62 Percent of Labor Department’s International Grants Missing Documentation

GAO: ‘Uncertainty about whether Labor followed all of its procedures’

Tom Perez / AP
May 16, 2014

More than half of international grants distributed by the Labor Department are missing documentation, according to the Government Accountability Office (GAO).

The Department of Labor’s Bureau of International Labor Affairs (ILAB) distributed roughly $70 million in awards to improve working conditions overseas and fight child labor last year. However, 62 percent of these grants lacked proper documentation.

Sens. Orrin Hatch (R., Utah) and Lamar Alexander (R., Tenn.) warned that funds are being misused in light of the GAO report, requested by the senators and released on Thursday.

"Today’s report shows that the lack of internal controls at the Department of Labor means these grants, meant to improve labor standards and to combat child labor, could instead be funding organizations that have actually been banned from partnering with the federal government," said Hatch, ranking member on the Senate Finance Committee, in a statement.

"The lack of documentation on the awarding of these grants to foreign countries is both reckless and irresponsible, especially in the current environment of fiscal restraint and budget cuts," he said.

For their review, the GAO examined 26 grant award files, and found that more than half were missing documents, and 15 percent had no accompanying documentation at all.

"Lack of readily available documentation causes uncertainty about whether Labor followed all of its procedures," the GAO said. "Without such assurance, achieved through sufficient internal controls, that Labor is following its grant award procedures, ILAB is at increased risk of not meeting the goals of its programs."

The grants reviewed represent roughly 44 percent of ILAB funding, and included seven major awards worth $10 million or more.

Missing documents included conflict of interest forms, approval paperwork by the Labor Procurement Review Board, and the "excluded parties list," which identifies whether an applying organization is prohibited from receiving funding. Eight grants were missing evidence that the Labor Department had searched the excluded parties list.

The senators, citing the GAO report, said the lack of proper documentation increases the chances that projects will fail.

"Internal control serves as the first line of defense in safeguarding assets and preventing and detecting errors and fraud, including ensuring that Labor does not award grants to organizations that have been debarred from doing business with the federal government," the GAO said. "Without such assurance that Labor is following its grant award procedures, these programs are at increased risk."

Overall, $56 million in grants from the child labor office, and $13.5 million in technical assistance projects were issued in fiscal year 2013.

Hatch said the government should not be awarding such high dollar contracts if it cannot keep track where the funding is going.

"The Department of Labor should not be dumping millions of dollars abroad without ensuring that the funds are used correctly and responsibly, and I urge the Secretary of Labor to heed GAO’s recommendations on implementing proper internal controls regarding these grants," he said.

The issue with grants lacking proper documentation is not new. The Labor Department’s Office of the Inspector General (OIG) issued a report in March 2012 that found as much as $23.1 in funding for contracts that had documentation problems.

"We could not always determine that the department’s procurement actions were proper," the OIG said at the time.

"Taxpayers should be doubly offended by GAO’s report—not only are millions of their hard-earned dollars being used to support labor unions in foreign countries, those dollars are also being mismanaged," Alexander, ranking member on the HELP Committee, said. "The pattern of negligence revealed by GAO demands immediate action from Secretary [Thomas] Perez."