Why OIG Did This Audit The National Institutes of Health’s (NIH) use of “other transactions” (OTs), which are special award instruments that are generally not subject to Federal laws and regulations that apply to traditional award instruments, increased by $314 million from 2016 to 2019. The Federal Government generally uses OTs for high-risk, high-reward research and development projects. Although OTs are subject to fewer restrictions than contracts, grants, or cooperative agreements, they must be awarded and administered in a way that ensures proper stewardship of Federal funds.From October 1, 2016, through September 30, 2019 (audit period), the NIH National Heart, Lung, and Blood Institute (NHLBI) awarded $84.3 million in Federal funds under 29 OTs.Our objective was to determine whether NHLBI complied with applicable Federal requirements for awarding and administering OTs.How OIG Did This AuditOur audit covered a judgmental sample of 12 OTs totaling $71.9 million that NHLBI awarded and administered during the audit period.Our audit procedures focused on whether NHLBI documentation for the sampled OTs provided evidence of compliance with Federal requirements. This audit is responsive to a U.S. Office of Special Counsel complaint referral.
Open Recommendations
| Recommendation Number | Significant Recommendation | Recommended Questioned Costs | Recommended Funds for Better Use | Additional Details | |
|---|---|---|---|---|---|
| 270463 | No | $0 | $0 | ||
| We recommend that the National Heart, Lung, and Blood Institute strengthen its internal controls for OTs by updating its policies and procedures to require that OT justification memos be signed, dated, and written or developed with involvement from appropriate parties, including OT Agreements Officers. | |||||
| 270464 | No | $0 | $0 | ||
| We recommend that the National Heart, Lung, and Blood Institute strengthen its internal controls for OTs by updating its policies and procedures to require that OT justification memos include explicit statements as to why a traditional award instrument could not be used for a project. | |||||
| 270465 | No | $0 | $0 | ||
| We recommend that the National Heart, Lung, and Blood Institute strengthen its internal controls for OTs by updating its policies and procedures to require that justifications for the continued use of OT authority be documented throughout the life of OT agreements with reconsideration required at a defined frequency. | |||||
| 270466 | No | $0 | $0 | ||
| We recommend that the National Heart, Lung, and Blood Institute strengthen its internal controls for OTs by updating its policies and procedures to specify requirements for determining and documenting the fairness and reasonableness of award amounts or cost estimates provided by OT award applicants. | |||||
| 270467 | No | $0 | $0 | ||
| We recommend that the National Heart, Lung, and Blood Institute strengthen its internal controls for OTs by updating its policies and procedures to specify requirements for determining and documenting the allowability of costs charged to OT awards. | |||||
| 270468 | No | $0 | $0 | ||
| We recommend that the National Heart, Lung, and Blood Institute strengthen its internal controls for OTs by updating its policies and procedures to specify requirements for determining and documenting its compliance with Federal funding requirements including the proper establishment of bona fide needs through specific work requirements prior to the obligation of OT funds. | |||||
