Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

NATIONAL CANCER INSTITUTE'S

MONITORING OF RESEARCH

PROJECT GRATS

~ SERVICes ~~ .u.p

( .. ~~~.lIlcf"a (:

Daniel R. Levinson

Inspector General

July 2008

OEI-07-07-00120
Office of Inspector General

http://oig.hhs.gov

The mission ofthe Offce ofInspector General (OIG), as mandated by Public Law 95-452, as

amended, is to protect the integrity of the Department of Health and Human Services

(HHS) programs, as well as the health and welfare of beneficiaries served by those

programs. This statutory mission is carried out through a nationwide network of audits,

investigations, and inspections conducted by the following operating components:

Office of Audit Services

The Offce of Audit Servces (OAS) provides auditing services for HHS, either by conducting

audits with its own audit resources or by overseeing audit work done by others. Audits

examine the performance of HHS programs and/or its grantees and contractors in carrying

out their respective responsibilties and are intended to provide independent assessments of

HHS programs and operations. These assessments help reduce waste, abuse, and

mismanagement and promote economy and effciency throughout HHS.

Office of Evalua tion and Inspections

The Offce of Evaluation and Inspections (OEr) conducts national evaluations to provide

HHS, Congress, and the public with timely, useful, and reliable inormation on signifcant

issues_ These evaluations focus on preventing fraud, waste, or abuse and promoting

economy, effciency, and effectiveness of departmental programs. To promote impact, OEI

reports also present practical recommendations for improving program operations.

Office of Investigations

The Offce of Investigations (Or) conducts criminal, civi, and adminstrative investigations

of fraud and misconduct related to HHS programs, operations, and beneficiaries. With

investigators working in all 50 States and the District of Columbia, 01 utilizes its resources

by actively coordinating with the Department of Justice and other Federal, State, and local

law enforcement authorities. The investigative efforts of 01 often lead to criminal

convictions, administrative sanctions, and/or civi monetary penalties.

Office of Counsel to the Inspector General

The Offce of Counsel to the Inspector General (OCIG) provides general legal services to

OIG, rendering advice and opinions on HHS programs and operations and providing all

legal support for OIG's internal operations. OCIG represents OIG in all civil and

administrative fraud and abuse cases involving HHS programs, including False Claims Act,

program exclusion, and civil monetary penalty cases. In connection with these cases, OCIG

also negotiates and monitors corporate integrity agreements. OCIG renders advisory

opinions, issues compliance program guidance, publishes fraud alerts, and provides other

guidance to the health care industry concerning the anti-kickback statute and other OIG

enforcement authorities.
.. EXECUTIVE SUMMARY

OBJECTIVE

To determine the extent to which the National Cancer Institute (NCr)

monitors Research Project Grants in accordance with Federal

regulations, departmental directives, and agency policies regarding:

(1) progress reports, (2) financial reports, (3) grant closures, and

(4) grant fies.

BACKGROUND

For fiscal year (FY) 2007, the National Institutes of Health (NIH)

disbursed 54 percent of its $29.1 billon budget via more than

38,000 Research Project Grants. NCI is the largest ofthe NIH

institutes and had responsibility for over $2.1 bilon in Research

Project Grants in FY 2007. In FY 2007, the Offce of Inspector General

(OIG) identified grants management (including the monitoring of

grants) as a top management challenge.

NCI monitors grants by reviewing report (e.g., progress and financial),

correspondence from grantees, audit reports, site visit reports, and

other available information. We requested and received from NCI a list

ofResear,ch Project Grants that received funding in at least 1 year

during FYs 2004, 2005, or 2006. This list contained 4,578 grants

totaling more than $3 bilion. From the population, we selected a

random sample of 100 grants for review. We reviewed each grant for

NCI's postaward monitoring in the following areas: progress reports,

financial reports, grant closeouts, and grant fies (i.e., the completeness

and accuracy of grant file materials).

FINDINGS

All grant files contained progress report that had evidence of

agency review; however, 41 percent of progress report were

received late. All required progress reports for FY s 2004, 2005, and

2006 for all 100 grants were present in the files. In addition, the case

files contained documentation of assessments of all of the progress

reports by the grants management specialist and the program staff

assigned to each grant. However, 41 percent of progress reports were

not received within the required timeframes (i.e., 2 months before the

next budget period for hard copy or 45 days before the next budget

period for electronic reports). Ofthese, electronic reports were received

an average of 18 days late and hard copy reports averaged 16 days late.

OEI.07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS
EXECUTIVE SUMMARY

We note that grantees' delay in submitting progress reports posed a low

risk because NCI did not disburse funds until it had received and

reviewed progress reports.

Deficiencies exist in financial oversight of Research Project Grants.

NCI grants management staff indicated that they rely on NIH's Offce

of Financial Management to monitor quarterly financial reports to

ensure that grantees are properly drawing funds. However, an Offce of

Financial Management offcial indicated that this offce does not

examine or maintain copies of quarterly financial reports; these are

submitted to the Payment Management System only. In our sample of

100 grants, 23 had reached the end of their grant periods during our

period of review and all 23 grant fies contained Financial Status

Reports. However, 11 of the Financial Status Reports were submitted

late and 12 indicated dates that did not reflect the entire budget

periods.

Five of the nine required grant closeouts in our sample were not

completed within the general timeframes specified in departmental

guidelines. Of the 100 grants in our sample, 9 were closed or eligible

for closeout. For five of the nine grants, the closeout process was not

completed within 180 days as generally required by departmental

policy. In addition, one closed grant lacked the required final Invention

Statement and Certification. Upon request, NCI staff could not provide

the statement; however, staff located it after we shared a draft ofthis

report.

Insuffcient documentation impedes third-part review of grant files

in some cases. Departmental grant policy directives require awarding

agencies to create and maintain fies that allow a third party

(e.g., auditor or other reviewer) to follow the paper trail, from program

inception through closeout of individual awards, and decisions made

and actions taken in between. While conducting a review of grant files,

we encountered documents with inaccurate dates and an inconsistent

filing structure and found that some files were missing, all of which

impeded the review process.

OEI.07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS II
EXECUTIVE SUMMARY

RECOMMENDATIONS

OIG recommends that NCI:

Initiate earlier and more frequent followup with grantees to obtain

required documents. Such diligence could promote grantee compliance

with Federal regulations and agency policies for submitting progress

reports, Financial Status Reports, and closeout documents.

