Audit of State Home Construction Grant Program Management of American Recovery and Reinvestment Act Funds

This audit determined if opportunities exist for Veterans Health Administration (VHA) to strengthen management of the State Home Construction Grant Program (SHCGP) and improve the transparency and accountability of American Recovery and Reinvestment Act of 2009 (Recovery Act) funds spending. VHA is on track to meet the deadline for obligating SHCGP Recovery Act funds. As of December 31, 2009, VHA had conditionally obligated about $141 million (94 percent) of the $150 million and had plans that should ensure VHA obligates the remaining $9 million (6 percent) by September 30, 2010. However, to improve accountability and transparency and help ensure effective use of the $150 million, SHCGP managers need to develop a risk management plan that identifies all potential risks and implements adequate strategies to mitigate these risks. These strategies include increasing the monitoring of states’ oversight of contractors and establishing additional performance measurements. VHA did not implement these strategies because they relied on states to manage risks and did not establish adequate policies and procedures. As a result, increased risks exist that SHCGP may not effectively accomplish Recovery Act objectives and states receiving the $150 million will not be subject to adequate accountability and transparency. The Under Secretary for Health agreed with our finding and recommendations. We consider the planned actions acceptable and will follow up with their implementation.