 

Additionally, NRC staff lack a clear understanding of the roles and 

responsibilities of the various individuals and offices involved in the grant 

process. 

OIG identified that project officers have inconsistent approaches for 

managing their grants. One such inconsistency relates to grantee 

oversight. Two project officers use site visits routinely to monitor grantees, 

while a third project officer was unaware that site visits were an option 

available for monitoring grantees. 

Another example of inconsistency pertains to ensuring the receipt of 

progress reports. While HR recently established a tracking process to 

ensure submission of required project progress reports, DC has no similar 

process to ensure financial progress reports are submitted. 

Furthermore, NRC offices disagree over grant program roles and 

responsibilities. While HR project managers believe they should maintain 

their applicant screening process records in HR to ensure confidentiality, 

DC staff believe that information should be maintained by DC in the official 

grant file. Conversely, HR staff believe they should have access to 

grantee financial progress reports, while DC staff, who typically receive the 

reports, do not think this is necessary and do not necessarily provide them 

to HR staff when asked. In addition, some staff did not understand 

SBCR’s review of grant proposals and felt it was burdensome to 

prospective grantees. 

Recommendations

OIG recommends that the Executive Director for Operations: 

1. Resolve outstanding Lean Six Sigma issues, including definition of 

the competitive grant process, roles and responsibilities, 

development of a shared electronic grant database, and scope of 

SBCR reviews. 
Audit of NRC’s Grant Management Program 

9 

2. Update Management Directive 11.6 to comprehensively address 

NRC’s competitive and noncompetitive grant program, including (a) 

roles and responsibilities of individuals and offices involved in the 

grant process, (b) process for awarding grants, and (c) required 

monitoring by project officers. 

3. Issue interim guidance to accomplish the intent of recommendation 

2, pending revision of Management Directive 11.6. 
Audit of NRC’s Grant Management Program 

10 

C. NRC Does Not Require Grants Training 

NRC employees responsible for awarding and managing grants need to 

be trained in order to adequately perform their assigned duties. Currently, 

there are varying degrees of training and experience among these staff 

because management does not require training for those administering the 

grant program. As a result, the NRC lacks assurance of adequate 

oversight of the grant program, which can adversely affect the proper use 

of grant funds. 

Training Needs 

NRC employees responsible for awarding and managing grants need 

training to adequately perform their assigned duties. Such training should 

allow personnel to gain and maintain a level of competence that allows 

them to accomplish their assigned duties. Furthermore, management 

needs to identify appropriate knowledge and skills needed for various jobs 

and provide appropriate training. 

In addition, in February 2009, the National Procurement Fraud Task 

Force, Grant Fraud Committee, published a White Paper5

 with 

recommendations for enhancing the grant oversight process. The White 

Paper was based on the Committee’s survey of National Procurement 

Fraud Task Force members to identify effective methods for detecting and 

preventing grant fraud. Survey respondents emphasized the importance 

of training in preventing and detecting grant fraud. (See Appendix B for a 

list of “best practices” compiled during audit fieldwork from the White 

Paper and other sources.) 

Varying Levels of Training and Experience Among Staff 

There are varying degrees of training and experience among NRC 

personnel involved with awarding and managing grants. Auditors 

reviewed the iLearn6

 training records for the 26 staff (15 grant project 

officers and 11 DC staff) who either (1) awarded and provided oversight 

for the agency’s FY 2007 and FY 2008 grants7

 or (2) are working on the 

agency’s FY 2009 grants. Records reviewed reflect training that occurred 

between October 1, 2004, and July 1, 2009. The following graph shows 

that of the 26 staff: 

 

5 A Guide to Grant Oversight and Best Practices for Combating Grant Fraud, February 2009. 6

 iLearn is a “learning management system,” which stores NRC employee training records and allows 

employees to submit training requests and register online for classes. 