Improve grants monitoring by:

· annually verifying grantees' self-reported fund balances with

external sources and developing an approach for financial reviews

that is not based solely on exceptions, and

· consistently documenting grantee correspondence and organizing

grant documents to assist NCI staff and third-party reviewers with

following grantees' actions from inception ofthe grant to closeout.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL

RESPONSE

NIH generally agreed with our recommendations and described actions

it plans to take in response to the recommendations. Regarding late

submission of progress reports, Financial Status Reports, and closeout

documents, NIH will continue to address this issue in education

outreach sessions with grantee offcials and stress the need for

institutions to monitor and adhere to all report deadlines. In addition,

NIH expects to increase timeliness of reporting by grantees through

continued development and deployment of its electronic grants

management system, enabling electronic submission of certain progress

and closeout reports. Regarding the recommendation to improve grants

monitoring by annually verifing grantees' self-reported fund balances

with external sources and developing an approach for financial reviews

that is not based solely on exceptions, NIH agreed that there may be

. value in using the Federal Cash Transaction Report on a broader scale

and wil conduct a pilot study to review the Federal Cash Transaction

Report prior to issuing the award for a specific pool of grants. At the

end of the pilot study, NIH wil identify the population of grants for

which review of the Federal Cash Transaction Report wil be required,

as well as best practices for the review and for resolution of any issues

that arise from the review. Additionally, NIH agreed with the

recommendation that grant files be properly documented and

OEI.07.07.00120 MONITORING OF Nei RESEARCH PROJECT GRANTS III
EXECUTIVE SUMMARY

organized. NIH wil continue to monitor the use of its electronic grant

system and update procedures for fie documentation as necessary. We

did not make any revisions to the report based on NIH's comments.

OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS Iv
.. TABLE o F CONTENTS

EXECUTIVE SUMMARy..................................... 1

INTRODUCTION ......... ........ ... ... ....... .... ... ... .... 1

FIN DIN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 10

All progress reports reviewed; 41 percent received late. . . . . . .. 10

Deficiencies exist in financial oversight. . . . . . . . . . . . . . . . . . . .. 11

Grant closeouts not completed within general timeframes. . . . .. 14

Insuffcient documentation impedes third-party review. . . . . . .. 15

R E COM MEN D A T ION S ..................................... 17

Agency Comments and Offce of Inspector General Response ... 18

A P PEN D I XES ............................................. 19

A: Glossary of Grant Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19

B: Confidence Interval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 20

C: Agency Comments. . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . .. 21

A C K NOW LED G MEN T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29
.. INTRODUCTION

OEI.07.07-00120

OBJECTIVE

To determine the extent to which the National Cancer Institute (NCI)

monitors Research Project Grants in accordance with Federal

regulations, departmental directives, and agency policies regarding:

(1) progress reports, (2) financial reports, (3) grant closures, and

(4) grant fies.

BACKGROUND

For fiscal year (FY) 2007, the National Institutes of Health (NIH)

disbursed 54 percent of its $29.1 bilion budget via more than

38,000 Research Project Grants.i The NIH budget constitutes

approximately 38 percent of all discretionary spending for the

Department of Health and Human Servces (HHS) and nearly

50 percent of Federal civiian spending for research and development.2

Extramural research, performed by non-Federal scientists using NIH

grant or contract money, includes more than 200,000 scientists and

research personnel working in over 3,100 universities, academlc health

centers, hospitals, and independent research institutions in the United

States and abroad.3 NCI is the largest ofthe NIH institutes and had

responsibility for over $2.1 bilion in Research Project Grants in

FY 2007.4

In FY 2007, the Office ofInspector General (OIG) identified grants

management (including the monitoring of grants) as a top management

challenge.5 A previous OIG report on grants monitoring in one HHS

agency found that fiancial reports either were not received or were late

and that Federal requirements for grant closeout were not met.6

1 NIH, "Summary of the Fiscal Year (FY) 2009 President's Budget," February 4, 2008.

2 Congressional Research Service (CRS) Report for Congress, "The National Institutes of

Health (NIH): Organization, Funding and Congressional Issues," October 19, 2006.

Available online at http://www.nih.iwv/aboutldirector/crsrept.pdf. Accessed on

December 12, 2006.

3 Ibid., p. 6.

4 NCI, "The Nation's Investment in Cancer Research," January 2008.

5 OIG, "FY 2007 Top Management and Performance Challenges Identifed by the Offce

of Inspector GeneraL" Available online at

http://www.hhs.gov/afr/information/challenges/index.htmL. Accessed on February 27,2008.

6 HHS, OIG, "Agency for Healthcare Research and Quality: Monitoring Patient Safety

Grants" (OEI-07-04-00460), June 2006.

MONITORING OF Net RESEARCH PROJECT GRANTS 1
INTRODUCTION

The National Cancer Institute

NCI, established under the National Cancer Institute Act of 1937, is the

principal Federal agency for cancer research and training. It

coordinates the National Cancer Program, which conducts and supports

research, training, health information dissemination, and other

programs with respect to the cause, diagnosis, prevention, and

treatment of cancer; rehabilitation following cancer; and the continuing

care of cancer patients and their familes. As part of its responsibilties,

NCI awards, monitors, and closes grants related to the National Cancer

Program.

NCI awards Research Project Grants to support research into the

causes, diagnosis, prevention, or treatment of cancer. These grants

account for the largest share of the NIH extramural research budget

and include grants to individual investigators, small teams, and groups

of researchers who work in collaborative programs or in

multidisciplinary centers that focus on particular diseases or areas of

research.7 An NCI Research Project Grant typically lasts 4 to 5 yearsan award period termed a competitive segment. The grantee does not

need to compete annually for continuation of funding when it has

received a multiyear Research Project Grant. A grantee may seek

extensions of the grant or apply for a new award, leading to another

competitive segment.

Applicable Federal Regulations, Departmental Directives, and Agency

Policies

Federal regulations contained in 45 CFR Part 74 establish uniform

administrative requirements governing HHS grants to institutions of

higher education, hospitals, and other nonprofit organizations.

The HHS Grants Policy Directives (GPD) provide guidance on grants

management issues to affected program offces at all organizational

7 CRS Report for Congress, "The National Institutes of Health (NIH): Organization,

Funding and Congressional Issues," October 19, 2006, p. 6. Available online at

htt.p://www.nih.gov/about/director/crsrept..pdf. Accessed on December 12, 2006.

OEI.07.07.00120 MONITORING OF He! RESEARCH PROJECT GRANTS 2
NTRODUCTION

levels within the Department.8 The GPD is the highest level of grants

policy issued by HHS. Part 1.01 ofthe GPD instructs agencies such as

NIH not to merely repeat the language in the GPD or reissue the GPD

in its entirety when developing their own implementation manuals.

Rather, HHS agencies are required to develop more detailed grants

administration manuals that reflect their implementation of the

directives. The NIH Grants Policy Statement, dated December 1, 2003,

is the policy document that contains the terms and conditions ofNIH

grant awards. A glossary of grant-related terms can be found in

Appendix A.

Grants-Monitoring Responsibilties

To fulfill its role in regard to the stewardship of Federal funds, NCI

monitors its grants to identify potential problems and areas in which

technical assistance might be necessary. NCI monitors grants by

reviewing reports (e.g., progress and financial), correspondence from the

grantee, audit reports, site visit reports, and other available

information. Grants monitoring continues for as long as NCI retains a

financial interest in the project or activity. As a result, property

accountabilty, auditing, and other requiements may continue after the

grant is closed out and NCI is no longer providing active grant support.9

NCI's Offce of Grants Administration is the focal point for all

business-related activities associated with the negotiation, award, and

administration of grants. Its Web site indicates responsibilities for the

following activities related to grants management:

· monitoring the financial and management aspects of grants to

ensure the effective utilization of Federal funds;

· building and maintaining a partnership with the grantee and NCI

program and review staff to ensure the issuance of award documents

that clearly communicate grant requirements and protect NIH from

waste, mismanagement, and costly disputes; and

8 Grants Policy Directives are issued as an instrument of internal Department

management to direct Department staff regarding HHS's policies, standards, and

procedures. For grantees and other interested parties, the Department also issues the HHS

Grants Policy Statement to provide grantees up-to-date policy guidance and information on

HHS and its discretionary grant process. Available online at

http://www.hhs.!wv/grantsneUadminis/gpdlindex.htm. Accessed on February 26, 2008.

