Report No. DODIG-2021-072 -

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Report No. DODIG-2021-072I n s pect or GeneralU.S. Department of DefenseAPRIL 2, 2021Audit of the Award andAdministration of theNational Guard Youth ChallengeProgram Cooperative AgreementsINTEGRITY INDEPENDENCE EXCELLENCE

Results in BriefAudit of the Award and Administration of the National GuardYouth Challenge Program Cooperative AgreementsApril 2, 2021Background (cont’d)ObjectiveThe Assistant Secretary of Defense for Manpower and ReserveAffairs is responsible for the management and oversight ofthe program and the Director of Manpower and Personnelfor the NGB is responsible for the issuance of guidanceand procedures for the program. The Office of YouthPrograms within the NGB is the primary office that overseesthe Challenge Program and is responsible for developingprocedures to execute the program and coordinating theallocation of Federal funds. In addition, the AssistantSecretary of Defense for Research and Engineering isresponsible for developing DoD cooperative agreementpolicies and procedures.The objective of this audit was to determinewhether the award and administration ofNational Guard Youth Challenge Programcooperative agreements were in accordancewith applicable Federal and DoD policies.We also determined whether three academieswe reviewed, Indiana Hoosier, KentuckyBluegrass, and Maryland Freestate ChallengeAcademies, achieved program goalsand objectives.BackgroundCooperative agreements are agreementsbetween Federal agencies and non-Federalentities to stimulate or support a publicpurpose. The National Guard Bureau (NGB)is the Federal agency responsible forexecuting the Challenge Program, includingawarding and administering cooperativeagreements for the program. Section 1091of the National Defense Authorization Actfor FY 1993 established the ChallengeProgram, which is designed to provideopportunities to adolescents who have leftschool before earning a high school diploma.The program’s goal is to improve education,life skills, and employment potentialof program participants. The programconsists of a 22-week residential programand a 12-month post-residential mentoringperiod. The Challenge Program budgetwas 199 million in FY 2020 and includedfunding to pay for costs associated with41 program academies across 30 states;Washington, D.C.; and Puerto Rico.FindingsThe NGB generally awarded and administered the ChallengeProgram cooperative agreements in accordance withapplicable Federal regulations and DoD policies. However,the NGB did not accurately budget for the academies becauseNGB officials instructed the academies to budget for a targetgraduation rate that did not consider each of the academies’historical attrition and graduation rates. As a result, thebudget process did not accurately reflect academies’ needsand costs. Therefore, an academy that has historically metor exceeded the NGB’s target graduation rate could receivethe same amount of funding as an academy that has nothistorically met the target graduation rate.In addition, for 3 years or longer the NGB United StatesProperty and Fiscal Officers did not complete cooperativeagreement closeouts for the Indiana Hoosier, KentuckyBluegrass, and Maryland Freestate Challenge Academiesbecause policy allowed the NGB United States Propertyand Fiscal Officers to repeatedly extend the deadline forthe academies to submit required closeout documentationand did not return funds promptly to the NGB Office ofYouth Programs. Closeouts should occur once the NGBUnited States Property and Fiscal Officers determine thatthe academy has completed all applicable administrativeactions and required work under the cooperative agreement.DODIG-2021-072 (Project No. D2020-D000AT-0142.000) i

Results in BriefAudit of the Award and Administration of the National GuardYouth Challenge Program Cooperative AgreementsFindings (cont’d)If the NGB United States Property and Fiscal Officersdo not close cooperative agreements in a timelymanner, funds that have not been expended could expireinstead of being returned to the NGB Office of YouthPrograms and put to better use. We determined theNGB United States Property and Fiscal Officers had notreturned 3,213 of excess Indiana Hoosier, KentuckyBluegrass, and Maryland Freestate Challenge Academyfunds for a 1-year period.Finally, while the Challenge Program is meeting itsgoal to provide opportunities for adolescents who haveleft school before earning a high school diploma, theNGB did not track long-term program benefits andcost-effectiveness because the NGB did not developa plan to measure program effectiveness. In addition,the academies did not consistently achieve annualgraduation requirements and goals because the NGBdid not incentivize the academies to meet requirements.Specifically, over the last 3 years the NGB did nottake any action to hold the academies accountablefor meeting their graduation requirements and goalsas required by the National Guard Youth ChallengeOperational Instruction. As a result, the DoD isunable to demonstrate that the Challenge Programand these academies are effective in meeting thelong-term benefits and short-term requirements andgoals of the program and the NGB could mismanagefunds by providing resources to academies that areconsistently underperforming.RecommendationsWe recommend that the Director of Manpower andPersonnel for the NGB: change how the academies develop theirannual budget request;ii DODIG-2021-072 (Project No. D2020-D000AT-0142.000) identify all Challenge Program cooperativeagreements that are still open after 1 year andeither close them out or require the grantee toexplain why they cannot be closed out; enforce Challenge Program requirements to holdaccountable the academies that are not meetingprogram requirements and goals or require theNGB Office of Youth Programs officials to obtaina waiver; and disapprove future state plans that do not complywith the NGB guidance.We recommend that the Assistant Secretary of Defensefor Manpower and Reserve Affairs, in coordination withthe Director of Manpower and Personnel for the NGB,establish and implement a plan to identify whetherthe Challenge Program is achieving long-term benefits,including a process for collecting cadet data beyond the1 year residential phase of the program.We recommend that the Executive Director ofAcquisition for the NGB provide NGB officials guidanceand training on the prompt return of deobligated funds.We recommend that the Office of the Under Secretaryof Defense for Research and Engineering issue guidancethat emphasizes that awarding agencies close outcooperative agreements within 1 year of the endof the period of performance.Management Commentsand Our ResponseThe Principal Deputy Director of Defense Research andEngineering for Research and Technology, responding forthe Office of the Under Secretary of Defense for Researchand Engineering, agreed with the recommendationto issue guidance on the timely closeout of the grantsand cooperative agreement awards. Therefore, the

