NATIONAL INSTITUTE 

OF STANDARDS AND 

TECHNOLOGY 

Oversight Activities of 

NIST’s Recovery Act 

Construction Grant 

Awards Are Generally 

Effective but Need 

Improvements 

FINAL REPORT NO. OIG-12-020-A 

FEBRUARY 14, 2012 

U.S. Department of Commerce 

Office of Inspector General 

Office of Audit and Evaluation 

FOR PUBLIC RELEASE 
UNiiED STATES DEPARTMENT OF COMMERCE 

Office of Inspector General 

Washington. D.C. 20230 

February 14, 20 12 

MEMORANDUM FOR: Dr. Patrick Gallagher 

Under Secretary of Commerce for Standards and Technology 

FROM: 

:::i:·::~~:J:d· ·nd /J/~ Principal Assistant Inspector General for Audit and Evaluation 

SUBJECT: Oversight Activities of NIST's Recovery Act Construction Grant 

Awards Are Generally Effective but Need Improvements 

Final Report No. 0/G-12-020-A 

We are providing our final audit report on the effectiveness of NIST's oversight and activities to 

manage American Recovery and Reinvestment Act (Recovery Act) awards given through the 

NIST construction grant program. Our audit objectives were to (I) determine the adequacy of 

policies and procedures developed for Recovery Act construction awards; (2) determine 

whether NIST has the personnel, processes, and systems in place to monitor the program; (3) 

assess the adequacy of monitoring activities; and (4) determine whether the construction 

projects have proceeded according to their original proposals. 

Although NIST has established its construction grant program, improvements are necessary. 

We found that policies, procedures, and monitoring activities, while generally effective, need 

strengthening. Specifically, we found inadequate internal controls led to awards administration 

and oversight concerns, construction projects in jeopardy of not being completed on time, and 

noncompliance with Recovery Act provisions such as the Buy American Act. 

We have received your response to our draft report. Where appropriate, we have modified 

this final report based on this response and discussions with NIST subsequent to the issuance 

of the draft report. The formal NIST response is included as appendix C. (We summarized your 

response, and OIG comments, starting on page 17.) The final report will be posted on the 

OIG's website pursuant to section 8L of the Inspector General Act of 1978, as amended. 

In accordance with the Department Administrative Order 213-5, within 60 days of the date of 

this memorandum, please provide us with an action plan that responds to all of the report 

recommendations. 

We would like to express our thanks to your staff for the courtesies shown to us during our 

review. Please direct any inquiries regarding this report to Johnny Dawsey, Auditor Manager, at 

(404) 730-2056, or Rebecca Leng, Senior Advisor, at (202) 482-8294, and refer to the report 

title in all correspondence. 
Attachment 

cc:	 Rachel Kinney, Audit Liaison, NIST 

David Robinson, Associate Director for Management Resources, NIST 

Michael Herman, Executive Officer for Administration, NIST 

George E. Jenkins, Chief Financial Officer, NIST 

Stella S. Fiotes, Chief Facilities Management Officer, NIST 

Usha Ganti, Chief, Grants and Agreements Management Division, NIST 
Report In Brief 

FEBRUARY 14, 2012 

NATIONAL INSTITUTE OF STANDARDS 

AND TECHNOLOGY 

Oversight Activities of NIST’s Recovery Act 

Construction Grant Awards Are Generally 

Effective but Need Improvements 

OIG-12-020-A 

WHAT WE FOUND 

After awarding its first Recovery Act grants more than 2 years ago, NIST has established a 

generally effective construction grants program. Nevertheless, program processes are still under 

development—and NIST risks not having appropriate and adequate monitoring processes in place. 

Monitoring challenges that we found include: 

Inadequate Controls Lead to Deficiencies in Award Administration. We detail how grant funds were 

released improperly (without securing the government’s interest), financial and technical reports 

were missing from official files, and prior audit reports were not consistently reviewed per the 

Single Audit Act. 

Construction Projects Are in Jeopardy of Not Being Completed on Time. Projects selected for review 

have not met Recovery Act objectives (including recent instructions to agencies to accelerate 

Recovery Act fund spending with final payments completed by September 30, 2013, unless 

granted an OMB waiver). Five projects (totaling $67 million in Recovery Act awards) may 

continue past the OMB deadline—and require immediate management attention. Also, NIST 

granted project time extensions without essential documentation, such as a statement of no 

anticipated further delay and feasibility of project completion within a revised time schedule. 

Lack of Program Guidelines and Incomplete Program Office Oversight Policies and Procedures Exist. The 

NIST program office’s construction grants procedures manual addresses some key areas but 

lacks financial and scientific review procedures. Also, NIST lacks a recipient program guidelines 

handbook. 

Noncompliance with the Buy American Act, and Other Recovery Act Rules, Presents Issues. We noted 

compliance issues that arose with reprieves granted to use non–U.S.-made devices without an 

official Buy American waiver—as well as the restriction agencies must follow to spend Recovery 

Act funds only on Recovery Act-related work. 

WHAT WE RECOMMEND 

Our recommendations to the Under Secretary of Commerce for Standards and Technology are 

that he direct: 

 The NIST grants office to address federal fund drawdown issues, as well as the review and 

reconciliation of all required reports in official grant files. 

 The NIST program office to (a) develop plans to address projects at risk of missing the 

September 30, 2013, deadline; (b) require other grantees to meet grant-specified deadlines 

and/or submit proper extension requests to NIST; and (c) require grantees to submit all 

extension request elements before finalizing its decisions. 

 The program office to strengthen its construction grants procedures manual and develop a 

recipient handbook—as well as direct the grants office to instruct staff on the official role of 

the paper file used with their grants management system as it transitions to a new grants 

system (and strengthen internal controls on official file access). 

 The program office to ensure Buy American compliance—and direct the grants office to 

establish a firewall to prevent the use of Recovery Act funds (should they become available) 

on non-Recovery Act activities. 

Background 

The American Recovery and Reinvestment Act of 2009 (the Recovery Act) appropriated $360 million 

to NIST to construct research facilities, including $180 million in 

competitive grants for the construction of research science buildings. 

NIST’s competitive grants program 

would award up to $60 million to 

unfunded meritorious projects proposed under a fiscal year (FY) 2008 

competition and the remaining 

$120 million based on a new competition. By January 2010, NIST 

awarded more than $179 million in 

Recovery Act funds to support the 

construction of new research science facilities at 15 universities and 

1 nonprofit research organization. 

With grant recipients’ matching 

shares, the 16 projects were intended to launch more than 

$400 million in new laboratory construction projects in 2009 and 2010. 

Why We Did This Review 

Since the announcement of Recovery Act funds appropriation, OIG 

has provided oversight of NIST 

administration of the construction 

grants program, including a October 2009 flash report that offered 

recommendations for the preaward phase. This review focuses 

on post-award administration. 