9 NIH, "Grants Policy Statement," December 1, 2003, pp. 128-129.

OEI-07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 3
INTRODUCTION

. providing quality service promptly within NIH and to the grantee

community to reflect a continuing commitment to improve grants

management, thus enabling the grantee to perform its research

unfettered, in an open Federal research environment free of

unnecessary record collection and reporting requirements. 10

Documentation Requirements

HHS GPD Part 3.06 requires awarding agencies to create and maintain

fies that allow a thid party to follow the paper trail, beginning with

program inception through closeout of grants, and decisions made and

actions taken in between. An offcial file must be created for each grant

and must contain the following documentation, as applicable:

· signed copies of applications and all documentation related to review

and approval of the applications;

. all notices of grant award;

. any approved deviations;

. site visit reports, records of telephone calls, and postaward technical

assistance provided;

. prior approval requests and other postaward correspondence;

. documentation related to enforcement actions, including any grant

appeals;

· required financial and progress reports and evidence of review and

acceptability;

. invention statements;ll and

. closeout documentation.

In 2000, NCI began using an electronic imaging system called eGrants to

store and retrieve documents contained in the offcial NCI grant files.

eGrants is an Internet-based data system that allows its users access to

grant information, including grant applications, progress reports, and

review checklists. Grant documents are organized by grant identification

number, award year, and document type. Site visit information is

10 NCI Offce of Grants Administration function. Available online at

http://www3.cancer.gov/adminlgab/function.htm. Accessed on December 20, 2007.

llGrantees are required to submit Form HHS 568, Final Invention Statement and

Certification, within 90 days of the end of grant support. NIH Grants Policy Statement,

December 1, 2003, p. 139.

OEI.07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 4
NTRODUCTION

maintained separately within eGrants in the Institutional File, which is

organized alphabetically by institution name.

Grantee Requirements and the Streamlined Non-Competing Award Process

Grantees must periodically submit progress and financial reports to

NIH. Other required reports may include invention reports, lobbying

disclosures, audit reports, and specialized programmatic reports.12

As part of the notice of grant award, NIH states whether a grantee is

permitted to use the Streamlined Non-Competing Award Process (SNAP).

Most NIH Research Project Grantees are subject to SNAP.13 Under SNAP,

NIH negotiates the direct costs for the entire competitive segment at the

time of award. This eliminates the need for annual budget submissions

and negotiations and reduces the information that NIH requires to review,

approve, and monitor noncompeting awards.

Grantees with SNAP awards are allowed to submit abbreviated annual

progress reports_ These can be submitted via the Grant Progress Report

(Form PHS 2590) or an eSNAP report. NIH grant policy requires grantees

to submit an annual Grant Progress Report 2 months before the beginning

of the next budget period or an eSNAP report 45 days before the beginning

of the next budget period.14

For financial reporting, grantees with SNAP awards are required to

submit the Federal Cash Transaction Report (Form PMS 272) within

15 days following the end of the quarter. The Federal Cash Transaction

Report is submitted to the HHS Division of Payment Management.15 At

the end of the award, the grantee is required to submit a Financial

Status Report (FSR) (Form SF 269) covering the entire competitive

12 NIH, "Grants Policy Statement," December 1, 2003, p. 129.

13 Grantees may be excluded from SNAP if their grants require close project monitoring

or technical assistance or the grantees have a consistent pattern of failure to adhere to

appropriate reporting or notifcation deadlines.

14 Instructions for ''U.S. Department of Health and Human Services, Public Health

Service, Non-Competing Grant Progress Report (PHS 2590)," Revised November 2007.

Forms approved through November 30, 2010, Offce of Management and Budget (OMB)

No. 0925-0001, p. 2. Available online at

http://irrantsl.nih.irov/irrants/fundinid2590/phs2590.doc. Accessed on January 9, 2008.

Instructions for submitting the eSNAP. Available online at

http://grants.nih.irov/grants/submitapplication.htm.AccessedonNovember6,2007.NCI

staff confimed that submission requirements for FY s 2004, 2005, and 2006 were the same

as those described in these more recent instructions.

15 Due dates for Federal Cash Transaction Reports. Available online at

http://www.dpm.psc.gov/grant recipient/reports/due dates. asp x? Accessed on

February 21, 2008.

OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 5
INTRODUCTION

segment no later than 90 days after the end of the competitive

segment.16 According to NCI, the submission of timely and accurate

FSRs is central to ensuring prudent and effcient stewardship of public

resources.17

Grant Closeout

Grant closeout is the fial stage ofthe grants-monitoring process. The

HHS GPD Part 4.02 states that awarding agencies generally shall close

out grants within 180 days of the end of grant funding. The NIH

Grants Policy Statement states that NIH will close out a grant as soon

as possible after expiration if the grant wil not be extended or after

termination. Unless NCI grants an extension, grantees are required to

submit a fial progress report, a final FSR, and a final Invention

Statement and Certification (Form HHS 568) within 90 days of the end

of the grant period. 18

Grantee Interaction With NIH

Each grantee is assigned a grants management specialist from the NCI

Grants Administration Branch to whom it may address any questions.

In addition, grantees interact with NIH's Offce of Financial

Management, the receipt point for FSRs. Grant payments and Federal

Cash Transaction Reports are administered through the HHS Payment

Management System. Grantees request payments via an

Internet-based application, and these are electronically transmitted to

the grantees' bank accounts.

Enforcement Actions

When a grantee fails to comply with the terms and conditions of the

grant, NCI may take one or more enforcement actions depending on the

severity and duration of the noncompliance. NCI generally wil afford

the grantee an opportunity to correct the deficiencies before taking

enforcement action unless public health or welfare concerns require

immediate action. However, even if a grantee is taking corrective

action, NCI may take action to protect the Federal Government's

interests, including placing special conditions on awards or precluding

the grantee from obtaining future awards for a specified period, or may

16 NIH, "Grants Policy Statement," December 1, 2003, p. 131.

17 NCI, "Everything You Wanted to Know About the NCI Grants Process But Were

Afaid to Ask," revised August 2005, p. 70.

18 NIH, "Grants Policy Statement," December 1, 2003, p. 139.

OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 6
NTRODUCTION

take action designed to prevent future noncompliance, such as closer

monitoring .19

METHODOLOGY

We requested and received from NCI a listing of Research Projects

Grants (R01) that received funding in at least 1 year durig FYs 2004,

2005, or 2006. This listing contained 4,578 grants totaling more than

$3 bilion. From the population, we selected a random sample of

100 grants for review. In the population, all but 0.5 percent ofthe

grants were awarded subject to SNAP. In our sample, all of the grants

were SNAP awards.

