oversight

AMS Oversight of the Farmers Market and Local Food Promotion Program

Published by the Department of Agriculture, Office of Inspector General on 2020-03-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

     United States Department of Agriculture




AMS Oversight of the Farmers
Market and Local Food Promotion
Program




Audit Report 01601-0001-24
March 2020
                                               OFFICE OF INSPECTOR GENERAL
                                   IMPORTANT NOTICE
This audit report contains sensitive information that has been redacted for public release, due to privacy
concerns.
AMS Oversight of the Farmers Market and Local
Food Promotion Program

Audit Report 01601-0001-24
OIG reviewed AMS’ oversight of the grants it issued through its Farmers Market
and Local Food Promotion Program.

OBJECTIVE                           WHAT OIG FOUND
We determined the effectiveness     The Agricultural Marketing Service’s (AMS) Farmers
of AMS’ oversight of FMLFPP,        Market and Local Food Promotion Program (FMLFPP)
including AMS’ outreach
                                    provides a competitive grants process to expand access to
activities to promote program
participation. In addition, we
                                    locally-produced agriculture products and to develop new
determined if AMS implemented       market opportunities for farmers, ranchers, and local/
policies and procedures to ensure   regional food businesses. We found that AMS officials
grant recipients complied with      effectively conducted program outreach and appeared
program requirements.               cognizant of grant requirements. Additionally, during
                                    our site visits, grant recipients successfully worked with
                                    AMS on grant objectives.
REVIEWED
                                    However, none of the 40 grants we tested, including
We reviewed actions AMS took        18 site visits, for fiscal years (FY) 2015–2017 fully
to promote farmers markets and
                                    complied with grant terms and conditions or Federal
local foods and also reviewed
FMLFPP grant management
                                    grant regulations. We found that:
procedures. Our sample covered      • AMS did not maintain sufficient documentation for
40 grants awarded between              any of the 40 pre-award decisions and 3 of the 18
FYs 2015–2017, totaling                grant recipients we visited did not maintain sufficient
approximately $6.8 million of          records post-award;
$78.8 million.                      • 4 of the 18 grant recipients we visited
                                       submitted unsupported requests for advances or
                                       reimbursements;
                                    • 11 of the 18 grant recipients we visited were not
RECOMMENDS                             aware of suspension and debarment policies; and
                                    • 1 fiscal sponsor we visited did not appropriately
We recommend that AMS
                                       document or perform sponsor oversight
modify its oversight procedures
to include the development and         responsibilities.
implementation of a schedule
for conducting site visits and      AMS did not identify or address these issues because it
a sampling methodology and          did not conduct adequate documentation reviews and did
appropriate tests to conduct        not have an official policy in place for conducting onsite
reviews of grant documentation.     reviews of grant recipients. As a result, AMS did not
                                    ensure that FMLFPP grant recipients effectively used
                                    Federal funding to achieve the objectives outlined in their
                                    grant agreements.

                                    AMS officials generally agreed with our findings and
                                    stated that they began conducting recurring site visits
                                    during the FY 2019 grant cycle. AMS officials also
                                    stated that ezFedGrants will help address insufficient
                                    documentation. As of October 2019, AMS is only using
                                    this system for the post-award process and not the pre-
                                    award process.
                           United States Department of Agriculture
                                  Office of Inspector General
                                   Washington, D.C. 20250



DATE:          March 19, 2020

AUDIT
NUMBER:        01601-0001-24

TO:            Bruce Summers
               Administrator
               Agricultural Marketing Service

ATTN:          Frank Woods
               Chief, Internal Audits
               Compliance Safety & Security Division
               Agricultural Marketing Service

FROM:          Gil H. Harden
               Assistant Inspector General for Audit

SUBJECT:       AMS Oversight of the Farmers Market and Local Food Promotion Program

This report presents the results of the subject review. Your written response to the official draft
is included in its entirety at the end of the report. We have incorporated excerpts from your
response, and the Office of Inspector General’s (OIG) position, into the relevant sections of the
report. Based on your written response, we are accepting management decision for all 3 audit
recommendations in the report, and no further response to this office is necessary. Please follow
your internal agency procedures in forwarding final action correspondence to the Office of the
Chief Financial Officer (OCFO).