The objectives of this audit were to 

(1) determine the adequacy of the 

policies and procedures developed 

for Recovery Act construction 

awards; (2) determine whether NIST 

has the personnel, processes, and 

systems in place to monitor the program; (3) assess the adequacy of 

monitoring activities; and (4) determine whether the construction projects have proceeded according to 

their original proposals. 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Contents 

Introduction........................................................................................................................ 1
 

Findings and Recommendations ...................................................................................... 3
 

I.	 Inadequate Controls Lead to Deficiencies in Award Administration ................ 3
 

A.	 Grant Funds Were Released Improperly, Without Securing the Government’s 

Interest............................................................................................................................................... 3
 

B.	 Financial and Technical Reports Were Missing.........................................................................4
 

C.	 Prior Audit Reports Were Not Consistently Reviewed........................................................5
 

II.	 Construction Projects Are in Jeopardy of Not Being Completed on Time...... 6
 

A.	 Projects Selected Did Not Meet All Recovery Act Objectives ............................................6
 

B.	 Project Time Extensions Were Granted Without Essential Documentation ................ 10
 

III. Lack of Program Guidelines and Incomplete Program Office Oversight 

Policies and Procedures Exist...............................................................................11
 

A.	 NIST Must Strengthen Program Office Policies and Procedures Manual to Ensure 

Proper Financial and Scientific Reviews ................................................................................... 12
 

B.	 NIST Needs to Develop a Recipient Program Guidelines Handbook .............................. 13
 

C.	 NIST Grants Office Should Improve Procedures for Maintaining Official Award 

Files .................................................................................................................................................. 13
 

IV. Noncompliance with the Buy American Act, and Other Recovery Act Rules, 

Presents Issues .......................................................................................................15
 

A.	 Compliance Issues Arose with the Buy American Act ........................................................ 15
 

B. Other Compliance Issues Emerged with the Recovery Act ............................................... 16
 

Summary of Agency and OIG Comments ....................................................................17
 

Appendix A: Objectives, Scope, and Methodology.....................................................20
 

Appendix B: Recipient Information ...............................................................................22
 

Appendix C: Agency Response.......................................................................................23
 

COVER: Detail of fisheries pediment,

U.S. Department of Commerce headquarters,

by sculptor James Earle Fraser, 1934
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Introduction 

On February 17, 2009, the President signed the American Recovery and Reinvestment Act of 

20091

 (the Recovery Act) into law. The Recovery Act appropriated $360 million to NIST to 

construct research facilities, including—as announced in the June 1, 2009, Federal Register— 

$180 million in competitive grants for the construction of research science buildings.2 

 

With Office of Management and Budget (OMB) agreement, NIST’s competitive grants program 

would award up to $60 million to unfunded meritorious proposals for “shovel-ready”3

 projects 

submitted under a previous competition held in fiscal year (FY) 2008 and the remaining $120 

million based on a new competition. On July 20, 2009, and January 8, 2010, NIST awarded more

than $179 million in Recovery Act funds to support the construction of new research science 

facilities at 15 universities and 1 nonprofit research organization (see appendix B). 

Ultimately, the research targets range from offshore wind power, aquaculture, and marine 

ecology to physics research and nanotechnology. With grant recipients’ matching shares, the 16 

projects were intended to launch more than $400 million in new laboratory construction 

projects in 2009 and 2010. 

Since the announcement of Recovery Act funds appropriation, OIG has provided oversight of 

NIST administration of the construction grants program, including the October 2009 flash 

report NIST Construction Grants and NOAA Habitat Restoration Grants Are Competitively Awarded 

but Improvements Are Recommended for NIST’s Selection Documentation, NOAA’s Management of 

Applicant Risk, and Commerce’s Pre-Award Guidance on Background Checks (ARR–19841). For the 

pre-award phase of construction grants administration, OIG recommended that NIST improve 

its documentation of the evaluation board selection process to ensure clear documentation of 

its financial assistance decisions. 

Monitoring Challenges Facing NIST 

To implement this program, NIST used the NIST Construction Grant Program (NCGP) to 

manage all pre-award competition activities. The Grants and Agreements Management Division 

(GAMD, or grants office) and the Office of Facilities and Property Management (OFPM, or 

program office) are responsible for all post-award grants administration, program monitoring, 

and oversight responsibilities. The grants office is part of the Office of Financial Resource 

Management and handles the administration of grants at NIST. 

Currently, OFPM provides oversight of 24 construction grant projects, 16 funded by the 

Recovery Act and 8 funded by annual appropriations. OFPM is staffed with a federal program 

officer (FPO) and contract support staff experienced in construction and engineering. 

                                                            

1

 Pub. L. No. 111-5. 

2

 74 Fed. Reg. 26213. Prior to the Recovery Act, only 3 awards totaling $30 million had been made under this 

construction grant program in FY 2008. 

3

 NIST created a questionnaire (OMB Control No. 0693-0054) for the initial round of Recovery Act funding with 

the following first question: “Is the proposed project in your proposal ’shovel ready‘ consistent with the Recovery 

Act objectives? If yes, explain.” 

FINAL REPORT NO. OIG-12-020-A 1
Oversight Responsibilities Grants 

Office 

Program 

Office 

Maintain official award files 

Ensure recipient compliance with award conditions 

Receive and review recipient financial reports 

Review and approve or disapprove no-cost amendments, 

including time extensions 



Provide programmatic guidance/technical assistance to recipients 

Establish programmatic policy 

Review financial and performance or technical reports for consistency 

with the approved project 



Monitor project activities to ensure project goal achievement 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Additionally, the program office created specific guidance documents to assist recipients with 

Recovery Act requirements (e.g., ARRA Supplemental Buy American Guidance for NIST 

Construction Grants, Clarifying Guidance for NIST ARRA Construction Grant Reporting). See 

table 1 for some of the oversight responsibilities attributed to the program and grants office. 

Table 1. Grants Office and Program Office Oversight Responsibilitiesa 

Source: OIG, data obtained from the Department of Commerce (DOC) Grants Manual a

 A checked box indicates the respective responsibility is with that office. 

After awarding the first Recovery Act grants more than 2 years ago, NIST’s program processes 

are still under development. NIST risks not having appropriate and adequate monitoring 

processes in place. Monitoring challenges include the program’s complex operational aspects, 

management of a significant contractor role in program implementation, and the need to 

include Recovery Act requirements in existing program and administration processes. 

Audit Objectives 

The objectives of this audit were to (1) determine the adequacy of the policies and procedures 

developed for Recovery Act construction awards; (2) determine whether NIST has the 

personnel, processes, and systems in place to monitor the program; (3) assess the adequacy of 

monitoring activities; and (4) determine whether the construction projects have proceeded 

according to their original proposals. 

See appendix A for details regarding our audit objectives, scope, and methodology. 

FINAL REPORT NO. OIG-12-020-A 2 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Findings and Recommendations 

I. Inadequate Controls Lead to Deficiencies in Award Administration 

Effective grant monitoring decreases the risk of unauthorized expenditures and, consequently, 

the risk of fraud. Our review highlighted problems in the award implementation phase that 

could be improved, including: 

	 ensuring funds are not released prior to securing the government’s interest in real 

property, 

	 requiring the timely receipt and review of financial and technical reports, and 

	 using independent audit reports to help determine financial status and compliance with 

government requirements. 

A.	 Grant Funds Were Released Improperly, Without Securing the Government’s Interest 

Grant awards have conditions that require specific actions for complying with the grant 

award—or, in some cases, limit or prohibit other actions until the recipient meets the 

award condition. According to NIST Construction Grant Program General Terms and Conditions, 

one condition is that Recovery Act construction grant recipients need to execute a security 

interest in the real property; NIST will release no grant funds until recipients have complied 

with this provision, unless other arrangements satisfactory to NIST are made. The security 

interest document “Covenant of Purpose, Use and Ownership” requires that recipients: 

1. not sell, transfer, convey, or mortgage any interest in the real property acquired or 

improved with funds made available through the award for the estimated useful life of 

the project without prior written approval of NIST (20 years); 

2. not use the property for purposes other than the project purposes without the prior 

written approval of NIST; and 

3. compensate the federal government for its interest in the property in the event the 

recipient uses the property for any other purposes—or sells, leases, transfers, conveys, 

or mortgages it without the prior written approval of NIST. 