Grant File Review

For the purpose of reviewing the grant files, the study team members

obtained read-only access to NCI's eGrants system. In instances in

which we could not locate documentation electronically, we requested

hard-copy documents from NCI staff.

Using a structured instrument, we reviewed each grant for NCI's

postaward monitoring in the following areas with respect to Federal

regulations, HHS Grants Policy Directives, and NIH policies and

procedures:

Proaress reports. We determined whether progress reports were

complete and submitted timely. Pursuant to 45 CFR § 74.51, we

reviewed the progress report for (1) a comparison of actual

accomplishments with the goals and objectives established for the

period, the findings ofthe investigator, or both; and (2) the reasons

established goals were not met, if appropriate. Grantees are required to

submit annual Grant Progress Reports 2 months before the beginning of

the next budget period or the eSNAP reports 45 days before the

beginning of the next budget period.20 In total, we reviewed

256 progress reports (202 were Form PHS 2590 and 54 were eSNAP).

19 NIH, "Grants Policy Statement," December 1, 2003, p. 136.

20 Instructions for "U.S. Department of Health and Human Services, Public Health

Service, Non-Competing Grant Progress Report (PHS 2590)," revised November 2007.

Forms approved through November 30, 2010, OMB No. 0925-0001, p. 2. Available online at

http://grants l.nih.iwv/grants/funding/2590/phs2590.doc. Accessed on January 9, 2008.

Instructions for submitting the eSNAP. Available onlie at

http://grants.nih.gov/grants/submitapplication.htm.AccessedonNovember6,2007.NCI

staff confimed that submission requirements for the years FYs 2004, 2005, and 2006 were

the same as those described in these more recent instructions.

OEI-Ol-Ol-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 7
INTRODUCTION

We projected timeliness of progress reports to the universe of N CI

Research Project Grants that received funding in at least 1 year during

FY s 2004, 2005, or 2006. Because progress reports are required to be

submitted annually on every grant, we were able to project this

statistic. The point estimate and 95-percent confdence interval can be

found in Appendix B.

Financial Status Reports. We determined whether FSRs were complete and

timely. Pursuant to 45 CFR § 74.52, grantees are to submit FSRs no later

than 90 days after the end of the reporting period. An FSR is required

from SNAP grantees only at the end of a competitive segment.21 Because

a competitive segment is typically 4 to 5 years for a SNAP grantee and our

period of review was 3 years, only 23 FSRs were within the scope of our

review. We reviewed those 23 FSRs.

Grant closeout. For grants that were closed or eligible for closeout, we

reviewed the grant fies to determine whether NCI complied with

departmental and agency guidance concerning grant closeout

procedures. Nine grants in our sample were either closed or in the

process of closeout. We reviewed these grant fies for documentation of

grantee submission of the final progress report, the final FSR, and the

final Invention Statement and Certifcation within 90 days after

completion of the grant.22 We also determined whether NCI closed out

these grants within 180 days of the end of grant support pursuant to

HHS GPD part 4.02.

Grant fies. To assess the documentation, we reviewed the grant fies to

determine whether NCI's monitoring processes (1) followed up with

grantees to obtain any delinquent reports; (2) escalated enforcement

actions in the event of continued Q.elinquency; (3) reviewed and provided

feedback to the grantee; and (4) accepted revised reports from grantees,

if applicable, in accordance with GPD Part 3.06B. We also reviewed the

grant files for documentation of enforcement actions (e.g., temporarily

withholding cash payment pending the receipt of a required financial

report).23

21 NIH, "Grants Policy Statement," December 1, 2003, p. 131.

2245 CFR § 74.71 and NIH, "Grants Policy Statement," December 1, 2003, p. 139.

23 NIH, "Grants Policy Statement," December 1, 2003, p. 136.

OEI-07-07.00120 MONITORING OF Net RESEARCH PROJECT GRANTS 8
INTRODUCTION

Grant File Followup and Interviews

We also consulted NCI staff throughout our review for answers to

questions concerning the documentation fóund in the grant fies. We

conducted structured telephone interviews with offcials from the Offce

of Financial Management and the HHS Payment Management System

to obtain information on their functions with respect to monitoring the

financial aspects of NCI Research Project Grants.

Standards

This study was conducted in accordance with the "Quality Standards for

Inspections" issued by the President's Council on Integrity and

Effciency and the Executive Council on Integrity and Efficiency.

OEI-07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 9
.. FINDINGS

All grant files contained progress report that had

evidence of agency review; however, 41 perc~nt

of progress report were received late

GPD Part 3.06 emphasizes the

importance of posta ward

monitoring of grants. The guidance

states that the monitoring

approach should be consistent with

45 CFR Part 74 and include review of performance reports (i.e., progress

reports), related audits, and other required reports. The assessment

should take place on an ongoing basis, but must be documented at least

annually and the results included in the grant fie.

NCI grants management staff review progress report

Al required progress reports for FY s 2004, 2005, and 2006 for all

100 grants were present in the files, totaling 256 progress reports. In

addition, the case fies had documentation of the assessments of all of

the progress reports by the grants management specialist and the

program staff assigned to each grant. We observed that grants

management specialits focused their review of progress reports on the

responses that grantees provided in three required areas: (1) changes in

the sources of salaries for key personnel occurring since the last

reporting period, (2) anticipated changes in the level of effort for key

personnel from what was approved, and (3) potential unobligated funds

greater than 25 percent of the current year's total budget.

Program staff also reviewed progress reports for changes in research goals

and objectives, the use of human and/or animal subjects, and indications of

whether the grantee's progress was satisfactory for continued funding. We

observed that grants management specialists followed up with grantees

concerning any omissions from the progress reports or clarifications

needed for the information provided. NCI did not award additional funds

until the progress report was received and reviewed, demonstrating a

relationship between monitoring and continued grant funding. For each of

the sampled grants, NCI established the beginning date of the new budget

period based on receiving a complete progress report that satisfied all

requirements.

Forty-one percent of progress report were not received timely

For the period of our review, NCI accepted either hard-copy progress

reports or electronically submitted eSNAP reports. NIH grant policy

requires grantees to submit the hard-copy progress reports 2 months

before the beginning of the next budget period or the eSNAP reports

45 days before the beginning of the next budget period.

OEI-07-01.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 10
F IN 0 I NG S

Forty-one percent were not received withi the required timeframes.

We note that grantees' delay in submitting progress reports posed a low

risk because NCI did not disburse funds until it had received and

reviewed progress reports. Table 1 shows the range and average

number of days past due for progress reports that we reviewed.

Table 1: Late Progress Reports for 100 Sampled Grants

Number Number Range of Average

Report FORnat Received Received Number of Number of

Late Days Late Days Late

Electronic 54 7 1-39 18

Hard copy 202 99 1-86 16

Total 256 106 N/A N/A

Source: OIG analysis of progress reports, 2007.