Results in BriefAudit of the Award and Administration of the National GuardYouth Challenge Program Cooperative AgreementsComments (cont’d)recommendation is resolved but will remain open.We will close the recommendation once managementprovides documentation demonstrating that the agreedto action has been completed.The Assistant Secretary of Defense for Manpowerand Reserve Affairs agreed with the recommendationand is working to obtain a System of Record Noticeapproval for long-term tracking of graduates to allowthe DoD to track graduates data beyond 1 year anddetermine return on investment. Therefore, therecommendation is resolved but will remain open.We will close the recommendation once the AssistantSecretary provides documentation of his plan forachieving long-term benefits, including the approvedSystem of Record Notice, record retention schedule,and privacy impact assessment.The Director of Staff for the NGB, responding for theDirector of Manpower and Personnel for the NGB, agreedwith the recommendations stating that the NGB would: rely more heavily on recent past performancein developing future annual budget requests, require the NGB Office of Youth Programs toobtain a waiver and explanation from any academythat does not meet program requirements andgoals, and look closer at proposed graduation levels anddevelop a quicker response to academies thatare not meeting graduation requirements.In addition, the Director, responding for the ExecutiveDirector of Acquisition for the NGB, agreed withthe recommendation to issue policy and providetraining that offers guidance on the prompt returnof deobligated funds. Therefore, the recommendationsare resolved but will remain open. We will closethe recommendations once management providesdocumentation demonstrating that the agreed toactions have been completed.Please see the Recommendations Table on the next pagefor the status of recommendations. coordinate annually with States and NGBUnited States Property and Fiscal Officers toensure that cooperative agreements are closed outand obtain an explanation for Challenge Programcooperative agreements that are still open 1 yearafter the period of performance has ended,DODIG-2021-072 (Project No. D2020-D000AT-0142.000) iii

Recommendations TableManagementRecommendations Recommendations RecommendationsUnresolvedResolvedClosedOffice of the Under Secretary of Defensefor Research and EngineeringB.3Assistant Secretary of Defense for Manpowerand Reserve AffairsC.1Director of Manpower and Personnel for theNational Guard BureauA.1, B.1, C.2.a,C.2.bExecutive Director of Acquisition for theNational Guard BureauB.2Note: The following categories are used to describe agency management’s comments to individual recommendations. Unresolved – Management has not agreed to implement the recommendation or has not proposed actions that willaddress the recommendation. Resolved – Management agreed to implement the recommendation or has proposed actions that will address theunderlying finding that generated the recommendation. Closed – OIG verified that the agreed upon corrective actions were implemented.iv DODIG-2021-072 (Project No. D2020-D000AT-0142.000)

INSPECTOR GENERALDEPARTMENT OF DEFENSE4800 MARK CENTER DRIVEALEXANDRIA, VIRGINIA 22350-1500April 2, 2021MEMORANDUM FOR UNDER SECRETARY OF DEFENSE FOR RESEARCH AND ENGINEERINGUNDER SECRETARY OF DEFENSE FOR PERSONNEL AND READINESSCHIEF, NATIONAL GUARD BUREAUSUBJECT: Audit of the Award and Administration of the National Guard Youth ChallengeProgram Cooperative Agreements (Report No. DODIG-2021-072)This final report provides the results of the DoD Office of Inspector General’s audit.We previously provided copies of the draft report and requested written comments onthe recommendations. We considered managements’ comments on the draft report whenpreparing the final report. These comments are included in the report.The Office of the Under Secretary of Defense for Research and Engineering, AssistantSecretary of Defense for Manpower and Reserve Affairs, the Director of Manpower andPersonnel for the National Guard Bureau, and the Executive Director of Acquisition for theNational Guard Bureau agreed to address the recommendations addressed to them in thereport; therefore, we consider those recommendations resolved and open. As described inthe Recommendations, Management Comments, and Our Response section of this report,we will close the recommendations when you provide us documentation showing that allagreed-upon actions to implement the recommendations are completed. Therefore, pleaseprovide us within 90 days your response concerning specific actions in process or completedon the recommendations. Send your response to either fif unclassifiedorif classified SECRET.If you have any questions, please contact me atTheresa S. HullAssistant Inspector General for AuditAcquisition, Contracting, and SustainmentDODIG-2021-072 v

ContentsIntroductionObjective. 1Background. 1Review of Internal Controls. 3Management Comments on the Results in Brief and Background. 3FindingsFinding A. The NGB Did Not Accurately Budget for the Academies. . 4Conclusion. 6Management Comments on Finding and Our Response. 7Recommendation, Management Comments, and Our Response. . 7Finding B. The NGB Did Not Close Out Cooperative Agreements in aTimely Manner for Three Academies. 8Conclusion. 11Recommendations, Management Comments, and Our Response. . 12Finding C. The NGB Did Not Track Long-Term Program Benefits orEnsure Academies Met Performance Requirements and Goals .