In accordance with Departmental Regulation 1720-1, final action needs to be taken within 1 year
of each management decision to prevent being listed in the Department’s annual Agency
Financial Report. For agencies other than OCFO, please follow your internal agency procedures
in forwarding final action correspondence to OCFO.

We appreciate the courtesies and cooperation extended to us by members of your staff during our
audit fieldwork and subsequent discussions. This report contains publicly available information
and will be posted in its entirety to our website (http://www.usda.gov/oig) in the near future.
Table of Contents

Background and Objectives ................................................................................... 1
Finding 1: AMS Oversight of FMLFPP Grant Recipients Needs
Improvement............................................................................................................6
         Recommendation 1 ......................................................................................11
         Recommendation 2 ......................................................................................11
         Recommendation 3 ......................................................................................12
Scope and Methodology ........................................................................................ 13
Abbreviations ........................................................................................................ 15
Agency’s Response ................................................................................................ 17
Background and Objectives 
Background
The Farmers Market and Local Food Promotion Program (FMLFPP) is an Agricultural
Marketing Service (AMS) grant program with outreach components intended to expand access to
locally produced agriculture products and to develop new market opportunities for farmers,
ranchers, and local/regional food businesses. FMLFPP accomplishes these goals through two
competitive grant program components: (1) Farmers Market Promotion Program (FMPP) and (2)
Local Food Promotion Program (LFPP).




    Figure 1. Local produce displayed at a farmers market. OIG photo.




                                                                AUDIT REPORT 01601-0001-24   1
Figure 2. Local corn for sale at a farmers market. Photo by OIG. Image obscured to protect the privacy of
program participants.

      FMLFPP is an expanded version of FMPP, which was originally authorized in the 2002 Farm
      Bill. FMPP was amended by the Agricultural Act of 2014 to include LFPP.1 The FMPP
      component develops new market opportunities for farm and ranch operations serving local
      markets by providing, developing, improving, and expanding outreach and training.
      Additionally, FMPP provides technical assistance and assistance in developing, improving,
      and expanding domestic farmers markets, roadside stands, community-supported agriculture
      programs, agritourism activities, and other direct producer-to-consumer market opportunities.
      The LFPP component offers grant funds with a 25 percent match requirement to support the
      development and expansion of local and regional food business enterprises.2 These grants
      should increase domestic consumption of locally and regionally produced agricultural
      products and develop new market opportunities for farm and ranch operations serving local
      markets. AMS accepts two types of project applications under LFPP—planning grants3 and




1
    The Agricultural Act of 2014 (H.R. 2642; Pub.L. 113-79).
2
 LFPP grant participants are required to provide an amount equal to 25 percent of the total cost of the project in the
form of cash and/or in-kind non-Federal resources.
3
 LFPP planning grants are used in the planning stages of establishing or expanding a local or regional food business
enterprise. Activities can include, but are not limited to, market research, feasibility studies, and business planning.

2        AUDIT REPORT 01601-0001-24
       implementation grants.4 Applicants can apply for either but will receive only one type of
       grant per grant cycle.

       AMS implemented policy changes to the FMPP and LFPP components beginning in
       FY 2016. Therefore, FY 2015 grants had different policies than FY 2016. These changes
       were also in effect for FY 2017 grants. AMS officials stated that these policy changes
       allowed FMLFPP staff to manage a more reasonable number of grants. These changes
       included separating FMPP grants into two tiers, increasing the period of performance for
       FMPP and LFPP grants and increasing the amount of funding per grant. Please see tables 1
       and 2 below:

Table 1. FMPP FY 2015 and FY 2016 award policies.

    FMPP 2015                                                FMPP 2016
    Award size: $15,000–$100,000                             Capacity building award size: $50,000–$250,000
    Period of performance: 2 years                           Community development, training, and technical
                                                             assistance award size: $250,000–$500,000
    Estimated awards per fiscal year: 160                    Period of performance: 3 years
    Agreements managed by each Grants Management             Estimated awards per fiscal year: 50–100
    Specialist per fiscal year: 53
                                                             Agreements managed by each Grants Management
                                                             Specialist per fiscal year: 12–25

Table 2. LFPP FY 2015 and FY 2016 award policies.

