Sneak Preview: DOT OIG Seeks Updated Oversight of R&D Awards

(The following was excerpted from a recent article in the Single Audit Information Service.) Although officials with Department of Transportation’s (DOT) Federal Highway Administration (FHWA) and Office of Senior Procurement Executive (OSPE) said that they refer to the Office of Management and Budget’s (OMB) uniform grant guidance for provisions on administering highway and vehicle safety research and development (R&D) agreements with for-profit and foreign entities, the DOT Office of Inspector General (OIG), in a recent audit, urged them to do more. It explained that the agency and office should update their internal financial policies and procedures, and future agreements, to specifically detail administrative requirements that apply to these types of agreements.

From federal fiscal year (FY) 2012 to FY 2016, FHWA, the National Highway Transportation Safety Administration (NHTSA) and the DOT Office of the Assistant Secretary for Research and Technology (OST-R) awarded about $501 million in highway and vehicle safety R&D grants and cooperative agreements. In FY 2017, FHWA was appropriated $152 million and NHTSA issued $90 million under this program for grants, cooperative agreements and cooperative research and development agreements (CRADA). OSPE develops departmental policy for awarding and overseeing R&D agreements and acquisitions.

OIG recently reviewed these grants and agreements to assess DOT’s policies and procedures for selection and oversight, as well as how FHWA, NHTSA and OST-R were complying with the associated policies and procedures. It evaluated a sample of 44 grants and cooperative agreements awarded from FY 2012-2016, and 69 financial transactions during that period.

OIG found that FHWA and NHTSA had gaps in their policies and procedures for entering into agreements to conduct highway and vehicle safety R&D with for-profit and foreign entities. For example, when the sampled awards were issued, DOT’s former Financial Assistance Guidance Manual, issued in 2009, required DOT operating administrations to apply OMB uniform administrative requirements based on the prior OMB circulars for nonprofit recipients of federal funds to for-profit recipients as well. Neither FHWA nor NHTSA had financial assistance policies that sufficiently identified what, if any, administrative requirements they should apply to for-profit recipients of financial assistance. “Although NHTSA’s standard financial assistance provisions state that the same administrative requirements apply to for-profit organizations as nonprofits, these provisions have not been updated since 1995 and refer to DOT regulations that no longer exist,” OIG stated.

In 2017, FHWA issued an order updating its policies for discretionary financial assistance that incorporates by reference the 2009 manual. However, because the 2009 manual was replaced in 2016 with an interim version that no longer specifies what administrative requirements apply to for-profit organizations, OIG said that FHWA still does not have specific or up-to-date policies that address this issue.

(The full version of this story has now been made available to all for a limited time here.)
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