The grant fies for some of the late progress reports contained copies of

letters that NCI sent to grantees informing them that a progress report

was due but had not yet been received. As evidenced in the grant file,

NCI sent a letter on March 5, 2004, to a grantee stating that a progress

report had been due on or before February 1, 2004. The letter advised

the grantee that ifthe report was not received by March 17, 2004,

funding might be jeopardized.

Deficiencies exist in financial oversight of

Research Project Grants

NIH guidance states that NIH

awarding offices fulfil their role in

regard to the stewardship of Federal

funds by monitoring grants to

identif potential problems and areas where technical assistance might be

necessary. Although we observed consistent review of progress reports, we

did not observe the same level of examination of financial reports. We

identifed three deficiencies with respect to NCI's financial oversight of

grants: (1) Federal Cash Transaction Reports are not monitored; (2) long

periods of time elapse between funding and grantees' submission of FSRs;

and (3) some FSRs are received late and contain incorrect budget period

dates. The amount of Federal funds represented in our sample of

100 grants totaled $ 106 milion.

Federal Cash Transaction Report are not monitored; NCI relies on

self-reported information regarding unobligated funds

We asked NCI grants management staff whether they monitor the

submission of the quarterly Federal Cash Transaction Reports. They

OEI.07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 11
FINDINGS

told us that they do not. Instead, NCI grants management staff

indicated that they rely on the Offce of Financial Management to

monitor Federal Cash Transaction Reports to ensure that grantees' are

properly drawing funds. NCI grants management staff told us that

some, but not all, grants management specialists have access to the

Payment Management System, and very rarely would they check

Federal Cash Transaction Reports unless a grantee reported a problem.

However, an Offce of Financial Management offcial told us that his

offce "does not get involved with Federal Cash Transaction Reports."

The offcial indicated that Federal Cash Transaction Reports are

submitted only to the Payment Management System and that the Offce

of Financial Management does not examine or maintain copies of them.

We were unable to identif anyone who regularly reviewed the Federal

Cash Transaction Reports.

The annual progress report requires grantees to report unobligated

funds greater than 25 percent ofthe current year's total budget. We

asked grants management staff whether they verify this information

with an external source. NCI grants management staff indicated that

the grantee is the only source that they would check for the current

balance.

Long periods of time elapse between funding and submission of FSRs

NCI grants management staff indicated that they monitor the

submission of the FSR to see whether it has been submitted to and

approved by the Offce of Financial Management. For SNAP awards,

the FSR is required at the end of the project period, which is typically

4 to 5 years. However, even more time may elapse before submission of

the FSR, depending on whether the grantee requests a project extension

of 1 to 2 years. For example, from July 1, 2001, to June 30, 2006, a

grantee received $1,117,672. The grantee requested and received two

I-year extensions to complete the project, making the new project end

date June 30, 2008. The FSR is not due until September 30, 2008-

more than 7 years after funds were first awarded.

Eleven of twenty-three Financial Status Reports in our sample were received

late and some contained incorrect budget period dates

In our sample of 100 grants, 23 reached the end of their competitive

segments during FYs 2004, 2005, or 2006. All 23 FSRs were present in

the fies. However, 11 of the 23 FSRs were submitted more than

90 days after the end of the project periods. These reports were

submitted between 8 and 573 days late. The grant files for some of the

OEI-07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 12
FINDINGS

late FSRs contained letters that NCI sent to grantees informing them

that an FSR was due but had not yet been received. For example, .NCI

sent a letter on March 22, 2006, to a grantee stating that an FSR was

past due. Because the project period had ended April 30, 2005, the FSR

was 237 days past due when the letter was sent. Grants management

staff explained that they check for the receipt of an FSR for a prior

project period before awarding the second year of funding in a new

project period. If the FSR is not on fie, then a deficiency letter is sent

to the grantee as a reminder of the requirement to submit the FSR, and

the annual grant award is not issued until the FSR has been received

and accepted.

For SNAP awards, the FSR must report on the cumulative support

awarded for the entire competitive segment.24 For 12 of the 23 FSRs

that we reviewed, the grantee reported dates on the FSR that did not

reflect the entire budget periods. Often, a grantee reported a period of

only 1 year. NCI grants management staff indicated that grantees often

mistakenly list the last year of the project period for the applicable

dates on the FSR but that this is an oversight. These FSRs usually

included the full amounts awarded in the project period but attributed

these amounts to an incorrect time period.

At the time of our review, the deficiency letter sent to grantees when

FSRs were late instructed grantees to submit "a completed Financial

Status Report (FSR) for the grant year prior to the last award.'~ We

asked NCI grants management staff why the letter was worded in that

manner. They explained that the letter was a form letter that is

generally not altered for SNAP awards to indicate the entire prior

project period. (Grantees that are not subject to SNAP must submit

FSRs annually.) NCI grants management staff reported that the letter

is suffcient to notify the grantee of the need for an FSR. However, the

language, which is inaccurate for grantees of SNAP awards, may lead to

these grantees' reporting on periods of shorter duration than the entire

competitive segment. Subsequent to our review, this deficiency letter

was revised to reflect that grantees should submit an FSR for the entire

competitive segment.

24 NIH, "Grants Policy Statement," p. 131.

OEI-07 -07 -00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 13
FINDINGS

Five of the nine required grant closeouts in our

sample were not completed within the general

timeframes specified in departmental guidelines

Ofthe 100 grants in our sample,

9 grants were closed or eligible for

closeout. For five of the nine

grants, the closeout process was

not completed within 180 days as

generally required by departmental policy.25 In one of these instances,

the grantee had received a I-year project extension, which made the

new project end date December 31,2005. The grantee submitted the

final FSR on January 27,2006, but neither the final progress report nor

the final Invention Statement and Certification had been received as of

October 2007. When we asked NCI grants management staff about the

closing of this grant, the staff responded that delinquency letters were

sent on April 4 and October 24, 2006. The grant remained open at the

time of our review. In addition, one closed grant lacked the required

final Invention Statement and Certification. Upon request, NCI staff

could not provide the statement. After we shared a draft of this report,

NCI staff conducted additional research to locate the statement and

uploaded the form to eGrants.

During our review, we noted a particular practice that may delay

closing grants. When a grantee approaches the end of the current

competitive segment, it may submit a new application to continue the

research for an additional competitive segment. Such applications

require assessment and scoring by the review committee to determine

whether the application will receive funding. When an application does

not receive funding, the grantee has two opportunities to submit

amended applications. During this time, the grant remains open. For

example, a grantee received an award with the competitive segment of

July 1,2000, to June 30, 2005. The grantee submitted an application

for an additional competitive segment on April 14, 2005, but it did not

receive funding. The grantee submitted an amended application on

December 7,2005, which also did not receive funding. The grantee

submitted a second amended application on July 26, 2006, that was

approved by the review committee in January 2007. The new

competitive segment began April 1, 2007, nearly 2 years after the end of

the original competitive segment.

25 GPD Part 4.02 states that grants generally shall be closed out within 180 days of the

end of grant support.