    LFPP 2015                                                LFPP 2016
    Planning grants award size: $5,000–$25,000               Planning grants award size: $25,000$100,000
    Planning grants period of performance: 1 year            Planning grants period of performance: 18 months
    Implementation grants award size: $25,000–$100,000       Implementation grants award size: $100,000–
                                                             $500,000
    Implementation grants period of performance: 2 years     Implementation grants period of performance: 3 years
    Estimated awards per FY: 160                             Estimated awards per FY: 50–100
    Agreements managed by each Grants Management             Agreements managed by each Grants Management
    Specialist per fiscal year: 53                           Specialist per fiscal year: 16–33


During our audit scope period, from FYs 2015–2017, AMS issued 529 FMLFPP grants totaling
approximately $78.8 million. AMS administered FMLFPP with seven grant management staff
between FY 2015 and FY 2017. FMLFPP staff were responsible for preparing requests for
applications for FMLFPP grants, establishing the panel review process, and awarding FMLFPP
grants. FMLFPP staff were also responsible for reviewing payment requests and conducting
grant recipient monitoring and closeout of activities for each project. To accomplish this
process, both AMS and grant recipients must adhere to Office of Management and Budget


4
  LFPP implementation grants are used to either establish a new local or regional food business enterprise or to
improve or expand an existing local or regional food business enterprise. Activities can include, but are not limited
to: training and technical assistance for the business enterprise and/or for producers working with the business
enterprise, outreach and marketing to buyers and consumers, and non-construction infrastructure improvements to
business enterprise facilities or information technology systems.

                                                                         AUDIT REPORT 01601-0001-24                 3
Guidance for Grants and Agreements, as outlined in 2 Code of Federal Regulations (C.F.R.) Part
200.5

2 C.F.R. 200 includes sections for pre-award6 and post-award7 grant requirements. To fulfill pre-
award requirements, AMS places its request for applications for FMLFPP grants on the
grants.gov website. Potential grant recipients then use this website to submit applications. Next,
grant management specialists are responsible for screening and removing incomplete
applications and applications that do not clearly meet requirements.8 FMLFPP uses a panel
review process to score the applications. AMS officials select panel reviewers—Federal and
non-Federal panelists with relevant experience—based on factors such as experience level and
geographic location. These panelists review and score FMLFPP applications. AMS staff
compile all application scores, sort them from highest to lowest, and consider only the highest
ranking scores for funding. Then, AMS staff administratively review each high-ranking proposal
to ensure that it meets FMLFPP requirements. Upon completion, AMS staff prepares a list of
potential grant recipients, which FMLFPP grants management specialists submit to AMS
management for approval. Once AMS management approves the list of grants, FMLFPP grant
management specialists begin preparing official grant documentation, including the grant
agreement.
                                                                         FMLFPP
                                                                         officials                           grant
                       grant            grant
     request for                                        panel          prepare a                             mgmt.
                     applicants        mgmt.                                            AMS mgmt.
    applications                                      reviewers         potential                          specialists
                       apply         specialists                                         approves
     posted on                                          score           grant list                          prepare
                      through          screen                                            grant list
     grants.gov                                      applications     (using panel                           grant
                     grants.gov     applications
                                                                         review                           documents
                                                                         scores)


Figure 3. AMS’ FMLFPP grant application and selection process.

In general, grant recipients sign their grant agreements and begin working on grant-funded
activities around September 30, and generally have a grant period of performance of up to
3 years.9 Following each full year of grant performance, recipients must submit a financial
report10 and a performance report.11 Federal regulations require recipients to maintain source
documentation pertinent to a Federal award for a minimum of 3 years following the date of final
expenditure submission. To ensure these post-award requirements are met, AMS assigned grant
management specialists specific grant recipients to monitor. Grant management specialists’

5
    2 C.F.R. 200, Jan. 1, 2018.
6
 2 C.F.R. 200 Subpart C 200.200(a) describes pre-award activities as those performed in the grant announcement
and grant application processes.
7
 2 C.F.R 200 Subpart D 200.300(a) describes post-award activities as those performed in the management and
administration of the grant recipient.
8
 Applications that do not clearly meet requirements include, but are not limited to: applications that do not include
all required documents, late applications, and duplicate applications.
9
    The period of performance for LFPP planning grants was no more than 1.5 years.
10
  The SF-425 (Federal Financial Report) captures the obligations and disbursements the grant recipient made during
the grant reporting period.
11
  Performance reports are used by grant management specialists to monitor project performance during the
reporting period.

