Oversight Lax on Labor Grants, Audit Says

By Carol D. Leonnig
Washington Post Staff Writer
Wednesday, April 30, 2008

In the past seven years, the Labor Department awarded more than $271 million to groups to help train workers for high-demand jobs, but a new audit suggests that the agency often failed to ensure the public was getting something for its tax dollars.

The Labor Department inspector general found that one of President Bush's signature initiatives to better prepare the American workforce for industry changes was giving money to industry and nonprofit groups with almost no competition and little oversight. The department often failed to set clear objectives for its worker training grants and failed to ensure that some grant promises were fulfilled, the audit found in a sample review of training projects.

The audit scrutinized 10 training grants worth $15.5 million, roughly 6 percent of the grants provided under the president's High Growth Job Training Initiative. Seven of 10 groups did not meet all of their objectives, according to Labor Department Inspector General Gordon S. Heddell; six did not have clearly defined objectives to measure their performance.

Sen. Tom Harkin (D-Iowa) who commissioned the audit as chairman of the Senate Appropriations subcommittee that oversees the Labor Department, said the report shows that Labor Secretary Elaine L. Chao did not make good decisions when she asked the public to trust her discretion in awarding worker training grants.

"This report reveals a double insult for American taxpayers -- not only did the Bush administration's Labor Department handpick the organizations to receive DOL grants, but many of those organizations failed to deliver measurable results," Harkin said.

The Labor Department disputed the audit's conclusions in a 30-page response to Heddell's office last week. Brent Orrell, acting assistant secretary for the Employment and Training Administration, which was supposed to monitor the grants, wrote that it was "not necessary or valuable" to measure and evaluate all grant results.

The department "strongly disagrees with many of the findings and characterizations of the initiative in the OIG's second audit report," Orrell wrote. "The agency continues to believe that its strategic approach . . . was prudent, necessary, and successful."

The early lack of competition for grants, flagged last year as a problem in a companion inspector general's report, continued to concern auditors. In the 2007 report, auditors found that 87 percent of grants were awarded without competition and that the department had failed to follow proper procedures in 90 percent of the noncompetitive awards reviewed. Chao and her deputies said then that competition was not needed because the winning groups had pledged to provide matching funds to help expand the influence of the agency's training effort.

In this report, the auditors found that grant winners had originally promised to devote $42 million in matching funds. The groups could document providing only about $21 million, the audit said.

The Labor Department disputed that the Employment and Training Administration failed to provide proper monitoring, but the report said the agency did not dispute that 6 out of the 10 grant winners did not receive any desk review or on-site monitoring.

In one example, the National Retail Federation received a $2.8 million grant, later increased to $5.1 million, to help train and place retail workers. The department justified the increase partly on a pledge made by Toys "R" Us and Saks to provide $9.3 million in additional resources toward the goal. Auditors said the amounts claimed by the companies were not allowed because they weren't relevant to the grant.

The National Retail Federation pledged to place 2,500 job seekers but could prove it placed only 1,443, or 58 percent of its goal, auditors said. Federation spokesman Scott Krugman said the group disagreed with auditors' methods for counting which job seekers qualified and which expenses could be applied toward matching funds.

Staff researcher Madonna Lebling contributed to this report.

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