OEI-07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 14
FINDINGS

Insuffcient documentation impedes third-part

review of grant files in some cases

The HHS GPD Part 3.06 requires

awarding agencies to create and

maintain fies that allow a third

party (e.g" auditor or other

reviewer) to follow the paper trail, from program inception through

closeout of individual awards, and decisions made and actions taken in

between. While conducting a review of grant files, we generally were

able to follow the documentation throughout the course of the grants.

However, we encountered the following examples that impeded the

review process:

· Inaccurate dates-We found incorrect budget period dates on

progress reports and incorrect dates of proposed periods of support

on applications. In some instances, the correct dates were penciled

in, but this was not done in all cases, necessitating additional file

review to determine the correct dates.

· Inconsistent filing structure-NCI offcials told us that grant

applications were located in an electronic folder labeled Application

File. Although we found this to be true in the majority of grant files,

we found some with the first page of the application located in the

middle of a large (75+ page) folder labeled Grant File.

· Missing files-NCI maintains an Institutional File in which

grantees are listed in alphabetical order. This fie contains audit

and site visit reports. When we accessed the Institutional Files in

November 2007, we could not locate the fies for grantees beginning

with the letter "Y" (e.g., Yale University). It appeared that the

electronic fies for grantees beginning with the letter ''W' were

erroneously copied over the area where the Y files should have been.

No fies existed for institutions beginning with the letter Y and the

W files appeared twice.

NCllacks a consistent approach for documenting communication between

NCI and grantees

The NIH Grants Policy Statement emphasizes that NIH awarding

agencies, in regard to fulfilling their role as stewards of Federal funds,

monitor grants to identify potential problems and areas where technical

assistance might be necessary. In addition to reviewing progress and

financial reports, monitoring is accomplished through correspondence

OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 15
FINDINGS

and site visits.26 NCI offcials told us that, if there are questions on

information reported in the progress report, the grants management

specialist may e-mail or call the grantee for clarifcation.

Documentation of communication with the grantee is up to the

discretion of the grants management specialist and can occur different

ways. E-mails may be scanned and appended to the end of the progress

report and fied in the Application File, or notes of a telephone

conversation may be transcribed and included with a grants

management specialist's review checklist in the Award File. The lack of

a consistent approach makes it more diffcult for a third 'party reviewer

to locate grant file documents.

26 NIH, "Grants Policy Statement," p. 128.

OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 16
.. RECOMMENDATIONS

Most signicant to the overall monitoring of grants is ensuring the

completeness and accuracy of progress reports. NClhas several grants

monitoring practices aimed at ensuring that progress reports are

reviewed and that grant funds are not awarded until progress reports

are received and accepted. In fact, NCI reviewed all progress reports to

monitor grantee performance. However, 41 percent were received late.

In some instances, NCI sent late notices 35 days after the grantees' due

date for the report. Furthermore, deficiencies exist in financial

oversight of Research Project Grants. Federal Cash Transaction

Reports are not monitored for unobligated fund balances, but instead

NCI relies on grantee-reported information. In our sample, 11 of

23 Financial Status Reports were late and five of nine required grant

closeouts were not completed within general departmental guidelines.

Finally, we generally were able to follow NCI's monitoring of Research

Project Grants in the fies, but insuffcient documentation impeded our

efforts in some cases.

Therefore, we recommend that NCI:

Initiate Earlier and More Frequent Followup With Grantees To Obtain

Required Documents Timely

Such diligence could promote grantee compliance with Federal

regulations and agency policies for submission of progress reports,

Financial Status Reports, and closeout documents.

Improve Grants Monitoring By:

· annually verifying grantees' self-reported fund balances with

external sources and developing an approach for financial reviews

that is not based solely on exceptions, and

· consistently documenting grantee correspondence and organizing

grant documents. This action could assist NCI staff, as well as

third-party reviewers, in following grantees' actions from inception

of the grant to closeout.

OEI-07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 17
RECOMMENDATIONS

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL

RESPONSE

NIH generally agreed with our recommendations and described actions

it plans to take in response to the recommendations. Regarding late

submission of progress reports, Financial Status Reports, and closeout

documents, NIH wil continue to address this issue in education

outreach sessions with grantee offcials and stress the need for

institutions to monitor and adhere to all report deadlines. In addition,

NIH expects to increase timeliness of reporting by grantees through

continued development and deployment of its electronic grants

management system, enabling electronic submission of certain progress

and closeout reports. Regarding the recommendation to improve grants

monitoring by annually verifyng grantees' self-reported fund balances

with external sources and developing an approach for financial reviews

that is not based solely on exceptions, NIH agreed that there may be

value in using the Federal Cash Transaction Report on a broader scale

and wil conduct a pilot study to review the Federal Cash Transaction

Report prior to issuing the award for a specific pool of grants. At the

end of the pilot study, NIH wil identify the population of grants for

which review ofthe Federal Cash Transaction Report will be required,

as well as best practices for the review and for resolution of any issues

that arise from the review. Additionally, NIH agreed with the

recommendation that grant files be properly documented and

organized. NIH wil continue to monitor the use of its electronic grant

system and update procedures for file documentation as necessary.

We did not make any revisions to the report based on NIH's comments.

For the full text of NIH's comments, see Appendix C.

OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 18
.. APPENDIX"'A

Glossary of Grant Terms

Application-Applicants seeking fiancial assistance for a project

formally request funds via an application. Applications are evaluated

for their scientifc merit and scored based on the project's potential

impact. The National Cancer Advisory Board conducts a second level of

review, evaluating grant applications in relation to the needs and

priorities of the National Cancer Institute (NCI). The entire process can

take approximately 10 months from application receipt to award.

Award-The provision offunds by NCI to an organization to carry out a

Research Project Grant based on an approved application and budget.

Budget Period-The interval oftime (usually 12 months) into which the

grant project period is divided for funding and reporting purposes.

Competitive Segment-The initial project period recommended for

support (usually 1 to 5 years) or each extension of the prior project

resulting from the award of a competing continuation grant.

Financial Status Report (FSR)-The FSR shows the status of awarded

funds for the competitive segment as maintained in the offcial

accounting records of the grantee institution.

Notice of Grant Award-The legally binding document that notifes the

grantee and others that an award has been made. This document

contains or references all terms and conditions for the award and

documents the obligation of Federal funds. The award notice may be in

letter format and/or may be issued electronically.

Source: National Cancer Institute (NCn, "Everything You Wanted to Know About the NCI

Grants Process But Were Afaid to Ask." Revised August 2005.

OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 19
.. APPENDIX-B

95-Percent Finding Point Estimate Confidence

Interval

Percentage of FYs 2004, 2005, and 2006 progress reports that were

not received timely 41.4% 33.6%-49.2%

OEI.07.07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 20
.. APPENDIX c

Agency Comments

(~ DEPARME Df HETH " RUMAN .."".. .....""~lPublic Health Service

National Institutes of Health

Bethesda,. Mary1and 20892

~JUN 20 2008

TO: Daniel R. Levinson

Inspecor General, HHS

FROM: Director

Natioii Institutes of Health

SUBJCT: National Insitutes of Health Comments on the Draft OlG Report

National Cancer lnstitue 's Monitoring of Research Project Grants (OEI-07-07-00120) .