4         AUDIT REPORT 01601-0001-24
post-award monitoring efforts include providing grant recipients with technical assistance,
conducting periodic group calls highlighting grant requirements, and reviewing recipients’
advance and reimbursement requests, financial reports, performance reports, and closing
packages. AMS had not conducted site visits prior to our audit, but the agency initiated a new
onsite grant monitoring effort in April 2018. AMS created guidance to follow when performing
these site visits, including a checklist identifying the documents and procedures the grant
management specialists use to review grant recipients.

Objectives

For this audit, we determined the effectiveness of AMS’ oversight of FMLFPP, including AMS’
outreach activities to promote FMLFPP program participation. In addition, we determined if
AMS implemented policies and procedures to ensure grant recipients complied with program
requirements.

We did not identify any concerns with the objectives relating to AMS’ outreach activities and its
grant policies and we did not issue any recommendations relative to these objectives in our
report.




                                                            AUDIT REPORT 01601-0001-24          5
Finding 1: AMS Oversight of FMLFPP Grant Recipients Needs Improvement
While AMS had policies in place to monitor grant recipients’ performance, AMS could
implement additional controls to more effectively ensure that grant recipients meet program
requirements. Specifically, all 40 grant files we reviewed for FYs 2015–2017 (22 closed and 18
open12) lacked the documentation necessary to show that AMS officials reviewed and approved
applicants for FMLFPP grant funding. In addition, 13 of the 18 open grant recipients we visited
did not always document or follow key post-award activities, such as documenting support for
grant expenses. The grant file lacked documentation because AMS officials did not include
processes in AMS’ application review (pre-award) procedures to document AMS management’s
approval of FMLFPP grants. In addition, AMS’ procedures for overseeing grant recipients did
not include procedures for either effective grant documentation reviews or official policy for
conducting onsite reviews of grant recipients. While AMS had approved procedures for onsite
reviews of grant recipients through site visits, AMS had only conducted one site visit as of April
2018. As a result, FMLFPP grant recipients did not always effectively use Federal funding for
its intended purpose: to achieve the objectives outlined in grant agreements. For example, one
of the grant recipients could not provide evidence that it developed a marketing and outreach
plan, as required in its grant agreement with AMS. During our site visit, nearly 11 months into
the first year of this grant, the recipient had requested only $15,767 out of the $166,024 budgeted
for that year.13 Another recipient requested three cash advances for office supplies, totaling
$3,185, but only used $188 on supplies, even though recipients were required to spend advances
only for amounts needed to meet actual and immediate cash needs.

2 C.F.R. 200, Subparts C through E, set forth the uniform administrative requirements for grants,
including pre- and post-award requirements for Federal awarding agencies as well as the
principles for determining the allowable costs incurred by non-Federal entities under Federal
awards. Specifically, Subpart D, paragraph 200.300, states that the Federal awarding agency
must manage and administer the Federal award in a manner so as to ensure that Federal funding
is expended and associated programs are implemented in full accordance with U.S. statutory and
public policy requirements.

While we identified grant performance concerns with one of the sites we visited (see Grantee
Performance Concerns section below), we generally observed evidence that grant recipients had
successfully completed or were working towards achieving grant objectives as described in their
grant applications.


                                                                          LFPP grant recipients
also adequately supported that they fulfilled its 25 percent match requirement. In addition, AMS
officials we spoke with were cognizant of grant requirements. However, AMS could improve its

12
  The 18 open grant case files were grants that had not yet completed their grant period of performance. The
22 closed grant case files were grants that had completed their grant period of performance.
13
  AMS also identified errors in one of this recipient’s payment requests in April 2018, and by August 2018 the
recipient had not corrected its payment request.

