DOL Investigated for Non-Competitive Grants, Millions Given Out Without Proper Documentation

The U.S. Labor Department’s watchdog has sounded an alarm about the way the Department’s Employment and Training Administration handed out grants for a key training program.

In a recently published report, the Labor Department’s Office of Inspector General found that ETA did not adequately justify decisions to give out non-competitive awards for the High Growth Job Training Initiative.

“ETA could not demonstrate that it made the best decisions in awarding grants to carry out HGJTI,” the report says.

The initiative is a program to prepare workers for jobs in high-growth, high-demand and economically vital industries, such as health care and advanced manufacturing. From July 2001 through March 2007, ETA gave out 157 grants for the initiative totaling $271 million. Of those, 133 grants totaling $235 million were awarded through non-competitive procurement methods. One grant for $7 million was awarded to a specific entity based on congressional direction, according to the report.

The Office of Inspector General examined 39 non-competitive awards and concluded that “ETA could not demonstrate that it followed proper procurement procedures” in 35 of them. Those 35 awards totaled $57 million.

“Specifically,” the report says, “decisions to award 10 non-competitive grants were not adequately justified, reviews of unsolicited proposals were not consistently documented, and matching requirements of $34 million were not carried forward in grant modifications.”

The report says Emily DeRocco, who heads ETA, “strongly disagreed” with findings related to the procurement practices used for non-competitive grants. “The Assistant Secretary further stated that sufficient documentation had been provided to support that the awards met departmental policy regarding non-competitive procurement,” the report states.

Among the problematic awards, according to the report, were a grant of $5,935,402 to the State of Arkansas Department of Workforce Service in March 2006, a grant of $5,065,000 to the National Retail Federation Foundation in May 2003, and a grant of $4,268,454 to the Home Builders Institute in December 2004.

The report came in response to a request from Sen. Tom Harkin, D-Iowa. Harkin’s office did not immediately respond to a request for comment.

In a recent essay published by the Center for American Progress think tank, author Scott Lilly asked about the extent to which non-competitive grants have been given by ETA. “[I]t should be noted that the ‘High Growth Job Training Initiative’ represents less than one percent of the almost $10 billion a year budget under DeRocco’s control, and appears to represent only a small portion of the total non-competitive grant activity in which DeRocco has been engaged,” Lilly wrote. The center is headed by John Podesta, former chief of staff to President Bill Clinton.

The November Inspector General report isn’t the only time DeRocco has landed in hot water. A 2005 Inspector General report about the award of National Emergency Grant funds found that ETA was inconsistent in applying federal procurement rules and regulations with which the department was responsible for ensuring compliance. (Link opens an Acrobat document in a new window.)

DeRocco also came under fire for ETA’s move earlier this year to shutter America’s Job Bank, a public online job board. The Labor Department cited outdated technology and claimed that America’s Job Bank duplicated what was already available in the private sector. But the department declined to make public any comprehensive study weighing the pros and cons of America’s Job Bank and justifying the decision to close it, despite the fact there was a good deal of evidence that argued for the site’s preservation.

–Ed Frauenheim