Attached are our comments on the Offce of Inspector General draft report on grt

monitoring at the National Cance Institute. We appreciat the opportty to review and

comment on this report.

We believe that our comments will help you iÌi prearing your final report on this.

importt issue. If you have any questions, please contact Patrcia Quast, in the NIH

Offce of Manement Assesment, at 301-402-8264.

~wû~Jr (fr

Attchment

OEI.07-07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 21
A P PEN D x c

COMMENTS OF THE NATIONAL INSTITUTES OF HEALTH (NIH)

ON THE OFFICE OF INSPECTOR GENERAL DRAFT REPORT, NAnONAL CANCER INSTITUTE'S

MONITORING OF ReSEARCH PROJECT GRANTS (OEI-07-07-001iO)

OIG RECOMMENDATION

Initiate earlier and more frequent foUowup with grantees to obtain required documents

timely. Such diligence could promote grantee compliance with Federal regulatiòns and

agency policies for submission of progress report, Financial Status Reports, and closeout

documents.

NIH RESPONSE

The Nll agrees in principle that ealier and more frequent follow up with grantees could result

in greater grate compliance. In fact, we have taken extensive actions, including earlier and

more frequent follow up with grantees, to improve gratee compliance with respt to timely

submission. We will continue to addres this issue by exploring and testing different approaches

to optimize grantee performance. The NIH fully expects that grtee performance will improve

with the ful deployment of its electronic systems, as evidence by the data presente in the

report. In addition, we will continue to remind grntees of their responsibility to submit accurate

and timely report, as described elsewhere in ths document. .

The NIH and NCI have been working diligently to resolve the problem of late progress report as

evidence by the extensive actions already taken. As documented by a previous OIG report

grantees fruently submit incomplete or late progress report. We agree that grtes' delay in

submitting progress report poses a low risk because it is NIH policy that additiona fuds ar not

awaded until progres reports are received, reviewed, and approved, as evidenced by NCI

actions. Grantees are responsible for ensuring timely and accurte reporting. The NIH continues

to achieve effciencies and improve performance of grantee institutions in this area.

We have developed and implemented many initiatives to address the problems associate with

late progress report. It is importt to understad. however, that although the Nl has and

continues to develop tools for its grant recipients, it is absolutely imperative tht grtee have

policies, procedur, and monitorig systems in place to ensure compliance with reportng

requirements. Actions taen to specifically address late anual (Type 5) progress report

include:

. The Nll and NCI continue to address late as well as incomplete reports in education

outrch sesions, clarifying Nll requirements and focusing on grtee responsibilties,

. including those of the PI, and the need for institutions to monitor and adhere to all report

deadlines. The NCI continues to stress the importance of timely and complete reports,

specificaly citing data that ilustrtes the magnitude of the problem and the negative and

costly impact late and incomplete reports have on NCI sta. NCI staff strss the

OEI-Ol-Ol-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 22
A P PEN D x c

importce of grantees monitoring their own performance and implementing appropriate

measuÎs to ensur reporting compliance. The NIH and NCI will continue to stress

reporting requirements and compliance at all outreah meetings with grantee offcials.

· In 2004, the NTH implemented a system though the eRA Commons, an electonic grnts

mangement system, enabling grantes to submit an electronic verion of the Stramlined

Noncompeting Awar Proces (e-SNAP) Type 5 progress report.

· E-mail reminders are sent to Principal Investigators (PIs) two months

before a Type 5 prog;ess report is due.

· E-mail reminders ar sent to Principal Investigators when a Type 5

progress report is more tha I 5 days late.

· Similar e-mail reminders are in development for business offcials at

grantee institutions.

· As noted above, grantees are responsible for monitoring and meeting

reporting deadlines. To assist that effort, we have creted a Web site

that grantees can access for noncompeting progress report (Typ 5) due

date informaton. This allows grtee offcials to obta a list of when

all Typ 5 progress report for their institution are due and when reports

are delinquent (htto:/lera.nih.gov/userreportsfor due.cfm). Due date

information is also available in the eRA' Commons Status system

accessible by both PIs and institutional Administrtive Offcials.

Final progress reports are one element of grt closeout docwnentation. To address late final

progress reports, we have taen the following actions:

· In June 2005, we introduced a new Closeout featu in the eRA Commons that provides

the capabilty to electronicaly submit required Closeout Reports: final progress report

final Financial Statu Report (FSR), and final inventions statement.

· All grtee institutions are required to be registered in the eRA Commons, which allows

them to query in the Commons Status system for those grts that are in a closeout

statu. Commons users can then enter the Closeout screens to electronically process and

submit the reuired report.

· A Term of Awar is automatically included in the Notice of Award for the final year of

the project period reminding grantees of the requirement to submit closet information

using the eRA Commons withn 90 days of the end of the project peod.

· To assist NIH grants management staf in addressing the pròblem of late closeout, we

developed an electronic closeout module in IMP AC II. In 2004, we made it a

2

OEI-07-07-00l20 MONITORING OF NCI RESEARCH PROJECT GRANTS 23
A P PEN 0 x c

requirement that all NIH Institutes and Centers use the closeout module for all grant

awards expirng on or afer October I, 2004.

· In fiscal year 2008, we completed the tranition of administrative closeout fuctions from

all NIH Institues and Centers (lCs) to the Division of Extrural Activities Support

(DEAS). The DEAS is responsible for grants closeout, in acrdance with standard

operating proedures, for all of the NtH awarding components.

. NIH grts management staff no longer perform closeout fuctions.

The data in the report indicate tha for the 100 sampled NCI grants, i 3 percent of the electronic

progress report were received late in contrast to 49 percent of paper progress reports that were

received late. We believe that when the NIH electronic systems ar fuly developed and

electronic submission of Typ 5 progress reports is required, timeliness will improve, as

suggested by the data in this report Until then, we wil continue om efforts to address late

Type 5 progress report.

OIG RECOMMENDATION

Improve grants monitoring by annually verifying grantees' self-reported fund balances

with external sources and developing an approach for financial reviews that is not based

solely on exceptions.

NIH RESPONSE

The NCI agees ther may be value in using the Fed..ral Cash Tranaction Report (FCTR)

(pMS 272) on a broader scale than is currntly being done. In order to determine the best most

productive use of the 272 report NCI will conduct a pilot study.

The arual progress reports for SNAP applications require that the gratee answer th

questions, including whether they anticipate an unobligated balance grater th 2S percent of

the current year's total budget. Similar inormation on signficant balaces (25 percet of the

curnt year's tota authorized budget) is also requested as par ofthe budget justification in nonSNAP progress reports. NCI Offce of Grants Administraion (OGA) staff review the

information provided in conjunction with program sta review of the progress report in the

application. If there appea to be discrepancies between the report balance and the progress

made in the project, they are discussed with the grantee. In addition, ifthe grantee report a

large balance, OGA sta will contat the grtee to verify th magnitude of the balance and

discuss options for use of the funds based on the cirumces (e.g., reducing the pending

award, allowing the caover on the pending award, or restrcturing timelines). The FCTR

(pMS 272) wil also be reviewed in grants for which there appear to be problems or

discrepancies in reporting of balances in the progress report. .

