GAO Recommends More Stimulus-Fund Oversight
By| August 11, 2010
In a special report to Congress, the U.S. Government Accountability Office (GAO) regarding broadband stimulus funding recommends continued monitoring of grant and loan recipients.
The American Recovery and Reinvestment Act (Recovery Act) provided $7.2 billion to the Department of Commerce’s National Telecommunications and Information Administration (NTIA) and the Department of Agriculture’s Rural Utilities Service (RUS) for grants or loans to a variety of program applicants. The agencies are awarding funds in two rounds and must award all funds by Sept. 30.
Recovery Act: Further Opportunities Exist to Strengthen Oversight of Broadband Stimulus Programs (GAO-10-823) addresses the results of the first broadband stimulus funding round, the extent to which NTIA’s and RUS’s application reviews substantiated application information, the challenges facing NTIA and RUS in awarding the remaining funds, and actions taken to oversee grant and loan recipients.
During its research, the GAO analyzed program documentation, reviewed a “judgmentally selected” sample of applications from first round award recipients, and interviewed agency officials and industry stakeholders.
According to the report, the NTIA and RUS “consistently substantiated information in first round award recipients’ applications. The agencies and their contractors reviewed financial, technical, environmental, and other documents and determined the feasibility and reasonableness of each project.”
In addition, “GAO’s review of 32 award recipient applications found that the agencies consistently reviewed the applications and substantiated the information as specified in the first funding notice. In each of the files, GAO observed written documentation that the agencies and their contractors reviewed and verified pertinent application materials, and requested additional documentation where necessary.”
However, to meet the Sept. 30 deadline, NTIA and RUS is working a little faster to earmark the some $4.8 billion (more than twice the amount awarded during the first round of funding) in less time than they had for the first round. Aside from this timing pressure, “the agencies may face increased pressure to approve awards. NTIA and RUS also lack detailed data on the availability of broadband service throughout the country, making it difficult to determine whether a proposed service area is unserved or underserved, as defined in the program funding notices,” GAO wrote.
As such, GAO said NTIA and RUS have streamlined their application process in these ways: eliminating joint reviews and reducing the number of steps in the due-diligence review process, and using Census tract data to verify the presence of service.
As a result, GAO concludes that stringent oversight is needed moving forward: “NTIA and RUS are putting oversight plans in place to monitor compliance and progress for broadband stimulus funding recipients, but some risks remain. The agencies will need to oversee far more projects than in the past and these projects are likely to be much larger and more diverse than projects funded under the agencies’ prior broadband-related programs.”
The report continued, “Additionally, NTIA and RUS must ensure that the recipients construct the infrastructure projects in the entire project area, not simply the area where it may be most profitable for the company to provide service. Both NTIA and RUS face the risk of having insufficient resources to actively monitor Recovery Act funded broadband projects. Because of this, planning for a possible lack of resources for program oversight after September 30, 2010, can help the agencies mitigate the effect of limited resources on post-award oversight.”