During our file review, we noted that 2 of the 16 recipients were able to draw down federal 

funds—a total of $135,124 for one recipient and $114,443 for the other—without security 

interests (or other arrangements) in place. While both the grants and program offices were 

aware of the release of grant funds without an executed security interest, they did not stop 

recipients from drawing down funds or revoke recipient access to their funds disbursement 

account. After we informed the NIST program and grants offices, they took action to 

remedy these violations. Without adequate oversight of these important grants 

requirements, recipients would have access to their award funds without securing the 

government’s interest in those assets. 

FINAL REPORT NO. OIG-12-020-A 3 
     

     

   

   

     

     

   

   

Figure 1. 

Financial Status 

Reports (72 Reports) 

Timely

Reports (23 or

31.9%)

Missing

Reports (32 or

44.4%)

Late Reports

(17 or 23.6%)

Figure 2. 

Performance Progress 

Reports (72 Reports) 

Timely

Reports (24 or

33.3%)

Missing

Reports (41 or

56.9%)

Late Reports

(7 or 9.7%)

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

B. Financial and Technical Reports Were Missing 

NIST special award conditions (SAC) require recipients to submit financial and performance 

reports to the program officer and the grants officer on or before the tenth calendar day 

after the end of each quarter. Financial reports are reviewed, among other reasons, to 

ensure that recipients are expending funds at an appropriate rate and matching 

requirements are being met. Performance reports are reviewed for consistency with the 

approved project. We reviewed the official file for the inclusion of these reports for the 

first six quarters of the grant period. Out of 724 financial status reports due, 32 (44 percent) 

were missing from the official file and 17 (24 percent) were submitted late (up to nearly 4 

months). Out of 72 performance progress reports due, 41 (57 percent) were missing from 

the official file and 7 (10 percent) were submitted late (up to nearly 5 months; see figures 1 

and 2, below). 

Source: OIG, from official NIST grant files 

Additionally, we found that the Automated Standard Application for Payments (ASAP)5 

withdrawals were not always verified against the financial status reports within 45 days of 

receipt as required by NIST Standard Operating Procedure 05-02. Out of the abovementioned reports, 40 (55.6 percent) were not verified at all, and 4 (5.6 percent) were not 

verified within 45 days of receipt. 

Not having the required reports in the official files hampers NIST’s oversight efforts— 

especially its ability to determine whether recipients are performing according to plan or 

accountable for their spending. 

                                                           

4

 Four 2009 awards and twelve 2010 awards required 6 and 4 quarterly financial status reports respectively. The 

same reporting requirement applies to performance progress reports. In total, the official file should have 

contained 72 financial reports and 72 performance progress reports. 

5

 ASAP allows grantee organizations receiving federal funds to draw from accounts pre-authorized by federal 

agencies. 

FINAL REPORT NO. OIG-12-020-A 4 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

We were informed by the NIST Grants Division Chief that high staff turnover and change in 

management have likely caused this lack of oversight. Subsequent to our meeting on August 

15, 2011, NIST informed us that it has received and reviewed all but three performance 

progress reports—and received and reviewed all financial status reports. 

C.	 Prior Audit Reports Were Not Consistently Reviewed 

All grant recipients are subject to the Single Audit Act,6 which requires independent review 

of the recipient’s financial management, internal controls, and compliance with laws and 

regulations. During the pre-award phase, the Grants Management Information System 

(GMIS) Pre-Award Checklist Guideline requires the grants specialist to review the 

recipient’s most recent single audit report to determine the financial status of the company, 

as well as its compliance history of managing federal funds. The grants specialist repeats the 

single audit reviews, as part of the checklist, when the recipient requests funded or no-cost 

actions. An example of a no-cost action is an amendment for a time extension without any 

additional cost to the government. A funded action is the obligating of additional federal 

funds to an existing project. 

We noted that the files did not always contain information that a single audit review was 

performed and when it was performed. Out of 16 official award files, 3 did not contain 

single audit reports, and 2 grant files only had a single audit report from FY 2001 (although 

the grant was awarded in 2010 and more recent single audit reports were available.) 

According to NIST, GAMD does not have the staffing resources needed to perform all 

necessary single audit reviews. Inadequate reviews of recipient single audits may result in 

overlooking important findings adversely affecting recipients’ ability to manage government 

funding. For example, in one instance, the single audit found that a recipient had deficiencies 

related to tracking equipment and cost transfers, but that single audit was not in the official 

award file. 

Recommendations 

We recommend that the Under Secretary of Commerce for Standards and Technology direct 

the NIST Grants Chief to: 

1. strengthen internal controls to ensure that all appropriate award conditions are met 

before NIST allows the drawdown of federal funds; 

2. develop adequate internal controls with regard to establishing review and reconciliation 

of all required reports in official grant files; and 

3. ensure that (a) the most current single audit reports are reviewed, (b) the review is 

documented by the grants specialist, and (c) the report and review are kept in the 

official file to help determine financial status and compliance with government 

requirements. 

                                                            

6

 31 U.S.C. §§ 7501-7507. 

FINAL REPORT NO. OIG-12-020-A 5 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

II. Construction Projects Are in Jeopardy of Not Being Completed on Time 

A.	 Projects Selected Did Not Meet All Recovery Act Objectives 

According to the objectives of the Recovery Act, projects undertaken through its program 

were intended to result in the preservation of jobs and the promotion of economic 

recovery—and be commenced as quickly as possible, while ensuring prudent management. 

To attain this goal, NIST would select projects that were ready to proceed or “shovel 

ready.” In fact, to emphasize the original intent of the Recovery Act, OMB recently 

instructed grant-giving agencies (unless granted a waiver by OMB) to accelerate the 

spending of Recovery Act funds with final payments completed by September 30, 2013.7

 We 

found that NIST construction grants funded by the Recovery Act are at risk of not meeting 

the Act’s objectives. 

The construction grant funding, as announced in the Federal Register, called for selection 

factors for use when vetting applications; the announcement highlighted that: 

	 NIST would consider the degree to which the applicant (1) proposes an early 

construction start date and/or (2) is close to (or has awarded) a construction contract 

for the facility. For example, an early start date for construction of a ready-to-proceed 

project may be considered more favorably than a project that requires a longer time to 

complete design requirements. 

	 Projects that are ready to proceed are generally those for which (1) feasibility studies 

and other baseline information required for a design to commence are completed; (2) 

required consultations and permits are, if not in hand, either in progress or there is 

reasonable assurance provided that they can be attained quickly; and (3) National 

Environmental Policy Act (NEPA) or equivalent analysis and any environmental permits 

and authorizations are finished, or can be expeditiously completed, so that projects can 

be implemented shortly after funding is made available. 

	 NIST would emphasize the selection of projects that are ready to proceed and will 

thereby stimulate the local economies through the creation or retention of jobs in U.S. 

jurisdictions, as well as yield significant program benefits. 

