A program intended to give financial assistance to "socially disadvantaged" farmers is riddled with "broad and pervasive mismanagement," leading the U.S. Department of Agriculture inspector general to question millions of dollars in taxpayer funds.
The Office of Advocacy and Outreach (OAO), established by the 2008 Farm Bill, administered $38 million in grants in fiscal years 2010 and 2011. The Office of the Inspector General (OIG) found no supporting documentation for any of the grants issued in those years, and suggested that the USDA may have awarded them in violation of federal law.
"OIG found a pattern of broad and pervasive mismanagement of OAO grant funds in FYs 2010 and 2011," the audit said. "This occurred because grant approval processes were informal and undocumented and regulatory processes were disregarded."
Among the audit’s findings included $20 million in "potential" Anti-Deficiency Act violations issued under the OAO’s Socially Disadvantaged Farmers and Ranchers Program, also known as Section 2501.
The report found that the office issued grants to applicants "who may not have been the most meritorious," did not monitor grant spending, and did not ensure that recipients followed regulations.
The OIG questioned the program’s grants because the USDA did not use a competitive process, despite it being required by law.
"The selection of less meritorious applicants negatively impacts the assistance provided to socially disadvantaged farmers and ranchers, and could expose the Department to unnecessary criticism and potential legal action," the OIG said. "Overall, we question the merits of all 118 Section 2501 Program grants, totaling over $38 million, issued in FYs 2010 and 2011."
The OIG found similar problems with the program in prior audits, noting that lack of oversight of the program, nepotism, and conflicts of interest have been a "consistent theme."
A former USDA official told the OIG during a previous audit that "there seemed to be an effort to avoid putting anything in writing" for awarding grants.
The most recent audit found that the USDA did not have "documentation explaining why proposed applicants were or were not selected or any documentation to explain the criteria that were used to make the selections."
The OIG visited four grantees, each of which had violated the terms of their grants, including two that violated the "nepotism agreement clause."
"These violations included inadequate documentation of expenses, funds used after the grants had expired, a lack of transparency, and conflicts of interest," the OIG said.
The USDA did not visit the farmers or conduct desk reviews, even though monitoring is required.
"During site visits to the four grantees, we asked if any officials from OAO had either visited or contacted the grantees to perform any monitoring activities," the OIG said. "None of the grantees had been subjected to any formal monitoring review."
The program is meant to "enhance the viability and profitability of small farms and ranches, beginning farmers and ranchers, and socially disadvantaged farmers and ranchers."
"Socially disadvantaged farmer or rancher," is defined as a farmer or rancher who is "a member of a socially disadvantaged group."
Grants can be awarded to universities, community-based organizations and Indian tribes.
Despite widespread problems with the program, the 2014 Farm Bill reauthorized it, appropriating $30 million a year until 2018.