Welfare Reform:

Interim Report on Potential Ways to Strengthen Federal Oversight of State and Local Contracting

GAO-02-245: Published: Apr 23, 2002. Publicly Released: May 9, 2002.

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The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 changed the nation's cash assistance program for needy families with children by replacing the Aid to Families with Dependent Children program, with the Temporary Assistance for Needy Families (TANF) block grant. As specified in PRWORA, TANF's goals include ending the dependence of families receiving government benefits by promoting job preparation, work, and marriage; preventing and reducing the incidence of non-marital pregnancies; and encouraging two-parent families. Contracting with nongovernmental entities to provide TANF-funded services occurs in most states and exceeded $1.5 billion in federal and state funds in 2001. A GAO survey indicated that the most commonly contracted services included education and training, job placement, and support services to promote job entry or retention. The Department of Health and Human Services (HHS) relies primarily on state single audit reports to oversee TANF contracting by states and localities. HHS officials told GAO that their regional offices follow up on the TANF deficiencies identified and that HHS focuses on reported deficiencies that involve unallowable or questionable costs. However, HHS officials said that they do not know the extent and nature of problems pertaining to the oversight of nongovernmental TANF contractors that have been cited in state single audits. State and local governments rely on third parties to help ensure compliance with bid solicitation and contract award procedures, including bid protests, judicial processes, and external audits. They use various approaches to oversee TANF contractors, but problems persist in contract oversight and contractor performance.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: HHS did not agree with this recommendation and questioned whether it is consistent with the Single Audit Act of 1984, which seeks to ensure that federal agencies rely on and use single audit reports. In addition, HHS maintained that in light of significant staff reductions, the cost-benefit of this recommendation must be considered before adding or redirecting staff toward such an effort. The House passed a welfare reauthorization bill in the 109th Congress (H.R. 240, Section 113 (g)) that would have required HHS to implement the actions outlined in this recommendation. However, this provision was not included in the Deficit Reduction Act of 2005 (P.L. 109-171), the scaled-back version of welfare reform reauthorization signed into law on February 8, 2006.

    Recommendation: To facilitate improved oversight of TANF contractors by all levels of government, the Secretary of Health and Human Services should direct the Assistant Secretary for Children and Families to use state single audit reports in a more systematic manner to identify the extent and nature of problems related to state oversight of nongovernmental TANF contractors and determine what additional actions may be appropriate to help prevent and correct such problems.

    Agency Affected: Department of Health and Human Services


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