After selection, the awards are managed by the program office and the grants office. The 

program office—tasked with monitoring project activities to ensure goal achievement— 

maintains a NIST construction grants project master schedule, which tracks project 

scheduling such as design and construction periods, along with additional tasks. The 

schedule requires monitoring and continuous updates to reflect the accurate status of grant 

projects. The grants office maintains the official file that has the award documents indicating 

the grant’s beginning and end periods which includes grant period extensions. 

                                                            

7

 On September 15, 2011, OMB issued M-11-34, Accelerating Spending of Remaining Funds from the American Recovery 

and Reinvestment Act for Discretionary Grant Programs, directing federal agencies to accelerate spending “consistent 

with existing laws and regulations and programmatic objectives. If those funds have not been spent by September 

30, 2013, agencies shall reclaim them to the extent permitted by law” (see page 2 of OMB M-11-34). 

FINAL REPORT NO. OIG-12-020-A 6 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

The projects selected have not yielded the results intended by the selection factors in order 

to meet the objectives of the Recovery Act. Projects have required extensions and spending 

levels are low. 

Of the 16 awards, 4 started in August and September of 2009; the remaining awards started 

in February 2010. At the time the awards were granted, most had initial award end dates 

before mid-2012, with only 1 award (University of Pittsburgh) scheduled to end past 

September 30, 2013 (see figure 3). 

FINAL REPORT NO. OIG-12-020-A 7 
 

 

 

Source: OIG, based on NIST data. 

* 12 awards started 2/2010; ** 1 award started 8/2009; *** 3 awards started 9/2009; 

 original award end date; — extension; – – multiple extensions; 

 construction phase end date, based on master schedule;     construction/administrative closeout period; 

% (first line) when OIG obtained data (10/31/2011); %(second line) OMB deadline for spending (9/30/2013). 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Figure 3. Award Completion Timeframes 

We compared the dates on official award documents (7 awards have approved extensions) 

with the dates that the master schedule indicated for end of construction. We concluded 

that, considering required construction days in light of current grant end dates, extensions 

may become necessary for the remaining 9 awards. For example, according to official grant 

documents, Nova Southeastern University, Purdue University, University of Kansas, and 

Woods Hole Oceanographic Institute have grant end dates by January 2012. However, 

according to NIST’s October 31, 2011, master schedule, these grantees will not complete 

the construction phase of the grant until March 2012, April 2013, June 2012, and July 2012, 

respectively. 

Also, in addition to University of Pittsburgh, at least 4 projects—Purdue University, Auburn 

University, University of Maryland, and University of Miami (which originally had grant end 

dates before OMB’s deadline)—may continue past the September 30, 2013, deadline 

(specified in OMB M-11-34) when construction and closeout periods are factored in. These 

5 projects total $67 million in Recovery Act grant awards. 

FINAL REPORT NO. OIG-12-020-A 8 
       

Figure 4. Recovery Act Construction 

Grant Disbursements
 

$16,000,000

$14,000,000

$12,000,000

$10,000,000

$8,000,000

$6,000,000

$4,000,000

$2,000,000

$0

91%

99%

87%

71%

46% 48% 49%

6%

13% 16% 21%

31%

37%

9% 9%

Dollars

0%

Award Amount Disbursement Amount Percent of Total Award Disbursed

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

We noted that most delays were not due to unforeseen external conditions such as 

weather, existing site conditions, or material or labor delays. Instead, valuable time has been 

lost in part because of administrative issues; to execute security interests; to fulfill NEPA 

requirements; or to facilitate design agreements. According to NIST, recipients were 

awarded fixed price-contracts to carry out the projects. Nonetheless, schedule delays may 

increase costs, which are an issue in today’s constrained budget environment. 

These project delays have contributed to slow spending. As of October 31, 2011, only half 

of the recipients have drawn down more than one-third of their respective federal funds 

(see figure 4 for grant disbursements). 

Source: OIG, based on federal Automated Standard Application for Payments (ASAP) drawdowns 

Disbursements are as of October 31, 2011; * Woods Hole Oceanographic Institute (nonprofit organization) 

When projects show indications of delays not pertaining to external factors, NIST should 

determine whether obstacles are preventing the Recovery Act projects from achieving 

timely completion. NIST should place more emphasis on these projects’ on-time 

completion, requiring recipients to devise an action plan for reducing the impact of 

identified delay risks—and recovering baseline schedule estimates contained in the grant 

agreement to the maximum extent possible—in order to hold projects to Recovery Act 

objectives. 

FINAL REPORT NO. OIG-12-020-A 9 
Element Recipient 

1a 

Recipient 

2 a 

Recipient 

3 a 

Recipient 

4 a 

Recipient 

5 a 

Recipient 

6 a 

Recipient 

7 a 

Explanation of the recipient’s 

inability to complete work by       

the specified date 

Statement that no other 

project changes are under 

consideration — — — — — — —

Budget for the remaining funds — — — — — — —

Documentation of a continued 

bona fide need for the project — — — — — — —

Statement of no anticipated 

further delay and feasibility of 

project completion within 

revised time schedule 

— — — —  — —

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

B. Project Time Extensions Were Granted Without Essential Documentation 

The Department of Commerce (DOC) Grants Manual, Chapter 17 (Construction Awards), 

G.1, states that the recipient should submit to the FPO timely written extension requests 

(which “must ordinarily” be submitted at least 30 days prior to the award end date), which 

should contain certain elements (see table 2 below, which covers the seven extension 

requests as of August 2011). After review, the FPO recommends to the grants officer 

whether to amend the grant award with a new end date. A total of seven recipients 

requested and received amendments to extend their awards’ end dates (see figure 3 on 

page 8). Some extension requests were not timely; in fact, one of these recipients filed its 

written request 4 days after the initial award end date. None of the extension requests 

contained all the elements, such as a statement of no anticipated further delay and feasibility 

of project completion within a revised time schedule. While the FPO is aware of the project 

status as a result of recurring meetings with award recipients, those recipients should 

submit extension requests with all elements. 

Table 2. Extension Requests Compliant with Department 

of Commerce (DOC) Grants Manual 

Source: OIG
 a

 A checked field indicates the respective element was present in the recipient’s extension request.
 

The NIST Construction Grants Monitoring & Oversight Procedures manual does not provide any 

guidance on the approval of time extensions for the construction projects. According to 

NIST, the failure to timely process extension requests was an administrative oversight; the 

agency stated it will explore the legality of backdating and retroactive approvals that were 

granted. NIST further stated that administrative practices have been instituted by the 

program office and the grants office to ensure that these procedural violations do not occur 

in the future. 

FINAL REPORT NO. OIG-12-020-A 10 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

The granting of extensions as a result of non-external factors should be rare. The program 

office providing oversight should ensure that risks are mitigated and these projects are 

completed on time. 

Recommendations 

We recommend that the Under Secretary of Commerce for Standards and Technology direct 

the NIST program office to: 

1.	 develop plans to accelerate the time schedule for the five projects either (a) scheduled 

for completion after or (b) at risk of being extended beyond September 30, 2013; 

2.	 require grantees of the remaining projects to accelerate construction work to meet the 

deadlines as specified in grant documents—or submit extension requests for NIST 

review; and 

3.	 require recipients to submit all elements in their extension request before making a 

decision to recommend or deny the request—as well as include extension guidance in 

the procedures manual. 

