For three brief periods during the first quarter of FY 1978, ACTION was required to operate without either an appropriation or a continuing resolution to support its domestic operations. During one of the periods, ACTION was also without obligational authority to support Peace Corps activities. The Investigative Staff found that during these periods, ACTION officials executed contracts, purchase orders, grants, and an interagency agreement in apparent violation of the Anti-Deficiency Statute. Also during these periods, obligations were incurred for staff travel and new employees were hired. In another instance, ACTION acknowledged three violations of the statute involving contracts in a total amount of over $22,000. While these unauthorized obligations were brought to the attention of the Director's office by the agency General Counsel, no action was taken to comply with requirements for reporting the violations to the Office of Management and Budget (OMB) and the Congress until long after the Investigative Staff made known its interest in the cases. The Investigative Staff found that some ACTION staff, including high-level officials, have been submitting improper expense vouchers for official travel in Peace Corps countries. Contrary to instructions in the Peace Corps manual, these employees have been provided lodging without charge in Government-leased quarters but have been claiming full per diem amounts. Apart from citing past practice, ACTION officials were unable to provide any satisfactory explanation as to why the regulations have been ignored. The Investigative Staff found other improprieties in the travel area. On at least three occasions, two employees had travel costs to Cuba and to the People's Republic of China subsidized with the understanding that the employees would share their experiences by writing trip reports. While the employees were not on official travel, reimbursement of partial expenses was, in effect, accomplished by not charging the travelers annual leave for the time away from the job. In February 1978, ACTION restructured its former Inspector General (IG) office and established in its place the Office of Compliance. In addition to being responsible for the usual IG functions of audit and investigation, the Office of Compliance supervises the agency's Equal Employment Opportunity (EEO) program. Further, as part of the restructuring, the former IG responsibility for reporting criminal violations to the The Investigative Staff is concerned about the compatibility of these changes with the interest of Congress in encouraging the establishment of independent Inspector General offices. The merger of EEO with IG functions creates the potential for a conflict of interest and is not in accord with Congressional intent on the subject of program responsibilities as stated in PL 95-452. Transfer of responsibility for liaison with other agencies is also contrary to the intent of Congress and detracts from the independence and organizational status of the IG function. CONCLUSIONS AND RECOMMENDATIONS The Investigative Staff's findings demonstrate the apparent weaknesses in ACTION's overall management of its personnel, procurement, and budget and finance programs. The findings concerning the National Grants Program not only demonstrate the inefficiencies in administering the $4 million program, but also the improper use and ineffectiveness of grants in meeting intended goals to reach low-income communities. This raises the question whether Congress should redirect or discontinue such grants in light of the improprieties identified. The recommendations that follow are directed toward improving overall management in the personnel, budget and finance, and procurement functions. Also, certain legislative considerations are set out which the Congress may wish to consider regarding the National Grants Program. To strengthen personnel management the Investigative Staff recommends that the Committee require ACTION to: - Adopt a firm, written policy to control foreign Develop reporting and management control procedures Reconsider the need for the increase in personnel To strengthen procurement management, the Investigative Staff recommends that the Committee require ACTION to: Issue an instruction requiring program office compliance with the Advance Procurement Planning procedure directed by Order 2620.1. Provide, by training or otherwise, for better orientation of program staff in the statutory and regulatory requirements governing the procurement process. To strengthen the budget and finance function and to preclude violations of the Anti-Deficiency Act and ACTION'S regulations, the Investigative Staff recommends that the Committee require ACTION to: - Develop controls for assuring that personnel authorized Report promptly Anti-Deficiency violations to OMB and the Congress, as required by the Statute. Observe the agency's own regulations and discontinue immediately the practice of reimbursing full per diem to travelers using Government-furnished quarters. To establish and assure independence of an Office of the Inspector General, the Committee may wish to consider having ACTION: - Review its current organization--the Office of The Investigative Staff suggests that the Congress may want to consider the following legislative matters concerning the National Grants Program: Prohibit further use of VISTA funds for National Review in depth the legislative history of the VISTA program and redefine Congressional intent with respect to program directions and volunteer activities. If Congress decides that the National Grants Program should not be terminated, but modified or redirected, the following recommendations are being made to improve program efficiency and effectiveness. ACTION should then be required to: Develop a more positive role for State offices in the development, implementation, and monitoring of National Grants projects. Conform with agency grant management regulations requiring on-site evaluation of potential projects, incorporation of project sponsors as nonprofit organizations, and unit cost ceilings. Require project sponsors to conform with agency instructions for quantifying and time-phasing project goals and objectives. Develop standards for identifying low-income communties consistent with Community Service Administration poverty income guidelines and assure those standards are met before VISTA volunteers are approved for a project. Evaluate potential sponsors more realistically for chances of community continuance of the organization without VISTA support. Develop more uniform standards for training of VISTA volunteers (standard and National Grant) both with respect to course content and length of training. I. INTRODUCTION A. Directive By directive dated March 22, 1978, the Committee requested that an investigation be made of certain policies, procedures, and practices of the ACTION agency. The investigation was to include but not necessarily be limited to: - personnel policies and practices, particularly with internal budgetary procedures, including the allotment the contracting policies of the agency. the selection of grantees in the VISTA program. B. Scope of the Investigation The information requested by the Committee was developed through interviews with ACTION management officials, both present and former, employees, grant project directors and supervisors, and VISTA volunteers. The Investigative Staff conducted interviews with more than 200 personnel employed or otherwise associated with the agency in a volunteer status. In addition to the interviews, ACTION files and documents pertaining to areas covered by the directive were reviewed. The regional offices of ACTION in Chicago, Ill., Boston, Mass., Atlanta, Ga., Dallas, Tex., and New York, N. Y., were visited. In addition, the State director offices in 12 States were visited, and contractor and 45 VISTA grantee projects in 22 States were also visited. In one instance, the Investigative Staff was refused, by the grantee, certain records and/or documents pertaining to a VISTA grant. C. Background Its ACTION was created as an independent agency under the provisions of Executive Order 11603, dated June 30, 1971, and Reorganization Plan 1 of 1971, effective July 1, 1971. legislative authorities are provided by the Peace Corps Act of 1961 for international operations and the Domestic Volunteer 44-548 079 - 7 |