7

 Sixteen project officers provided oversight of the FYs 2007 and 2008 grants; however, one of the project 

officers no longer works for the agency and no iLearn records were available. 
Audit of NRC’s Grant Management Program 

11 

 7 of 11 DC staff have not had any specific grant training. 

 3 of 11 DC staff have had 1 grant specific training course. 

 1 of 11 DC staff has had 2 grant specific training courses. 

 None of the 15 project officers have had any specific grant training. 

Grant Training for Project Officers and DC Staff

Project officers with 

0 courses, 15

DC staff with 2 

courses, 1

DC staff with 1 

course, 3

DC staff with 0 

courses, 7

At the September 14, 2009, exit conference, agency managers noted that 

the iLearn system may be incomplete and does not reflect training 

received prior to NRC employment or informal, in-house training provided 

to staff. 

Agency employees working with grants also have varying levels of 

experience in this area. An agency official noted that several individuals 

were hired from other agencies to work on NRC’s grant program because 

of their extensive training and experience managing Federal grants. 

However, due to the volume of grant-related work that DC must deal with 

during certain time periods, the office must borrow DC staff with little or no 

grant experience to work on awarding grants. None of the staff who work 

on grants are required to have any NRC-specific or general grants 

training. While NRC does not offer formal grants training courses, an 

NRC official represented that DC conducted two informal sessions for DC 

and other NRC staff in FY 2009. In addition, formal training is readily 

available in the Washington, D.C., metropolitan area. 
Audit of NRC’s Grant Management Program 

12 

No Training Requirements 

NRC management does not require grant-specific training for those 

awarding and managing grants. At this time, there are no overarching 

Federal standards for grants training; instead, it is left up to each individual 

agency to set their own requirements. However, a Chief Financial 

Officer’s Council subgroup is working to develop Federal grant training 

standards. As of August 2009, NRC had no defined training requirements 

for staff responsible for awarding and managing grants. 

Adequate Oversight Not Assured 

Without training requirements for staff awarding and managing grants, the 

agency lacks assurance that the grant program has adequate oversight, 

which can adversely affect the proper use of more than $20 million in 

grant funds. For example, when OIG asked one project officer about the 

use of site visits to monitor grantees, the project officer stated that these 

could have been useful; however, the project officer was not aware that 

site visits were an option. 

Recommendations

OIG recommends that the Executive Director for Operations: 

4. Develop grant specific training requirements for staff who work on 

grants to include a reasonable period of time (such as 18 months) 

for completion of the training. 

5. Ensure that staff working on grants complete the required training 

within the specified timeframe identified in response to 

recommendation 4. 
Audit of NRC’s Grant Management Program 

13 

D. Grant Files Are Inconsistent and Incomplete 

NRC grant files need to be complete and uniformly organized to facilitate 

informed decisionmaking by staff involved in the grant process. However, 

NRC official grant files are inconsistently organized and often incomplete. 

This is because agency management has not established standards or 

requirements for the content and organization of these files. Without 

timely and easy access to all relevant information on each grant award, 

NRC decisionmakers cannot always make fully informed decisions about 

awarding and managing grants. 

File Requirements 

NRC grant files need to be complete and uniformly organized to facilitate 

informed decisionmaking by staff involved in the grant process. NRC 

decisionmakers should have access to all relevant information in order to 

make fully informed decisions about awarding and managing grants. 

Specifically, they need access to past performance records, both internal 

to NRC and from other Federal agencies (e.g., OMB A-133 audit reports8); 

current award agreements, including terms and conditions; and progress 

reports, both financial and programmatic. 

Based on interviews with DC staff, OIG determined that at a minimum, the 

following items should be reflected in the official grant file: 

 Proposal document – This document is the grantee’s proposed 

project to meet the grant award. 

 Budget justification – This document reflects a monetary breakdown 

of the funds requested to address the proposal. 

 Request for procurement action – The program office creates a 

request for procurement action and DC’s receipt of this document 

initiates the awarding phase of the grant process. 