III.	 Lack of Program Guidelines and Incomplete Program Office Oversight Policies 

and Procedures Exist 

GAO’s Standards for Internal Control state that “all transactions and other significant events 

need to be clearly documented, and the documentation should be readily available for 

examination. The documentation requirements should appear in management directives, 

administrative policies, or operating manuals and may be in paper or electronic form. All 

documentation and records should be properly managed and maintained.”8

 NIST provided OIG 

the relevant program office procedures manual—compiled 30 months after the first 

construction grant award (non-Recovery Act) and 22 months after the first Recovery Act grant 

award. As this was a new program, NIST has had to develop and document procedures while 

managing 24 awards. According to the FPO, NIST has emphasized running the program, with 

not enough time devoted to the full development of written policies. 

Our review of the NIST Construction Grants Monitoring & Oversight Procedures manual determined 

that it addresses some of the requirements necessary for the successful implementation of the 

construction grants program. However, it is lacking in key areas, including program office 

procedures for financial and scientific reviews. Further, NIST should develop a recipient 

program guidelines handbook. Finally, NIST’s grants office should improve procedures for 

maintaining official award files. 

                                                            

8

 U.S. General Accounting Office, November 1999. Standards for Internal Control in the Federal Government, 

AIMD-00-21.3.1. Washington, DC: GAO, 15. 

FINAL REPORT NO. OIG-12-020-A 11 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

A.	 NIST Must Strengthen Program Office Policies and Procedures Manual to Ensure Proper Financial 

and Scientific Reviews 

Financial review procedures. Currently the program office employs oversight procedures 

including recurring meetings via conference call (usually at 5-week intervals), a fraud training 

session, and site visits. According to the NIST Construction Grants Monitoring & Oversight 

Procedures manual, site visits can occur at multiple times during the award implementation 

phase of the grant (the FPO holds an in-person kick off meeting after the grant is awarded). 

These early site visits have been deemed an effective way to catch potential construction 

problems, according to best practices identified by the Department of Justice in its February 

2009 Improving the Grants Management Process.

9

 While site visit guidance includes various 

reviews, the NIST manual underemphasizes the analysis of financial records. 

For example, there is little mention of the FPO’s role to ensure that the recipient maintains 

accurate accounting records and adequate support for its expenditures. During two of our 

four site visits, we requested that the recipient show us how the accounting records were 

used to prepare the expenditures on the financial status reports. In both instances, the 

recipient was not able to provide us the link between the approved budget’s spending 

categories and its accounting records while we were onsite. Each recipient ultimately sent 

us the required documentation but, with financial reports already filed with NIST, it should 

have been readily available. Requesting this type of financial documentation should be a 

standard oversight practice to ensure that recipients are not overdrawing funds and are 

providing the proper matching share. 

Currently, NIST relies on single audits (which, as we note in this report’s first finding, NIST 

inconsistently tracks and reviews) to monitor financial records. Recipients are not required 

to submit their annual single audit report until 9 months after the end of the organization’s 

fiscal year—allowing recipients to have receipt of federal funds for up to 2110 unaudited 

months. About $60 million has been disbursed as of October 31, 2011, with approximately 

$120 million of federal funds yet to be received by recipients. It is essential for program 

officers to know, beyond single audit reports, how recipients expend these federal funds— 

which support projects complex in scope and design and involving large costs, multiple 

vendors, and many specific building requirements (see figure 3 on page 8 for total awards 

and disbursements). Robust site visits can provide timely assurance of effective Recovery 

Act spending, by incorporating review of financial reporting and other compliance 

requirements as part of the overall monitoring plan. 

Postaward scientific review procedures. The Federal Register announcement stated that the 

scientific and technical merit of the proposed use of the facility is to be used as a grant 

proposal evaluation criterion. This entails scientists—familiar with the research related to 

the construction project’s purpose—rating the project proposal during the selection 

process. After this initial step, there are no more required scientific reviews. NIST policies 

                                                            

9

 U.S. Department of Justice Office of Inspector General, February 2009. Improving the Grant Management Process, 

4–5. 

10 The 21 months depends upon the recipient receiving award funds in the first month of the fiscal year—12 

months in the fiscal year plus 9 months until the report is due. 

FINAL REPORT NO. OIG-12-020-A 12 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

and procedures do not include a formalized scientific review at later project phases; further, 

the construction grant program office has experts on construction but not on the science 

itself. 

The FPO stated that scientists are consulted when there is a need; however, we found 

there is no requirement for including scientists in subsequent reviews. Such scientific 

reviews were done inconsistently. For example: during the implementation phase, the 

program officer described consulting a NIST scientist when a grant recipient selected a 

deionizing water system for its project. In another example, when the recipient had a 

concern about interference with its labs’ vibration isolation systems, the project did not 

consult with a NIST scientist. The NIST Construction Grants Monitoring & Oversight Procedures 

manual should describe key indicators that would trigger a scientific review during the 

implementation phase to ensure consistent operations. 

Without full understanding by the FPO of the technologies relevant to the construction site, 

recipients may alter projects from their original proposals. With established documented 

procedures for scientist consultation, NIST would ensure that projects progress according 

to plan and project scopes remain unaltered in order to achieve the goals as intended. 

B. NIST Needs to Develop a Recipient Program Guidelines Handbook 

NIST’s policies and procedures do not include a recipient handbook for the construction 

grants program. Although recipients can find grants criteria within the award terms, a 

handbook would clarify requirements during the grant’s implementation stage, preventing a 

misinterpretation of regulations and ensuring that recipients are following policies 

consistently. 

The Department of Commerce (DOC) Grants Manual states that the program office is 

responsible for providing recipients with programmatic guidance and technical assistance. In 

addition to showing a PowerPoint presentation covering many of the grant’s administrative 

and reporting requirements, the NIST FPO provides an in-person review with an overview 

and discussion of all award provisions, conditions, and terms—as well as technical, 

administrative, and reporting requirements—at the kickoff meeting for each Recovery Act 

grant recipient. However, these do not provide the detail often needed by recipients; they 

do not provide a reference tool in the way a detailed handbook would. For example, there 

are no details provided regarding the extension request elements. Not having adequate 

policies and procedures in place to manage this program will adversely affect NIST’s 

oversight capabilities. 

C. NIST Grants Office Should Improve Procedures for Maintaining Official Award Files 

Electronic grants management system. We found that NIST no longer uses GMIS as the official 

grants file, which is once again a paper file. According to NIST officials, it was necessary to 

revert to paper because GMIS was no longer receiving the necessary upgrades. The grants 

officer stated that the paper file is the official file of record. Commerce, in the process of 

requiring all grants offices to use a Department-wide grants management system, is 

considering a management system called Grants Online. 

FINAL REPORT NO. OIG-12-020-A 13 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

During this transition period there is no clear direction for when GMIS should be used or 

for what official purpose. Currently, an amendment to the grant must be administratively 

created in the GMIS system. In addition, some grant specialists are scanning images of the 

award documents into GMIS, even though it is no longer the official grant file. The grant 

specialists are required to keep all documents needed for official administration of the grant 

in the paper file. 

Award file structure. NIST Standard Operating Procedure (SOP) 01-01-A (revised 2003) 

states that personnel must file all correspondence (e.g., closeout letters and audit reports) 

in the applicable sections, annotating section cards with documentation filed under that 

section. We found that it was difficult to find documents within the file because personnel 

had not updated the section cards specific to these Recovery Act awards. The grants office 

has informed us that the current file organization structure is outdated and needs 

revamping. 

