Community Development:

Neighborhood Reinvestment Corporation Should Improve Program Management

RCED-92-174: Published: Jul 8, 1992. Publicly Released: Aug 8, 1992.

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Judy A. England Joseph
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Pursuant to a congressional request, GAO provided information on the Neighborhood Reinvestment Corporation and its NeighborWorks organizations, focusing on: (1) the oversight of local neighborhood organizations; (2) grant management practices; and (3) competition requirements for contracting for goods and professional services.

GAO found that: (1) 94 percent of the Corporation's 1992 budget came from federal appropriations totalling $28.6 million; (2) the Corporation lacks assurances that program reviews and financial audits receive adequate oversight; (3) poor oversight of grant management led to the Corporation's failure to detect grant funds being spent without necessary Corporation approval; (4) the Corporation lowered its competitive bid threshold to increase competition, but its threshold is still above that of most federal agencies; and (5) in 1991, the Corporation awarded six noncompetitive contracts to former employees.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The NRC did assess its process to incease competitive bidding and implement a new contract process which established a pool of qualified consultants and contractors for professional services.

    Recommendation: The Executive Director, Neighborhood Reinvestment Corporation, should assess whether the process to increase competitive bidding is effective, and, if found lacking, evaluate lowering the threshold for competitive bidding.

    Agency Affected: Neighborhood Reinvestment Corp.

  2. Status: Closed - Implemented

    Comments: NRC has revised Section 903 of its policy manual to require that all contracts with former employees need the pre-approval of NRC's Executive Director.

    Recommendation: The Executive Director, Neighborhood Reinvestment Corporation, should ensure that the Corporation's administrative manual is revised to specifically require that the Executive Director approve all sole-source contracts awarded to former employees.

    Agency Affected: Neighborhood Reinvestment Corp.


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