 

8

 Entities (e.g., a grantee) that expend more than $500,000 in Federal awards must receive an annual 

audit in accordance with OMB Circular A-133. These audit reports report on the health of the grantee. 

Specifically, the audit looks to ensure (1) financial statement information is presented fairly, (2) internal 

controls are sufficient and (3) compliance with applicable laws, regulations, and provisions of the award. 

The audit on each grantee is performed by “the cognizant audit agency.” The designated cognizant 

agency for audit is the Federal awarding agency that provides the predominant amount of direct funding 

to a recipient unless OMB designates a different cognizant agency for audit. NRC is not the cognizant 

audit agency for any grantee. 
Audit of NRC’s Grant Management Program 

14 

 Evidence of OGC review9 – OGC reviews each grant award to ensure 

the award meets the terms of the grant program and to ensure there 

are no conflicts of interest. 

 Evidence of SBCR compliance review – SBCR reviews each grant 

award to assess that the grantee is in compliance with mandatory civil 

rights statutes. 

 OMB A-133 audit results – These audit reports report on the health of 

the grantee. 

 Summary of the decision to award – During FYs 2007 and 2008, DC 

used a memo format to summarize its review during the awarding 

phase. This document illustrates why a grant can be awarded. 

 Award document – This document is the agreement that binds NRC 

and the grantee to the award. 

 Progress reports - Grant terms and conditions require the grantee to 

submit two semiannual progress reports that outline (1) financial 

expenditures and (2) project progress. These reports should be 

included in the grant files along with evidence that these documents 

were reviewed to determine progress and expenditures were 

appropriate. 

Files Are Inconsistently Organized and Often Incomplete 

NRC official grant files are inconsistently organized and only 1 of 36 files 

reviewed was complete. NRC’s official files are hard copy folders 

maintained within DC. These files are created when a contract specialist 

begins the pre-award review process. All documentation supporting the 

decision to award the grant should be maintained within these files. 

Additionally, after the grant is awarded, the specialist keeps copies of all 

modifications to award agreements and any semiannual progress reports 

submitted by the grantee. 

OIG reviewed official grant files for 36 (approximately 29 percent) of 126 

grants10 awarded in FY 2007 and FY 2008 to assess whether they 

contained key award and monitoring documentation. Only one grant file 

 

9

 As noted in the Background section of this report, OGC reviews grant proposals valued at more than 

$25,000. 

10 NRC awarded 168 grants during FYs 2007 and 2008; however, for purposes of this review, OIG 

counted the universe as 126 because some grants received funds in both fiscal years and therefore 

shared the same official file within the Division of Contracts. 
Audit of NRC’s Grant Management Program 

15 

reviewed contained all relevant and significant documentation. Table 2 

illustrates the criteria used (see pages 13-14) to review the official grant 

folders and the number of official grant files that contained this 

documentation. 

Table 2. Official File Review Results 

Contents Number of Files 

Containing 

Percent 

Award Phase 

Proposal Document 36 100% 

Budget Justification 36 100% 

Request for Procurement Action 36 100% 

OGC Review 36 100% 

SBCR Review 34 94.4% 

OMB A-133 Audit Results 4 11.1% 

Summary of Decision 26 72.2% 

Signed Award Document 36 100% 

Monitoring Phase 

Financial Progress Reports and 

Evidence of Review 

22 61.1% 

Project Progress Reports and 

Evidence of Review 

21 58.3% 

While the official files generally contained all information related to the preaward process, support for decisions made during this phase was missing 

in 10 files. Additionally, only four files showed evidence that OMB A-133 

audit results were reviewed. Progress reports (and evidence of progress 

report review) were available in approximately 60 percent of the grant files 

reviewed. 

