The State Department's Office of Inspector General has released another “management alert” detailing rampant mismanagement within the agency, much of it during Secretary of State Hillary Clinton's tenure.
The inspector general’s latest “management alert” — the third released by the agency's internal watchdog in a little over a year — warns that the State Department’s management and oversight of grants has become a serious financial liability.
“The management and oversight of grants poses heightened financial risk to the Department of State,” Inspector General Steve A. Linick said in a report dated Sept. 26 but released Sept. 30.
Linick became the agency’s inspector general in September 2013, ending a vacancy that had lasted nearly six years.
After Linick assumed the role, he almost immediately issued two "management alerts." The latest alert in September marks the third of its kind in the IG’s history. Each alert issued by Linick has related to issues that festered and went unaddressed during Hillary Clinton’s tenure.
The State Department’s grant program spends more than $1 billion annually, and this amount will likely continue to spiral out of control due to the fact that the program has terrible management, the IG reported.
“In FY 2012, the Department obligated more than $1.6 billion for approximately 14,000 grants and cooperative agreements worldwide,” Linick reported. “The Office of Inspector General … and other oversight agencies have identified a number of significant deficiencies in the grant-management process.
“Audits conducted by OIG have reported similar deficiencies, including insufficient oversight caused by too few staff managing too many grants, insufficient training of grant officials, and inadequate documentation and closeout of grant activities,” he added.
Oddly, the State Department has made it a habit to outsource the job of awarding grants to contractors in many overseas locations.
"GAO has also reported on the Department’s grant workforce shortage and criticized the over-reliance on contractor employees to oversee grants in Iraq and Afghanistan, which it concluded could lead to conflicts of interest and the potential for loss of government control and accountability for mission-related policy, as well as waste, fraud, and abuse,” the report said.
Unfortunately, the grants issue is not exactly new: The Inspector General's office identified this problem back in 2008, shortly before President Obama was inaugurated. Even more unfortunate is the fact that little or no effort has been spent on fixing the issue since.
In response to the agency’s failings in this area, the IG suggested that the agency take "immediate action" to fix its "unacceptable lack of internal control" in regard to the grants program, which exposes the agency to "significant financial risk.”
“The Department should take immediate action to ensure that adequate numbers of properly trained [Grants Officers] and [Grants Officer Representatives] are assigned, required documentation is maintained in grant files, and expired grants are closed out in a timely manner. The failure to maintain appropriate oversight over grants results in an unacceptable lack of internal control and exposes the Department to significant financial risk,” the report reads.
Failure to address the department's grant management, the IG argued, would of course open the door to corruption and fraud.
“These conditions could lead to the misuse or misappropriation of grant funds, failure to meet grant program objectives, or the inability to use unobligated grant funds before they expire,” the report noted. “Furthermore, the lack of documentation impairs OIG oversight of Department programs and operations that administer or finance grants, and it creates conditions conducive to fraud, where corrupt individuals may attempt to conceal evidence of illicit behavior by omitting key documents from grant files.”