Participation in adaptive sports—sports that have been specifically adapted or created for persons with disabilities—has been recognized by experts as an important means of rehabilitation for people with physical and other disabilities, including veterans and members of the armed services. In 2008, federal law authorized VA to establish a grant program to fund adaptive sports for veterans and members of the armed services with disabilities. First operated using fiscal year 2010 funds, the program is authorized to support activities that will facilitate, encourage, and sustain participation in adaptive sports activities. Under the program, grants are made to qualifying organizations, referred to in the law as eligible entities, that will plan, develop, manage and implement programs to provide adaptive sports opportunities. To be eligible for a grant, an organization must be a non-federal entity with significant experience in managing a large-scale adaptive sports program. Such experience must be with programs that are either (1) affiliated with a National Paralympic Committee or a National Governing Body authorized to provide Paralympic sports, (2) an adaptive sports program of a National Governing Body that meets certain other requirements, or (3) an adaptive sports program in which at least 50 persons with disabilities participate or in which the participants with disabilities reside in at least five different congressional districts. Since fiscal year 2010, VA has allocated $8 million per year for the program. During the program’s first four fiscal years—2010 through 2013—the USOC served an intermediary role in program management, receiving grant funds from VA and sub-granting them to organizations that provided adaptive sports opportunities and events. In 2012, we reported on the program’s actual or planned activities in fiscal years 2010 to 2012, when USOC was involved. At that time, we found several shortcomings in program reporting and oversight practices. For example, we found that expenditure reporting practices for grantees were not consistent with federal internal control standards, and that VA was not performing on-site or remote monitoring to verify how funds were being used. In addition, we reported that in fiscal year 2011 $3.1 million of the $7.5 million annually provided by VA—about 40 percent—was absorbed by USOC for its operations, personnel, and administrative costs. We made several recommendations aimed at improving grantee reporting and encouraged VA to review implementation of USOC’s monitoring plan. VA’s implementation of the program substantially addresses these recommendations. As appropriate, we refer to these recommendations and related VA actions to address them later in this report. In December 2013, the program was reauthorized with a number of changes. The reauthorization eliminated USOC’s role and instead provides that VA can award grants to eligible entities. In addition, the law placed specific limits on grantees’ use of grant funds for administrative and personnel costs. For grants supporting adaptive sports opportunities taking place during fiscal year 2015, grantees can allocate no more than 7.5 percent to such costs; in fiscal year 2016 and thereafter, grantees will be limited to 5 percent. Law and regulation include other requirements for VA and grantees. For example, the adaptive sports program’s authorizing statute and regulations outline a number of criteria that guide grant application review and selection, including requirements that applicants clearly state the sports activities to be provided, clearly define program objectives, and describe the adequacy of their program management structure. In addition, applications must include detailed descriptions of any partnerships and the grant funds that will be provided to any partners; the anticipated personnel, travel, and administrative costs paid for with grant funding; and the performance metrics to be used to evaluate the effectiveness of the activities carried out with grant funds. VA grant programs are also subject to government-wide grants management requirements. In its first two years of awarding grants, VA has awarded grants near the end of the fiscal year for use by grantees to support activities to be carried out in the following fiscal year. For example, organizations that were awarded grants in fiscal year 2014 have used fiscal year 2014 funds to support adaptive sports activities during fiscal year 2015. Similarly, grantees will use grants awarded in fiscal year 2015 to support adaptive sports activities that will occur primarily during fiscal year 2016. Except where specifically noted, this report refers only to activities and events pertaining to grants awarded in fiscal year 2014. In fiscal year 2014, the first year VA was responsible for selecting eligible entities to receive grants under the adaptive sports grant program, VA officials reported challenges because of tight time frames to obtain and review grant applications and the lack of a standard application form tailored for the adaptive sports grant program. (See fig. 1 for a timeline of events.) Proposed program based in facts, good reasoning, sound judgment (20 points) Considerations: Likelihood of success in aiding rehabilitation; appropriateness of funding requested; measurability of objectives; benefits for disabled veterans. low risk and high potential return. For example, it sought to ensure that proposed activities were occurring in areas with a large population of veterans with disabilities. In some cases, some aspects of a proposal were accepted and others rejected to make the proposed grant amount smaller. At the end of this process, VA selected 69 applications to which