In addition to the official files, project officers have developed their own 

files for storing grantee documentation. These files contain award 

documents and project progress reports. Subsequent to the review of the 

official DC files, OIG reviewed the associated HR files and found that the 

latter contained project progress reports and evidence that these reports 

were reviewed, which had not been included in the official DC file. 

However, the project officer files did not contain the financial progress 

report information. Some project officers stated that they do not have 

access to this information because DC is responsible for reviewing these 

reports.

No Standards for File Organization and Content 

Grant files are inconsistently organized and incomplete because NRC 

management has not established standards or requirements for the 
Audit of NRC’s Grant Management Program 

16 

content and organization of these files. Each specialist who is responsible 

for awarding grants is allowed to organize grant files as they see fit. 

Furthermore, while the associated branch chiefs review grant files before 

awarding grants, these reviews are to ensure that all outstanding issues 

are resolved and grant award documents are accurate. These reviews do 

not determine if the grant file is complete or uniformly organized. 

Additionally, after the grant is awarded, no checks are performed to 

ensure that the grant files contain all related progress reports. 

Furthermore, NRC lacks a means to provide access to all grant 

information to all parties needing this information. The two major players 

in the competitive grants process, HR and DC, are housed in separate 

headquarters locations that are not within walking distance of each other, 

and because the files are maintained in hard copy, there is no easy way to 

share information. 

While steps have been taken to provide electronic access to award 

documentation, access to and content of these electronic documents is 

inconsistent. Specifically, a shared drive on NRC’s internal network was 

created to allow HR and DC staff to view electronic copies of grant 

documentation; however, HR project officers state that they cannot always 

locate current grant documents in this drive. Additionally, DC has taken 

steps to upload electronic copies of award and monitoring documents to 

the Automated Acquisition Management System. However, project 

officers do not have access to this system and there is no quality 

assurance steps to ensure all documents are uploaded. Furthermore, one 

of the Lean Six Sigma goals was to recommend a formal, electronic 

tracking and reporting system; however, while this issue was addressed 

during the process, a recommendation was never developed.

Decisionmakers Lack Access to All Relevant Information 

Without timely and easy access to all relevant information on each grant 

award, NRC decisionmakers cannot always make fully informed decisions 

about awarding and managing grants. When awarding a grant, NRC staff 

should have access to all information about the grantee and its ability to 

perform the objectives of the grant. To help in this decision, NRC staff 

should document that they have reviewed OMB A-133 audit results as 

these reports show the financial stability of the grantee. Additionally, NRC 

staff should have access to all progress reports, both financial and project, 

for past NRC grants as these reports show grantees’ past performance 

and ability to comply with grant objectives and terms and conditions of 

past awards. Without access to both financial and project progress 

reports, project officers cannot assess whether project spending appears 

to align with project progress. 
Audit of NRC’s Grant Management Program 

17 

Recommendations

OIG recommends that the Executive Director for Operations: 

6. Develop a method for sharing up-to-date official file/grant 

documentation with all involved parties to include a formal 

electronic tracking and reporting system. 

7. Establish requirements for the content and organization of NRC 

official grant files. 

8. Develop a quality assurance process for ensuring official grant files 

are complete. 
Audit of NRC’s Grant Management Program 

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E. NRC Has Not Issued a Regulation on Debarment and Suspension 

Federal agencies with grant programs are required to issue regulations 

establishing their policies and procedures for debarment and suspension 

of irresponsible grantees. NRC has not issued such a regulation because 

agency officials were unaware of the requirement. Without issuing a 

regulation, NRC risks non-compliance with Federal requirements and may 

not be adequately protected if an irresponsible grantee misuses agency 

grant funds. 

Debarment and Suspension Requirements 

Executive Order 12549, “Debarment and Suspension,” requires Federal 

agencies to participate in a system for debarment and suspension from 

programs and activities involving Federal financial assistance, including 

grants. The purpose of a debarment and suspension system is to protect 

the public interest by ensuring that the Government conducts business 

only with responsible entities. Per the executive order, debarment or 

suspension of a participant in one agency’s program means they are 

barred from working with all other agencies as well. Executive Order 

12549 also requires agencies to issue regulations governing their 

implementation of the order, consistent with guidelines provided by OMB. 

