Publicly Released: April 6, 2021
The objective of this audit was to determine whether the award and administration of National Guard Youth Challenge Program cooperative agreements were in accordance with applicable Federal and DoD policies. We also determined whether three academies we reviewed, Indiana Hoosier, Kentucky Bluegrass, and Maryland Freestate Challenge Academies, achieved program goals and objectives.
Cooperative agreements are agreements between Federal agencies and non-Federal entities to stimulate or support a public purpose. The National Guard Bureau (NGB) is the Federal agency responsible for executing the Challenge Program, including awarding and administering cooperative agreements for the program. Section 1091 of the National Defense Authorization Act for FY 1993 established the Challenge Program, which is designed to provide opportunities to adolescents who have left school before earning a high school diploma. The program’s goal is to improve education, life skills, and employment potential of program participants. The program consists of a 22-week residential program and a 12-month post-residential mentoring period. The Challenge Program budget was $199 million in FY 2020 and included funding to pay for costs associated with 41 program academies across 30 states; Washington, D.C.; and Puerto Rico.
The Assistant Secretary of Defense for Manpower and Reserve Affairs is responsible for the management and oversight of the program and the Director of Manpower and Personnel for the NGB is responsible for the issuance of guidance and procedures for the program. The Office of Youth Programs within the NGB is the primary office that oversees the Challenge Program and is responsible for developing procedures to execute the program and coordinating the allocation of Federal funds. In addition, the Assistant Secretary of Defense for Research and Engineering is responsible for developing DoD cooperative agreement policies and procedures.
The NGB generally awarded and administered the Challenge Program cooperative agreements in accordance with applicable Federal regulations and DoD policies. However, the NGB did not accurately budget for the academies because NGB officials instructed the academies to budget for a target graduation rate that did not consider each of the academies’ historical attrition and graduation rates. As a result, the budget process did not accurately reflect academies’ needs and costs. Therefore, an academy that has historically met or exceeded the NGB’s target graduation rate could receive the same amount of funding as an academy that has not historically met the target graduation rate.
In addition, for 3 years or longer the NGB United States Property and Fiscal Officers did not complete cooperative agreement closeouts for the Indiana Hoosier, Kentucky Bluegrass, and Maryland Freestate Challenge Academies because policy allowed the NGB United States Property and Fiscal Officers to repeatedly extend the deadline for the academies to submit required closeout documentation and did not return funds promptly to the NGB Office of Youth Programs. Closeouts should occur once the NGB United States Property and Fiscal Officers determine that the academy has completed all applicable administrative actions and required work under the cooperative agreement.
If the NGB United States Property and Fiscal Officers do not close cooperative agreements in a timely manner, funds that have not been expended could expire instead of being returned to the NGB Office of Youth Programs and put to better use. We determined the NGB United States Property and Fiscal Officers had not returned $3,213 of excess Indiana Hoosier, Kentucky Bluegrass, and Maryland Freestate Challenge Academy funds for a 1-year period.
Finally, while the Challenge Program is meeting its goal to provide opportunities for adolescents who have left school before earning a high school diploma, the NGB did not track long-term program benefits and cost-effectiveness because the NGB did not develop a plan to measure program effectiveness. In addition, the academies did not consistently achieve annual graduation requirements and goals because the NGB did not incentivize the academies to meet requirements. Specifically, over the last 3 years the NGB did not take any action to hold the academies accountable for meeting their graduation requirements and goals as required by the National Guard Youth Challenge Operational Instruction. As a result, the DoD is unable to demonstrate that the Challenge Program and these academies are effective in meeting the long-term benefits and short-term requirements and goals of the program and the NGB could mismanage funds by providing resources to academies that are consistently underperforming.
We recommend that the Director of Manpower and Personnel for the NGB:
- change how the academies develop their annual budget request;
- identify all Challenge Program cooperative agreements that are still open after 1 year and either close them out or require the grantee to explain why they cannot be closed out;
- enforce Challenge Program requirements to hold accountable the academies that are not meeting program requirements and goals or require the NGB Office of Youth Programs officials to obtain a waiver; and
- disapprove future state plans that do not comply with the NGB guidance.
We recommend that the Assistant Secretary of Defense for Manpower and Reserve Affairs, in coordination with the Director of Manpower and Personnel for the NGB, establish and implement a plan to identify whether the Challenge Program is achieving long-term benefits, including a process for collecting cadet data beyond the 1 year residential phase of the program.
We recommend that the Executive Director of Acquisition for the NGB provide NGB officials guidance and training on the prompt return of deobligated funds.
We recommend that the Office of the Under Secretary of Defense for Research and Engineering issue guidance that emphasizes that awarding agencies close out cooperative agreements within 1 year of the end of the period of performance.
Management Comments and Our Response
The Principal Deputy Director of Defense Research and Engineering for Research and Technology, responding for the Office of the Under Secretary of Defense for Research and Engineering, agreed with the recommendation to issue guidance on the timely closeout of the grants and cooperative agreement awards. Therefore, the recommendation is resolved but will remain open. We will close the recommendation once management provides documentation demonstrating that the agreed to action has been completed.
The Assistant Secretary of Defense for Manpower and Reserve Affairs agreed with the recommendation and is working to obtain a System of Record Notice approval for long-term tracking of graduates to allow the DoD to track graduates data beyond 1 year and determine return on investment. Therefore, the recommendation is resolved but will remain open. We will close the recommendation once the Assistant Secretary provides documentation of his plan for achieving long-term benefits, including the approved System of Record Notice, record retention schedule, and privacy impact assessment.
The Director of Staff for the NGB, responding for the Director of Manpower and Personnel for the NGB, agreed with the recommendations stating that the NGB would:
- rely more heavily on recent past performance in developing future annual budget requests,
- coordinate annually with States and NGB United States Property and Fiscal Officers to ensure that cooperative agreements are closed out and obtain an explanation for Challenge Program cooperative agreements that are still open 1 year after the period of performance has ended,
- require the NGB Office of Youth Programs to obtain a waiver and explanation from any academy that does not meet program requirements and goals, and
- look closer at proposed graduation levels and develop a quicker response to academies that are not meeting graduation requirements.
In addition, the Director, responding for the Executive Director of Acquisition for the NGB, agreed with the recommendation to issue policy and provide training that offers guidance on the prompt return of deobligated funds. Therefore, the recommendations are resolved but will remain open. We will close the recommendations once management provides documentation demonstrating that the agreed to actions have been completed.
This report is the product of Proj. No. D2020-D000AT-0142.000.