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Highlights

The U.S. insular areas of American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, and the U.S. Virgin Islands (USVI) face serious economic and fiscal challenges and rely on federal funding to deliver critical services. The Department of the Interior (Interior), through its Office of Insular Affairs (OIA), provides roughly $70 million in grant funds annually to increase insular area self-sufficiency. GAO and others have raised concerns regarding insular areas' internal control weaknesses, which increase the risk of grant fund mismanagement. GAO was asked to determine (1) whether previously reported internal control weaknesses have been addressed and, if not, to what extent they are prevalent among OIA grant projects; (2) the challenges, if any, insular areas face in implementing OIA grant projects; and (3) the extent to which OIA has taken action to improve grant project implementation and management. GAO reviewed a random sample of 173 OIA grant files, conducted site visits, and interviewed OIA and insular area officials.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Interior 1. To improve OIA's ability to require insular areas to efficiently complete projects and expend funds, the Secretary of the Interior should direct Interior's Office of the Solicitor to prepare a detailed written evaluation of OIA's existing authorities that could be used to ensure the more efficient use of funds by insular areas, and work with OIA officials to use such authorities as appropriate and to identify the need, if any, for additional authority. If the evaluation identifies the need for additional authorities, the Secretary should submit the evaluation to the Congress.
Closed - Implemented
In our March 2010 report on the Department of the Interior's Office of Insular Affairs' (OIA) grant oversight and management, we found that to improve OIA's ability to require insular areas to efficiently complete projects and expend funds, the Secretary of the Interior should direct Interior's Office of the Solicitor to prepare a detailed written evaluation of OIA's existing authorities that could be used to ensure the more efficient use of funds by insular areas, and work with OIA officials to use such authorities as appropriate and to identify the need, if any, for additional authority. If the evaluation identifies the need for additional authorities, the Secretary should submit the evaluation to the Congress. The Department of the Interior noted that OIA has a listing of regulations applicable to the insular areas, but concurred with our recommendation. According to an OIA official, OIA requested that the Department's Office of the Solicitor prepare the evaluation that we recommended and, as of July 2014, the draft evaluation was under review within the Office of the Solicitor.
Department of the Interior 2. To ensure that OIA's staffing needs are clearly and accurately communicated to key decision makers, the Secretary of the Interior should direct OIA to create a workforce plan and reflect in its plan the staffing levels necessary to adopt a proactive monitoring and oversight approach.
Closed - Implemented
In our March 2010 report on the Department of the Interior's Office of Insular Affairs' (OIA) grant oversight and management, we found that OIA officials reported that resource constraints impede effective project completion and proactive monitoring and oversight. However, OIA had not formally communicated additional resource needs to decision makers within Interior, specifically through a workforce plan or other formal process. Interior's own Workforce Planning Instruction Manual emphasizes that workforce planning is a fundamental tool, critical to quality performance that will contribute to the achievement of program objectives by providing a basis for justifying budget allocation and workload staffing levels. In order to ensure that OIA's staffing needs are clearly and accurately communicated to key decision makers, we recommended that the Secretary of the Interior direct OIA to create a workforce plan and reflect in its plan the staffing levels necessary to adopt a proactive monitoring and oversight approach. Interior's Assistant Secretary for Insular Affairs concurred with our recommendation. Based on our finding and recommendation, OIA has taken action to implement our recommendation. Specifically, in November 2010, OIA issued a 2010 Workforce Profile and Plan, which includes an assessment of OIA's current and projected workforce through 2014. It acknowledges gaps in staffing and outlines staffing solutions in order to further develop a proactive monitoring and oversight approach.
Department of the Interior 3. To reduce the impact that frequently shifting insular area priorities have on insular areas' incentives to complete projects and efficiently use federal funds, the Secretary of the Interior should direct OIA to develop criteria that establish when project redirection requests should be approved and when they should be denied and update its financial assistance manual with these criteria to clarify OIA policy on redirection. In developing these criteria, OIA should adopt guidelines that minimize ineffective project redirection. In addition, the Secretary should direct OIA to develop criteria that establish when offset or disallowed costs should be pursued.
Closed - Implemented
In our March 2010 report on the Department of the Interior's Office of Insular Affairs' (OIA) grant oversight and management, we found that OIA's current project redirection approval practices do little to discourage U.S. insular areas from redirecting project funds in ways that hinder project completion. Furthermore, OIA's policies for granting project redirection requests were not well documented. In order to reduce the impact that frequently shifting insular area priorities have on insular areas' incentives to complete projects and efficiently use federal funds, we recommended that the Secretary of the Interior direct OIA to develop criteria that establish when project redirection requests should be approved and when they should be denied and update its financial assistance manual with these criteria to clarify OIA policy on redirection. Interior's Assistant Secretary for Insular Affairs concurred with our recommendation. Based on our finding and recommendation, OIA has taken action to implement our recommendation. Specifically, in May 2010, OIA issued an updated financial assistance manual with criteria for redirecting project funds. The criteria include conditions upon which redirection requests will be approved and when OIA may disallow costs,which encourages project completion and a more efficient use of federal funds.

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