Agency regulations concerning debarment and suspension must be 

issued in 2 CFR, Subtitle B, “Federal Agency Regulations for Grants and 

Agreements.” 

NRC Has Not Issued a Required Regulation

While NRC has not issued a regulation in 2 CFR, Subtitle B, establishing 

the agency’s policies and procedures for debarment and suspension, 22 

other agencies have issued such a regulation. These agencies include 

larger entities, such as the Department of Health and Human Services and 

Department of Defense, and smaller entities, such as the Peace Corps 

and the Corporation for National and Community Service. 

NRC has not issued a regulation on debarment and suspension because 

agency officials were unaware of the requirement. During the 

September 14, 2009, audit exit conference, an OGC Associate General 

Counsel said Executive Order 12549 applies to NRC and that since 

becoming aware of the matter (through the draft audit report), OGC has 

begun drafting a regulation. 

Without issuing a regulation if the requirement applies, NRC risks noncompliance with Federal requirements and may not be adequately 

protected if an irresponsible grantee misuses agency grant funds. 
Audit of NRC’s Grant Management Program 

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Recommendation

OIG recommends that the Executive Director for Operations and the 

General Counsel: 

9. Issue a regulation on suspension and debarment. 
Audit of NRC’s Grant Management Program 

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IV. CONCLUSION 

Due to the more than 36-fold growth in NRC’s grant program since 

FY 2005, a primary agency focus has been on developing the program 

infrastructure to allow NRC to award grant funds appropriated by 

Congress in a timely manner. However, it is equally important that NRC 

maintains proper oversight over grantee use of funds and ensures that 

these funds are used appropriately and as intended. Although grant 

oversight is not associated with “substantial involvement” by the 

Government with the grantee, it is still critical that NRC staff perform 

adequate oversight to prevent and detect fraud, waste, and abuse in the 

grants they administer. Until NRC management provides agency staff with 

guidance and training in grants, the agency lacks assurance that an 

appropriate level of oversight is being performed over its assistance 

dollars. 
Audit of NRC’s Grant Management Program 

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V. AGENCY COMMENTS

At an exit conference on September 14, 2009, NRC officials agreed with 

the report contents and provided editorial suggestions, which OIG 

incorporated as appropriate. 
Audit of NRC’s Grant Management Program 

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VI. CONSOLIDATED LIST OF RECOMMENDATIONS

OIG recommends that the Executive Director for Operations: 

1. Resolve outstanding Lean Six Sigma issues, including definition of 

the competitive grant process, roles and responsibilities, 

development of a shared electronic grant database, and scope of 

SBCR reviews. 

2. Update Management Directive 11.6 to comprehensively address 

NRC’s competitive and noncompetitive grant program, including (a) 

roles and responsibilities of individuals and offices involved in the 

grant process, (b) process for awarding grants, and (c) required 

monitoring by project officers. 

3. Issue interim guidance to accomplish the intent of recommendation 

2, pending revision of Management Directive 11.6. 

4. Develop grant specific training requirements for staff who work on 

grants to include a reasonable period of time (such as 18 months) 

for completion of the training. 

5. Ensure that staff working on grants complete the required training 

within the specified timeframe identified in response to 

recommendation 4. 

6. Develop a method for sharing up-to-date official file/grant 

documentation with all involved parties to include a formal 

electronic tracking and reporting system. 

7. Establish requirements for the content and organization of NRC 

official grant files. 

8. Develop a quality assurance process for ensuring official grant files 

are complete. 

OIG recommends that the Executive Director for Operations and the 

General Counsel: 

9. Issue a regulation on suspension and debarment. 
Audit of NRC’s Grant Management Program 

23 

Appendix A 

SCOPE AND METHODOLOGY

Auditors evaluated NRC’s grants management program to determine if 

NRC had established and implemented an effective system of internal 

controls. 