3

OEI.07.07.00120 MONITORING OF Net RESEARCH PROJECT GRANTS 24
A P PEN D x c

Submission of the FCTR is monitored by staff of the Payment Management System (PMS). All

OGA staf have access to the PMS and review the FCTR on an as-needed basis. Th FCTR is

one of the tools usedby OGA staf to monitor balances in grt awars, when necessarý.

However, the limitations of this data as a monitoring tool nee to be noted.

The PMS is based on the calendar yea, so information raly coincides with the budget period

for any partcular grant. In addition, the FCTR reports are baed on quaerly draw downs

(March 31, June 30, Septembe 30, and December 31 ),and report are not due frm the grantee

until 45 days after the end of the quar, so expenditure analysis is not curent. However,

becuse the report provide a general indication of the baance remaining in a grant account, they

are used as an additional monitorig tool, as the paricular situation warrants. A worksheet is

available for grts management staff to asist them in using the FCTR information as a fiscal

monitoring tool.

In response to the recommendation, the NCI will conduct a pílot study to develop an~ evaluate

best practices for reviewing FCTR reports and to determine for which population of grants this

review is appropriate, given the limitations of the PMS report noted abve.

Specifically, the NCI plans to institute:

. A pilot study to conduct a review of the FCTR (pMS 272) report prior to issuing the

awar for a specific pool of grants.

· If the PMS 272 reflects that the grantee has accurately reported the anticipated

unobligated balance in the progress report, the fie will be docwnented accordingly.

. If a review of the PMS 272 rases questions or concerns about the gratee's

reportng of the balance, the specialist will reuest additional infonnation from the

grantee, will tae appropriate action as necssar, and will document the fie accordingly. . .

· At the end of the pilot stuy, the NCfwill evaluate the data and develop appropriat

stadard operating procedur. The procedures will identify the population of

grants for which the Grats Speialist wil be required to review the FCTR

PMS 272 report, as well as the best practices for the review and for resolution of

any issues tht arise from the review.

OIG RECOMMENDATION

Improve grants monitoring by consistently documenting grantee correspondence and

organizing grant dCKuments to assist NCI staff and third-party reviewers with following

grantees' actions from inception of the grant to closeout.

NIH RESPONSE

The NCI agrees with the recommendation that offcial fies be properly documented and

organized. We note that the reviewers were generally able to follow the documentation

4

OEI.07-07-00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 25
A P PEN D x c

thoughout the coure of the grants and conf tha the NCI had proper docuentaon for its

actions. As discussed below, the NCI has and will continue to inonitor and improve eGrats for

all users.

The NCI has develope an implemented a fuly integrated stae-of-the-ar electronic grat file

system known as eGrants, which staff continualy monitor, evaliite, and improve. The NCI's

prima goal is to mantain and enhance an electronic grant fie system that is curent, complete,

consistently organized, and user frendly. The eGrats system allows authorized users to easily

follow and review the flow of grt documents from inception to closeout.

The NCI OGA has always reCognized the need to have a consistent andeffcient electronic grat

fie. In order to promote consistency in fie documentation, OGA has developed and continually

updtes guidance to staff. "The List of Standard Practices for Electronic Review and

Documentation of Grt Files," dated November 2007, has a list of stadad practice for

electronic documentation of grt files. We will continue to monitor the use of eGrats and to

updte our procdUres for fie documentation as necessary.

A history of the evolution of eGts is attched for fuher reference.

6/19/08

5

OEI.07.07.00120 MONITORING OF Nei RESEARCH PROJECT GRANTS 26
A P PEN D x c

AITACHMENT

The NCI Offce of Grats Administration (OGA) traition from working with a well-organized

offcial paper-based grant fie to an eleconic document management systm has taen place

over the last i 4 years. It has been.a process incrementa in natue, with tranitional staes being

implemented to take advantage of the most rect advances in technology. During ths time

period-specific guidelines for sta regarding fie documentation, indexing stdads,

bookmaking, etc., have periodically been revised and updated based on user feedback from

grants management and program stff, as well as extrnal comments made by independent

entities.

The trsition from paper to electronic fies began in 1993, with a feaibilty study regarding the

tranition of the application fie back-up from microfiche to an Electronic Imaging Management

Systm.

In 1996, the conversíon system was implemented-a back-fie conversion of grt applications

to indexed electronic images-tis went back to the last competing yea. The back-file

conversion was completed in 1999 with 2.5 millon pages scaed in the eGrts database.

In i 998, we began niing demonstrtions of the electronic fie system in multiple small group

settings to a vanety ofNCI, NIH, and grtee staff. A significant purse ofthese

demonstrtions was to get user feedback. In Marh 2000; eGants was rolled out for extensive

NCI extramurl use as a Web-based system.

In November 2002 (fiscal-year 2003), the NCI began processing SNAP applicaions exclusively

using eGrats, eliminatng the paper files for these mechanisms.

In April 2004, we moved into processing other types of mechanisms using eGrants. This

amounted to approximately 70 percent of the workload. However, for the more complex

mechanisms, staff was stil marking up paper copies that were .then rescanned into eGrats:

In Augut 2004, thee flat panel LCD c~nfiguations were intrduced to OGA staffto enable

them to work the remaining 30 percent of their portfolio electronically.

In October 2004 (fiscal year 2005), NCI Grants staf began working 100 percent of the grt

portfolio electrnically-meaing no paper 'fies at a11-ad we began destroying existing paper

fies:

In FY 2006, over 20 percent (i ,200 linear feet) of the OGA' s records mangement center shelves

were empty. Currently, the OGA does not have any paper fies in the records management

center, over 35,000 active paper grts fies have been shredded, and all of our offcial fies are

kept in the eGrts database.

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A P PEN D x c

As previously stated, the OGA manages i 00 percent of grant portolios electrnically. This

business practice is possible by utilizing the eGrants database and the Adobe Acrobat softare.

In order to maintan a consistent and effcient grant folder, the OGA has once again updated its

guidance to stff "The List of Stadad Practices for Electronic Review and Documentation of

Grat Files," dated November 2007, is a compilation of stadad practices for electrnic

documentation of grt files, and the OGA has shared this document with the nine other ICs that

are curently using eGants.

We feel that we have consistently documented the grant files and organized grant documents to

assist and facilitate NCI sta and third-pary reviewers with following grtees' actions from

inception of the grt to the closeout.

6/19/08

7

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.. ACKNOWLEDGMENTS

This report was prepared under the direction of Brian T. Pattison,

Regional Inspector General for Evaluation and Inspections in the

Kansas City regional offce.

Tricia Fields served as the team leader for this study. Other principal

Offce of Evaluation and Inspections staff from the Kansas City regional

offce who contributed to the report include Michael Barrett, Rae

Bozworth, and Dennis Tharp; other central offce staff who contributed

include Robert Gibbons and Mark Richardson.

OEI-07.07.00120 MONITORING OF NCI RESEARCH PROJECT GRANTS 29