Missing file. Upon request, NIST could not produce for us the file for one recipient. We 

learned that NIST found the file after it was missing for a week. NIST maintains official files 

in an open space room in the grants office with general access. Its tracking system includes 

staff that scans files in and out of the file room; however, grants office personnel do not 

consistently utilize the system. NIST informed OIG that currently there is no SOP for 

scanning files in and out of the file room. We found that NIST is not fully complying with 

the requirements of the grants manual related to official file designation, structure, and 

stewardship. As a result, grant oversight could be hampered. Grants office management 

informed us that they plan to develop a solution to address this issue. 

Recommendations 

We recommend that the Under Secretary of Commerce for Standards and Technology direct: 

1. NIST’s program office to strengthen its NIST Construction Grants Monitoring & Oversight 

Procedures manual so that it provides specific written guidance—including clarification 

and reference points regarding requirements for financial and scientific review; 

2. NIST’s program office to develop a recipient handbook to help construction grant 

recipients complete their projects efficiently and in accordance with regulations 

governing federal grant assisted construction projects; and 

3. NIST’s grants office to provide instructions to the grants staff on the official role of the 

GMIS system and the official paper files as it continues to transition to Grants Online, 

improve paper file structure, and strengthen internal controls on proper access to 

official grant files. 

FINAL REPORT NO. OIG-12-020-A 14 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

IV. Noncompliance with the Buy American Act, and Other Recovery Act Rules, 

Presents Issues 

A. Compliance Issues Arose with the Buy American Act 

The Recovery Act incorporated a “Buy American” provision,11 stipulating that a public 

building12 will not receive funding unless all of the iron, steel, and manufactured goods used 

in the project are U.S.–produced. Recipients may obtain waivers from the head of the 

department or agency if: 

1. compliance would be inconsistent with the public interest; 

2. the United States does not produce iron, steel, and other relevant manufactured goods 

in sufficient and reasonably available quantities or of a satisfactory quality 

(nonavailability); or 

3. inclusion of iron, steel, and manufactured goods produced in the United States will 

increase the overall project cost by more than 25 percent. 

NIST is considering two waivers of the Buy American Act. One is a de minimis waiver 

allowing recipients to spend up to 5 percent of certain construction material costs on non– 

U.S.-made items. The second is a safety, interoperability, and security waiver allowing non– 

U.S.-made devices to be purchased as part of a pre-existing safety or security system. 

NIST has not officially announced its approval of these waivers in the Federal Register. 

Nevertheless, recipients were informed by the program officer they could install and track 

applicable parts as if a Buy American de minimis waiver has been granted. As explained, 

non–U.S.-made materials could be used up to 5 percent of total construction material costs 

(excluding costs such as mark-up, profit, or labor, tax). For example: a recipient was 

instructed to maintain a tracking spreadsheet of every non–U.S.-made item which would 

contain a description of the item, count, cost, and location where installed. In another 

instance, a recipient stated that NIST granted a global reprieve to use non–U.S.-made 

proprietary safety system devices. 

When we brought these issues to NIST management’s attention, the program officer 

informed recipients via e-mail that they should not presume any waiver until an official 

announcement. As a result of NIST not adequately enforcing compliance with the Buy 

American Act, recipients could be spending government funds inappropriately by purchasing 

items not made in the United States without approved waivers in place. 

                                                            

11 The Recovery Act incorporated provisions of the Buy American Act. Pub. L. No. 111-5, Title XVI, § 1605. 

12 The waiver would affect only the grant recipients with public buildings; 6 recipients out of 16 are private 

institutions and not subject to the Buy American Act. 

FINAL REPORT NO. OIG-12-020-A 15 
                                                            

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

B.	 Other Compliance Issues Emerged with the Recovery Act 

The Recovery Act further restricts the use of its funds and sets forth a statement of 

purposes and general principles on the use of funds.13 Generally, the United States Code, 

Title 31, Chapter 13, section 1301(a) states: “[a]ppropriations shall be applied only to the 

objects for which the appropriations were made except as otherwise provided by law.” 

NIST used Recovery Act funds to hire a contractor as a grants specialist to work solely on 

Recovery Act-funded construction grants. During our visit to the NIST grants office, we 

discovered that the contracted grants specialist worked on non–Recovery Act-funded 

construction grants while being compensated with Recovery Act funds. According to the 

grants officer, the lack of staffing on non-Recovery Act construction grants caused this to 

occur. It was the official’s intent to amend the contract but that official did not do so. NIST 

could not quantify the amount of time the contractor (no longer at NIST) spent on nonRecovery Act construction grants but estimates less than a week. Regardless of the time 

elapsed, appropriations law prohibits a Recovery Act-funded contractor to perform nonRecovery Act work. 

Recommendations 

We recommend that the Under Secretary of Commerce for Standards and Technology direct: 

1. NIST’s program office to develop internal controls that ensure continued compliance 

with the Buy American provision, and 

2. NIST’s grant office to establish a firewall to prevent the use of Recovery Act funds 

resources on non-Recovery Act activities and consult with Office of General Counsel to 

determine whether this use of funds violated the Anti-Deficiency Act. 

13 Pub. L. No. 111-5, § 3. 

FINAL REPORT NO. OIG-12-020-A 16 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Summary of Agency and OIG Comments 

We received, from the Under Secretary of Commerce for Standards and Technology, NIST’s 

written comments on our draft report (see the entire memorandum from January 25, 2012, in 

appendix C). For our final report, we have considered this response—and discussions held with 

NIST after we issued the draft report—and made technical revisions deemed appropriate. NIST 

agreed with the findings and recommendations and offered additional discussion points for 

finding 1 (recommendation 1), finding II (recommendation 3), and finding IV (recommendation 

2). 

Finding 1, recommendation 1: Agency generally concurred. NIST stated that the premature 

drawdowns of Recovery Act funds (without security interests in place) resulted from a 

combination of failures: (a) by two recipients, who did not abide by award terms, and (b) by 

NIST Grants and Agreements Management Division (GAMD), with a misinterpretation of the 

terms. The agency agreed to take actions to avert similar occurrences in the future. NIST 

asserted that the premature drawdown amounts were smaller than what we stated in the draft 

report—and, after review of additional information from NIST, we revised these drawdown 

amounts in this final report. 

Finding 1, recommendation 2: Agency concurred. NIST agreed to "develop adequate internal 

controls with regard to establishing review and reconciliation of all required reports in official 

grant files." GAMD will make additional hires, and provide additional training, to assist grant 

specialists in the effort. 

Finding 1, recommendation 3: Agency concurred. NIST agreed to "ensure that (a) the most 

current single audit reports are reviewed, (b) the review is documented by the grant specialist, 

and (c) the report and review are kept in the official file to help determine financial status and 

compliance with government requirements." More specifically, it agreed to reassign 

construction awards to experienced federal grant personnel, in lieu of contractors (who are 

less familiar with NIST standard operating procedures [SOPs] regarding review of A-133 audit 

reports). In addition, any A-133 report findings will require a corrective action plan from the 

recipient before the grants officer will issue an award amendment. 

Finding 1I, recommendation 1: Agency concurred. NIST agreed to "develop plans to 

accelerate the time schedule for the 5 projects either (a) scheduled for completion after or (b) 

at risk of being extended beyond September 30, 2013." To that end, it is currently working with 

award recipients and the Department to meet OMB’s M-11-34 requirements. 