The audit team reviewed relevant criteria, including, Title 2, Code of 

Federal Regulations, “Grants and Agreements”; the Federal Funding 

Accountability and Transparency Act of 2006; and the General Accounting 

Office (now renamed Government Accountability Office) Standards for 

Internal Control in the Federal Government. Additionally, auditors 

reviewed NRC policies, including Management Directive 11.6, Financial 

Assistance Program. Furthermore, the audit team used the National 

Procurement Fraud Task Force, Grant Fraud Committee, A Guide to 

Grant Oversight and Best Practices for Combating Grant Fraud, to help 

identify best practices for managing a grant program. 

At headquarters in Rockville, MD, auditors interviewed NRC staff and 

management from the Division of Contracts, Office of the General 

Counsel, Office of Human Resources, Office of Nuclear Regulatory 

Research, and Office of Small Business and Civil Rights to gain an 

understanding of their roles and responsibilities in the grants management 

program. Auditors also conducted interviews with Department of 

Education and National Nuclear Security Administration officials to 

determine best practices in managing a grants program. 

Auditors reviewed a random sample of NRC official files for grants 

awarded during FY 2007 and FY 2008. Auditors reviewed these files to 

determine documentation completeness related to the award and 

monitoring of grants. 

This work was conducted from March 2009 through August 2009 in 

accordance with generally accepted Government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. The work was conducted by 

Steven Zane, Team Leader; Judy Gordon, Quality Assurance Manager; 

Rebecca Underhill, Audit Manager; and Elaine Kolb, Senior Auditor. 
Audit of NRC’s Grant Management Program 

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Audit of NRC’s Grant Management Program 

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Appendix B 

BEST PRACTICES 

Auditors developed a list of grant “best practices” based on (1) interviews 

with Department of Education and National Nuclear Security 

Administration staff who are involved with managing grants and (2) 

reviews of documents, including the National Procurement Fraud Task 

Force White Paper, A Guide to Grant Oversight and Best Practices for 

Combating Grant Fraud. As NRC works to formalize the grant process, 

the agency should consider incorporating the following best practices: 

 Incorporate measurable goals into the grant agreement, then follow up 

and determine the effectiveness of grantee programs funded. Value 

added should be considered. 

o As an example, agencies could track the number of degrees 

granted as the result of financial assistance provided for 

education. 

o Another example would be to track how agency money is 

leveraged with private funds. 

 Review OMB A-133 results to determine degree of monitoring needed. 

 Perform sufficient oversight and monitoring of grantees to ensure the 

integrity of the grant process. 

 Determine need for site visits based on risk associated with grantees. 

Visit the grantees that need the most attention. 

 Develop a policy and procedures manual that takes a lifecycle 

approach to awarding and managing grants. 

 Require Federal grant recipients to certify that statements made in the 

grant application are true and correct. 

 Ensure that grant participants have been properly trained. 

o Grant recipients may find it useful to receive training on 

detecting and preventing grant fraud. 

o Grant administrators could benefit by receiving training on 

grants management. 
Audit of NRC’s Grant Management Program 

26 

o Investigators and auditors need training to effectively prevent 

and prosecute fraudulent grant activity. 

 Maintain all documentation in the official file. 

 Include project officers on the distribution list to receive award 

documents. 

 Raise awareness among agency staff involved in the grant process 

about the nature of grants. The purpose of a grant is to help the 

grantee achieve its grant outcome, and not to benefit the granting 

agency. 

 Foster a good working relationship between the program office and the 

granting official. This promotes a free and open exchange of 

information and ideas. 

 Ensure regular communication among the agency, the grant recipient, 

and the public to increase awareness of how money is spent. 

 Share information in and among agencies to prevent and detect fraud.