the $8 million allocated for the program in fiscal year 2014 was awarded. Sufficiency of management structure (20 points) Considerations: Sufficient experience in providing activity; certification of key personnel; evidence of community outreach; clear description of infrastructure to support planned activities. Geographic coverage (15 points) Considerations: Cost-effective filling of adaptive sports needs in area; appropriate for region and potential participants. Conformance with VA program goals and objectives (15 points) Considerations: Proposed activities advance program goals, fall within spectrum of adaptive sports, and have positive impacts. Strength of program concept and objectives (10 points) Considerations: Concepts clearly linked to objectives; likely to benefit health of disabled veterans. VA officials told us that completing all tasks necessary to award the grants before the end of fiscal year 2014 was very challenging—in part because of the limited time frame and because managing the solicitation and selection of grant applicants was a new experience for the responsible VA unit. However, VA officials explained that the alternative would have been that no program activities would have been funded with fiscal year 2014 dollars. Officials told us that developing and publishing the interim final rule to govern the program within about 6 months required considerable effort. VA officials also told us that development and authorization of an application form tailored to the program was not possible within the deadlines they faced in fiscal year 2014. Instead they opted to use a standard federal grant applications form—SF-424— developed by OMB. Because law and regulation required the program’s grant applications to include information that the SF-424 forms are not designed to include—such as a description of the roles of any partner organization—VA required narrative attachments to this standard application form. These narratives varied greatly in length, detail, and format. According to one VA official, they ranged from about 7 pages to about 60 pages. Financial capability and value for funding (10 points) As a result, according to VA officials, the review and approval process for fiscal year 2014 was very labor-intensive, and VA officials said staff had to engage in extensive communications and negotiations with applicants. For example, VA officials told us they conducted extensive negotiations with some applicants regarding the cost and scope of their proposals, with the aim of controlling costs and maximizing the benefits that program funds would provide to participants. In addition, VA officials said that, despite repeated VA communication, some applicants did not understand the limitation on administrative expenses. Under this limitation, for activities taking place during fiscal year 2015, grantees could allocate no more than 7.5 percent of the grant amount to administrative expenses, including any costs associated with employees other than those who directly provided coaching and training for participants. This misunderstanding may have been unintentionally reinforced by the budget categories used in the standard federal application form, which do not distinguish between these two types of personnel costs. For example, the standard form includes a line for personnel expenses, but does not distinguish between costs attributable to coaching and instruction, and other types of personnel costs. Federal law, VA regulation, and grant management principles dictate that a number of requirements be followed during the application and selection process. For example, the program statute and VA regulations require that an applicant submit a detailed description of its financial controls, including methods to track expenditure of grant funds, that a grantee observe the applicable percent limit on administrative expenses, and that any partnerships be described, including the amount of funds that will be made available to each partner. Despite VA’s efforts to ensure completeness of grant applications, our review of 16 fiscal year 2014 grant files and other VA documentation found that in some cases aspects of grant applications were not well documented. For example, VA developed a standard checklist—the VA Administrative and Financial Review Questionnaire for Grantees— for applicants to attest to various aspects of their administrative and financial policies and procedures. While this checklist was not required, VA officials told us that they treated the satisfactory completion of this form as sufficient evidence that the grantee could adequately safeguard and account for grant funds. However, 3 of 16 grant files we reviewed contained neither this form nor any other documentation of the administrative and financial capabilities of the grantee. The forms of 3 others indicated that these grantees lacked certain administrative and financial policies and procedures. For example, one grantee indicated on its form that it did not have a written accounting manual or written policies and procedures for managing finances. Other aspects of some grantee applications were also limited. For example, 7 of the 16 grant applications we reviewed lacked clear documentation that the 7.5 percent limit on administrative expenses had been observed in proposed budgets. Similarly, we found that in 3 cases, full documentation of intended grantee partnerships was not clear. For example, one grantee’s application narrative referred to partners but did not specify the role of the partner organizations. As discussed in the next subsection, VA subsequently took action to keep instances of such documentation issues from recurring in future grant application and award processes.