-5

was experiencing personnel problems between its board and its president and a chairman had never been appointed. Eventually, on January 27, 1986, an interim chairman was appointed.

Further site visits were made by OJJDP staff in an attempt to support the program and help the Partnership move towards its program goals. During these site visits, OJJDP staff briefed Partnership employees on Federal policies and procedures concerning the administration of a Federal grant and discussed with Partnership staff the approach, components, products, personnel resources, and time frames to be contained in the required project implementation plan which had not yet been completed. The implementation plan was required as a special condition appended to the grant award by OJJDP and was to have been submitted to OJJDP by January 10, 1986. These meetings follow the general procedures OJJDP employs when working with a new grantee with no proven track record of grant management.

However, as the Partnership fell further and further behind in making progress with the program, and after learning that the Partnership had already obligated almost half of its grant award, the OJJDP Administrator imposed a limited freeze on grant funds on February 28, 1986, until such time as the Partnership submitted the required implementation plan which was then six weeks late. The freeze curtailed all expenditures by the grantee except for salaries and fringe benefits for Partnership employees. A few weeks later, on March 14, 1986, the Partnership president resigned.

-6

In its second progress report submitted in April 1986, the Partnership was able to report progress on a number of tasks, including the establishment of the first local partnership--in Mobile, Alabama--and the completion of its implementation plan, which because of the above-mentioned delays, included a revised budget and time and task statement. Fourteen other sites were in the preliminary stages of partnership development.

of

In May, however, OJJDP staff became concerned about a number expenditures made by the Partnership and the OJJDP Administrator directed that a limited financial audit be conducted. The financial review was conducted on May 28, 1986, and two days later the Partnership's acting president was notified of the findings and the necessary corrective action. For example, we found that proper records were not being kept on the bills submitted by senior consultants, that the Partnership had no viable policy concerning travel by staff, and that there was no written policy concerning the use of credit cards issued by the Partnership to staff members. In addition, we found that the Partnership had authorized reimbursement for employees' expenses that could not be paid with Federal grant funds.

Corrective action was taken by the Partnership to address these problems. The Partnership reimbursed the grant for unallowable expenditures with private funds, staff reimbursed the Partnership for personal expenditures and, with the assistance of OJJDP, policies were developed for travel, use of credit cards, and for contracting with other organizations.

-7

At the same time, concern was increasing in OJJDP that the management and financial problems the Partnership was experiencing was severely impeding its progress. By early June,

after eight months of operation, only one local partnership had been established, $9,000 in private funds--from contributions and membership fees--had been raised, limited action had been taken to identify and begin efforts for the replication of exemplary programs, and some action had been taken to implement the national awareness campaign on drug and alcohol abuse, while almost all its grant money had been expended.

Because more than

This was the situation I learned about when I was appointed Acting OJJDP Administrator on June 9, 1986. three-quarters of the grant funds ($764,000 or 76 percent) had been spent by the Partnership and program results were not consistent with the volume of dollars spent, on June 13, 1986, I notified the Partnership that funding was suspended pending a thorough review before a final decision was made concerning the future of the program.

Over the next several days OJJDP program staff and staff from the Office of Justice Programs' Office of the Comptroller and the Office of General Counsel conducted further programmatic and financial reviews. The reviews confirmed that, while Partnership staff had conducted themselves in a professional manner and a number of tasks had been conscientiously taken toward establishing the organization and in working toward the overall objectives, programmatic achievements were limited.

-8

In addition, the Partnership had suffered from the beginning from a lack of stable leadership. Since the Partnership president resigned in March 1986, no one had assumed the presidency, nor had a permanent chairman of the board been found. Without proper management, the staff had a limited understanding of the program and policy goals of the Partnership and little guidance on implementation. The decisionmaking process was often hindered by disagreements between the president and the board or between senior and line staffs. There seemed to be no common understanding of the objectives of the Partnership and the means of reaching these objectives. And without the necessary leadership, the management of the Partnership never improved.

Therefore, on June 23, 1986, I notified the Partnership's interim chairman that OJJDP would not provide continued funding for the program and that Federal support would end July 31, 1986, which was the end of the first budget period.

Following this notification, OJJDP and the Partnership chairman agreed to close out the program. With the withdrawal of Federal funds and few private funds, the Partnership had no means to continue. Therefore, OJJDP and Office of Justice Programs staff worked with the Partnership to assist in the orderly close out of grant-supported activities and to determine severance procedures and payments for employees. On July 9,

1986, a close out agreement drafted by OJJDP was delivered to the Partnership, which was signed two weeks later by the Partnership's Acting Chairman of the Board. On July 31, 1986, the Partnership grant formally ended.

-9

When the Partnership closed, its files were transferred to the possession of the Federal government and one Partnership staffer worked at OJJDP to complete the closing out of the grant program. There are currently a few financial matters related to the Partnership--payment of bills or refunds from contractors--that are being resolved through contact with a bookkeeper and the an attorney for the Partnership. At the present time, the Partnership grant has $35,144 of unobligated funds remaining from the original $1 million award. However, because there are these few financial matters outstanding, we do not yet have a final tally on the expenditure of funds under this grant.

Before responding to any questions you may have, Mr. Chairman, I would like to say that the final decision to terminate the grant to the Partnership should not be construed to be a reflection of the level of commitment of the Partnership staff to the goals of this project and that I understand the hardship this decision caused Partnership employees. I regret that circumstances necessitated this decision.

We believe the staff conducted themselves in a professional, conscientious, and responsible manner throughout the life of this program, particularly during the difficult days of the program close out. For a variety of reasons, however, the program's tremendous potential was never achieved.