District unveils new rules for monitoring tax-funded grants

By Tim Craig
Washington Post Staff Writer
Thursday, December 31, 2009; B05

The Fenty administration unveiled new rules Wednesday for how city agencies will monitor the estimated $2.5 billion in taxpayer-funded grants that are handed over annually to nonprofit and other private organizations.

At a news conference at Judiciary Square, Mayor Adrian M. Fenty (D) and Attorney General Peter Nickles said the new guidelines will affect not only local grants but also federal money that the District is charged with distributing.

The new rule book, "City-wide Grants Manual and Sourcebook," marks the first time that the city has a uniform policy for how grant monies are doled out and comes at a time when some city agencies and officials have been criticized for failing to detect fraud, waste and abuse by some grant recipients.

"This will be my lasting legacy because long after I am gone, the District will have rules for dealing with one-quarter of its budget," said Nickles, who spent the past six months working with the Office of Partnerships and Grants to develop the guidelines.

Many of the rules in the sourcebook are not new, such as the requirement that most grants be competitively bid. But Nickles said the new regulations will guarantee that all agencies across the government are more closely monitoring how tax dollars are spent.

The uniform rules, which apply to about 30 agencies and departments, come as the D.C. HIV/AIDS Administration has come under fire in a Washington Post investigation about the mismanagement of its grants to nonprofits. The D.C. Council also has been struggling to respond to questions about $50 million in earmark grants it issued last year. The Fenty administration also was criticized last year for doling out millions of dollars to nonprofits for the mayor's Summer Youth Employment Program.

Under the order signed by Fenty on Wednesday, all agencies will be expected to competitively bid most grant requests, although "sole source" contracts are permitted in specific circumstances. The mayor and council can also continue to direct earmarks to individual organizations, but those recipients will have to abide by more aggressive oversight.

After an organization receives a grant, the new policy requires agencies to "maintain records sufficient to detail the significant history of each award."

Recipients will also have to sign sworn statements agreeing to abide by various rules and regulations. Agencies will be required to submit annual audits justifying how the money was spent.

"You cannot have a government operating without clear standards, clear procedures for the granting of public dollars . . . but that is what we've had in Washington, D.C.," Fenty said.

In previous administrations, Nickles said, different agencies had separate policies for how they awarded and monitored grant monies, which made it hard for city leaders to track how tax dollars were being spent.

"The council would say, 'Here is $10 million for troubled youths,' " Nickles said. "Some agencies would have no rules. Some would have some rules. Some would have comprehensive rules but no enforcement."

The release of the handbook comes as Fenty, who is expected to seek reelection next year, and other city leaders face mounting questions about how they have been spending tax dollars.

Since 2005, the council has overseen the allocation of nearly $150 million in earmarks, which are grants that the mayor or council members can designate to individual organizations.

Until last year, the council had no rules governing earmarks. But Council Chairman Vincent C. Gray (D) started pushing for reforms last summer, when he capped earmarks at $250,000 for non-capital projects and $1 million for capital projects.

Still, D.C. Auditor Deborah K. Nichols issued a report two weeks ago concluding there was "significant financial and management deficiencies" in the council's earmark process last year.

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