Finding 1I, recommendation 2: Agency concurred. NIST agreed to "require grantees of the 

remaining projects to accelerate construction work to meet the deadlines as specified in grant 

documents or submit extension requests for NIST review.” NIST is currently working with 

award recipients to ensure they meet all schedule and award deadlines (and help them request 

timely and fully-documented requests for no-cost time extensions when justifiable). 

Finding II, recommendation 3: Agency generally concurred. NIST has agreed to create a 

checklist to ensure grant recipients comply with the Department’s Grants Manual when 

FINAL REPORT NO. OIG-12-020-A 17 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

requesting no-cost extensions. However, NIST asserted that the Department does not require 

grantees to submit all five supporting elements listed in the manual (see the five elements in 

table 2 of our report). Based on NIST’s request, we revised the statement about the Grants 

Manual to state that these supporting elements “should be” (but not “must be”) included in 

extension requests for evaluation. 

Nonetheless, we remain concerned with the lack of supporting information from grantees who 

request extensions. As indicated in table 2, grantees overlooked four of five supporting 

elements specified in the Department’s manual when requesting extensions. Providing these 

elements, such as a statement indicating no other project changes are under consideration, may 

help minimize further extension requests. NIST should specify more supporting elements for 

grantees to submit in the new checklist. 

Finding 1II, recommendation 1: Agency concurred. NIST agreed to "strengthen its NIST 

Construction Grants Monitoring & Oversight Procedures manual so that it provides specific written 

guidance—including clarification and reference points regarding requirements for financial and 

scientific review." 

Finding 1II, recommendation 2: Agency concurred. NIST agreed to "develop a recipient 

handbook to help construction grant recipients complete their projects efficiently and in 

accordance with regulations governing federal grant assisted construction projects." More 

specifically, it agreed to issue supplemental clarifying instructions and guidance to recipients—as 

well as increase onsite reviews of recipient reports and supporting documentation. 

Finding 1II, recommendation 3: Agency concurred. NIST agreed to "provide instructions to 

the grants staff on the official role of the GMIS system and the official paper files as it continues 

to transition to Grants Online, improve paper file structure, and strengthen internal controls 

on proper access to official grant files." To this end, GAMD will develop procedures for use of 

its file management system, FileTrail—and provide specialists desktop access to the system. 

GAMD will also reevaluate its SOP for the official award file (which still contains both the GMIS 

file and the paper file) and, after ensuring consistency in both sets of requirements, provide staff 

training after implementing any changes. 

Finding 1V, recommendation 1: Agency concurred. NIST agreed to "develop internal 

controls that ensure continued compliance with the Buy American provision." It continues to 

develop and refine processes for ensuring recipient compliance with the Recovery Act’s Buy 

American requirements, including further additions to its January 2011 supplemental guidance. 

Further, NIST is currently finalizing program-wide Recovery Act Buy American waivers, which 

it will publish in the Federal Register upon issuance. 

Finding IV, recommendation 2: Agency partially concurred. NIST has contacted the Office of 

General Counsel and NIST Budget Office to resolve the issue concerning use of Recovery Act 

funds to help oversee non-Recovery-related projects. However, NIST does not consider it 

necessary or cost-effective to establish a firewall to prevent recurrences as recommended. 

NIST maintains that (a) it does not have access to additional Recovery Act funds and (b) all 

expenses for administering and overseeing Recovery Act construction grants are borne by 

regular NIST staff. We agree with the NIST proposal. However, should Recovery Act funds 

FINAL REPORT NO. OIG-12-020-A 18 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

become available, such as through de-obligation of unused funds, NIST needs to strengthen 

controls to ensure it not spend Recovery Act funds on non–Recovery-related work. 

 

FINAL REPORT NO. OIG-12-020-A 19 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix A: Objectives, Scope, 

and Methodology 

We initiated this audit in October 2010 as part of our continuing oversight of NIST’s 

construction grant program. The objectives of this audit were to: (1) determine the adequacy of 

policies and procedures developed for Recovery Act construction awards; (2) determine 

whether NIST has the personnel, processes, and systems in place to monitor the program; (3) 

assess the adequacy of monitoring activities; and (4) determine whether the construction 

projects have proceeded according to their original proposals. 

To satisfy these objectives, we reviewed NIST’s compliance with applicable laws, regulations, 

policies, and procedures, including: 

• The American Recovery and Reinvestment Act of 2009; 

• Federal Financial Assistance Management Improvement Act of 1999; 

• Department of Commerce (DOC) Grants Manual; 

• NIST Construction Grant Program Special Award Conditions; 

• Department of Commerce Financial Assistance Standard Terms and Conditions; 

• NIST Construction Grant Program General Terms and Conditions; 

• NIST Standard Operating Procedure 01-01-A (Revised 2003) for official award files, 

grants management information system, and financial reconciliation; 

• NIST Standard Operating Procedure 05-02, “Procedures for Reconciling ASAP 

Withdraws & Financial Status Reports (SF-269) and Enforcement Actions for NIST 

Grants and Agreements Management Division” 

• 15 CFR Part 14 Uniform Administrative Requirements for Grants and Agreements with 

Institutions of Higher Education, Hospitals, Other Non-Profit, and Commercial Organizations; 

• NIST Construction Grants Monitoring & Oversight Procedures Manual; 

• American Recovery and Reinvestment Act (ARRA) Supplemental Buy American 

Guidance for NIST Construction Grants; 

• GMIS Pre-Award Checklist Guideline (for Single Audit Review); and 

• 31 USC Chapter 13 – Appropriations 1301 (a). 

To gain an understanding of NIST’s monitoring efforts and records management, we reviewed 

grants monitoring procedures and interviewed pertinent staff, including: 

• Grants Management Information System (GMIS); 

• NIST Grants and Agreements Management Division (GAMD) personnel; 

FINAL REPORT NO. OIG-12-020-A 20 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

• NIST Office of Facilities and Property Management (OFPM) personnel; and 

• NIST Construction Grants Program Office (NCGP) personnel. 

To review the results of NIST’s monitoring efforts, we reviewed files of all 16 NIST Recovery 

Act construction grant recipients, including: 

• performance progress reports; 

• financial progress reports; 

• single audit reviews; and 

• other document reviews including security interests, award extension requests, and 

official award file section cards (for file structure and organization). 

For further review of the results of NIST’s monitoring efforts, we judgmentally selected four 

recipients for site visits based upon the following selection factors: site proximity, level of 

completion, and award amount. Our review included: 

• financial reconciliation, 

• Buy American and Davis Bacon compliance, and 

• adherence to original proposal. 

Regarding data reliability, we did not rely on computer-generated information for this audit. 

The NIST grants officer informed us that its paper-based system was the official file of record. 

We performed our work in accordance with generally accepted government auditing standards. 

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

evidence that provides 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. 

We conducted our review from October 2010 through October 2011 under the authority of 

the Inspector General Act of 1978, as amended and the Department Organization Order 10-

13. We performed our work at: 

•	 NIST in Gaithersburg, Maryland; and 

•	 Recipient locations in Atlanta, Georgia; Auburn, Alabama; Washington, DC; and 

Lexington, Kentucky. 

FINAL REPORT NO. OIG-12-020-A 21 
Recipient Science Conducted at 

Research Facility 

Federal Award 

Amount 

Recipient Share 

Amount 

Total Project 

Cost 

Columbia 

University Global climate processes $ 1,363,240 $ 1,363,240 $ 2,726,479 

University of 

Maine 

Deep water offshore wind 

energy industry $ 12,420,000 $ 2,971,410 $ 15,391,410 

Rice 

University 

Fundamental and applied 

physics $ 11,130,018 $ 33,390,055 $ 44,520,073 

University of 

Nebraska 

Nanofabrication, electron 

microscopy, and synthesis 

and characterization 

$ 6,904,993 $ 6,904,993 $ 13,809,986 

University of 

North 

Carolina 

Marine biotechnology $ 14,979,888 $ 14,979,888 $ 29,959,776 

University of 

Kentucky 

Biomass and biofuels, 

distributed power generation 

and storage, and electric 

vehicles 

$ 11,832,685 $ 3,944,228 $ 15,776,913 

Nova 

Southea

University 

stern Coral reef ecosystem $ 14,990,071 $ 15,584,636 $ 30,574,706 

Purdue 

University 

High-performance buildings 

for systems related to 

future-built environments 

$11,750,000 $ 11,750,000 $ 23,500,000 

University of 

Kansas 

Energy and transportation, 

global climate change, 

composite materials 

technology, and sustainable 

building practices 

$ 12,275,527 $ 6,500,000 $ 18,775,527 

Woods Hole 

Institute 

Sensor technologies for 

ocean observation $ 8,101,724 $2,025,436 $ 10,127,160 

Auburn 

University 

Standards, measurement, and 

forecasting of the 

environment; biofuels, water, 

food quality, safety 

$ 14,427,075 $ 14,427,075 $ 28,854,150 

Georgetown 

University 

Soft matter research: liquid 

crystals, gels, colloids, 

polymers, foams, granular 

matter. 

$ 6,900,000 $ 48,829,184 $ 55,729,184 

Georgia Tech Energy efficient products and 

sustainable energy sources $ 11,632,804 $ 11,632,804 $ 23,265,608 

University of 

Maryland Advanced quantum science $ 10,346,123 $5,173,061 $15,519,184 

University of 

Miami 

Power of hurricanes and the 

biology of coastal waters $ 15,000,000 $ 28,764,462 $ 43,764,462 

University of 

Pittsburgh Nanoscience and technology $ 15,000,000 $ 12,751,516 $ 27,751,516 

Total $ 179,054,148 $220,991,988 $400,046,134 

Source: OIG, based on NIST data 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

Appendix B: Recipient Information 

FINAL REPORT NO. OIG-12-020-A 22 
UNITED STATeS DEPARTMENT CF COMMERCE 

National I~ af Standard• and Technology 

GaittltnJ;Jurg. ~ 20899-

0FfiCE OF THE DIRECTOR 

JAN 2 5 20t2 

MI::.MORANDUM FOR Ann C. Eilers 

Principal In~jtor ~raJ for Audit and Evaluation 

hom: Patnck 

Under Sccrewy 

Gallagher 

of Co 

~ 

merce for Slalldards and Technolog) 

NIST Response to the draft report, Oversight Actt\•ities ofNIST'.r &covery Act 

Constrru:/ion Gront Au ords Are Generolly Fjfective hut Ne1d lmprov'm'nf 

Thank you for the opportunity to review the Office ofiJUpector General (OIG) draft report, 

o ... ersight Activities ofVIST's Rtcow!ry Act Constmctlon Gr(IJit Awards A1t General/} Eflecth-tt 

but Need lmpro\'tmtnt. dated December 22,2011 Staff from the National lnslllute ofStnndards 

and Technolo;.y's (NISl) Office ofFaciliti~ and Property \ofanagemtnl (OFPM) and Grants and 

Agreements Management Division (GAMD) have reviewed the draft report and offer the 

comments in the attached document. NIST concurs with the majority of the recommend3tion, 

If you have any questions, please contact Rachel Kmney at (301) 975-8707. 

AtlllCbment 

NI.Sr 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL
 

Appendix C: Agency Response 

FINAL REPORT NO. OIG-12-020-A 23 
FINAL REPORT NO. OIG-12-020-A 24 

U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL
 

Office of Inspector General Draft Repon 

(ftqsighl Actnntles of l-IST'' RecO\·try Act Construction Grant Awards are Generally EjJecllve 

but Need Improvements 

National Institute or Standard• and Teebnology (NISD Re1noMl' to Rc:~ommentlali s 

Section I Recommendations: 

"We recommend that the Under Secretary of Commerce for Standards and Technology direct the 

NIST Grants Chief to:" 

Reeommendanon I: wstrenglhcn internal controls to ensure that all appropnate awnrd conditions 

are met befon: NJST allows the dta"down of federal funds-. 

NIST Response. 

NlST genemlly agrees "ilb thu findmg, subject to the discussion below concerning the 

dollar amounts referenced in Section I.A. of the draft audit report (page 3). NIST notes 

that the award conditions penaining to American Recovery and ReiO\estment Act of 

2009 (Recovery Act) construction projects, includjng the proper application and 

interpretation of the security interest and National Environmental Policy Act (NEPA) 

requirements as well as the proper use of eldstlng internal controls (e.g., restrictions on 

i\utomaled Standard Application for Pa)mcnt (ASAP) drawd.0\\1lS by m:ipients) 

designed to aven smlilar occurrences in lhe future, have been reviewed and discussed in 

detail with the NIST Grants Officer and NlST Grant SpccialtSts !bsigned to Recov~ Act 

construction grants, NlST program office S1aff and contractors. and wtth the Office of 

Geneml Counsel (OGC) Federal Assistan« Law Divtsion (FALD) NlST further notes 

that the security mterest and NEPA requirements for all 16 ARRA construction a'.l.urds 

are complete and that there are no recipients currently subject to drawdown restrictions. 

Tbe premature drawdowns by two of the 16 Recovery Act \onslruction Grants 

ReCipients resulted from a combination of a failure by the two rectpients to abide by the 

award terms c:onc:errting disbursements ofNlST a"nrd funds and from a misinterpretation 

of the security interest and NEPA tenns and conditions of the award by lhe Grants and 

Agreements Management Dhislon (GAMD). GAMD concluded tba.t the recipients "ere 

authorized to drawn down fundJng for non-construenon purposes, such as design and 

engineering, prior to the recipient's satisfaction of the security interest requirements. Tbe 

funding drown down by the two recipients was for non-construction purposes. 

At the time of the drawdowns, the f\\'0 recipients in question were in the process of 

finalizing the security interest documentation in consultation with the F ALD and legal 

counsel for the rectpients The progress and StatUS ofthese efTons were being closely 

monitored by GAMD at NIST. The security interest documentation was actuaiJ)' executed 

and recorded by boUt rec:iptents in December 2010. As a result, drawdowns after 

December 2010 ocx:urrcd after the security interest documenllltion was executed and 

recorded by each recipient, but prior to the corresponding award amendment being issued 

by NIST. lmponantly, the Federal interest in each project was protected upon execution 

Page I of6 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

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U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

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U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

FINAL REPORT NO. OIG-12-020-A 27 
U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

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U.S. DEPARTMENT OF COMMERCE OFFICE OF INSPECTOR GENERAL

ARRA000-107 

FINAL REPORT NO. OIG-12-020-A 29