6     AUDIT REPORT 01601-0001-24
existing oversight activities to ensure that both program officials and grant recipients work
towards meeting all grant and program requirements. We visited 18 active grant recipient sites
to determine whether the recipients followed grant requirements. In addition, we conducted a
document review of 22 closed grants for the same purpose. Our review of these 40 grants
(18 open grants and 22 closed grants) revealed weaknesses in AMS’ pre-award processes as well
as in its oversight of awardees after awards were issued.

           Grant Documentation (Pre-award and Post-award)

           The Government Accountability Office requires that documentation concerning internal
           controls and all transactions are properly maintained and easily available.14 AMS did not
           sufficiently document its approval of potential FMLFPP awards during the pre-award
           phase of the grant cycle. According to AMS procedures, external panel reviewers score
           applicants’ proposals. AMS staff compile all application scores and sort them from
           highest to lowest and consider only the highest ranking scores for funding. AMS staff
           then administratively reviews each high-ranking proposal to ensure that it meets
           FMLFPP requirements. AMS management then approves this final award list. However,
           we found that although AMS management appropriately signed the individual grants in
           our sample, they did not document approval of the final award list in the grant files for
           any of the 40 grants we reviewed. In addition, AMS officials did not always complete
           grant checklists or ensure panel reviewers signed off on their reviews. AMS officials
           agreed to add procedures to address these concerns.

           In addition, we found that grant recipients were not keeping sufficient records post-
           award. We attempted to verify the accuracy of grant documents by tracing reported data
           to supporting documentation. However, 3 of the 18 recipients we visited could not
           support amounts on project budgets, financial reports, or performance reports. For
           example, one of our sample recipients did not maintain documentation to support the
           amounts it budgeted in its application and also did not report program income on the
           Federal Financial Report (SF-425), even though the entity budgeted program income in
           its initial project budget. A second site underreported a USDA Food and Nutrition
           Service program redemption amount at a farmers market by $180 on its annual
           performance report that it sends to AMS. Finally, a third site could not provide
           documentation to support the amounts it budgeted in its initial application to AMS.
           Federal regulations require Federal award records and supporting documentation be
           maintained for at least 3 years following the last transaction pertinent to the grant.15
           AMS agreed that these recipients should have supported the amounts on project budgets,
           financial reports, or performance reports and will work with grant recipients to ensure it
           is accomplished.




14
   Government Accountability Office 14-740G Federal Internal Control Standards Principle 10—Design Control
Activities requires management to clearly document internal control and all transactions and other significant events
in a manner that allows the documentation to be readily available for examination.
15
     2 C.F.R. 200.333, Jan. 1, 2018.

                                                                        AUDIT REPORT 01601-0001-24                 7
     Overall, AMS officials generally agreed with the issues presented in this section. They
     stated that they will begin using ezFedGrants, a web-based grants management system, to
     manage grants from beginning to end. As of October 2019, AMS used this system for the
     post-award part of the grant process and not the pre-award. Internal controls, such as
     grant approvals and documentation submissions by the grant recipients, will be
     completed electronically using ezFedGrants. AMS officials stated that they believe this
     system will address the documentation concerns we identified in this section. In the
     meantime, AMS officials stated that they will use a document created by the agency to
     record management’s approval

     Advance and Reimbursement Requests (Post-award)

     Additionally, 4 of the 18 open grant recipients we visited did not accurately request
     advances or reimbursements from AMS for grant expenses. Recipients can either request
     cash advances (which must be limited to amounts needed to meet actual and immediate
     cash needs) or expense reimbursements (recipients must collect and maintain source
     documentation so it is available to AMS upon request at any time during the performance
     period). At any point during the performance period, AMS may require the recipient to
     submit source documentation, including documentation needed to support grant
     expenses. However, we found that:

        ·   One of the recipients informed us during our site visit that it claimed $5,255 more
            in reimbursement amounts than it actually spent. The recipient identified these
            errors while preparing documentation for our review ahead of our site visit. The
            recipient stated that it will correct these errors on future requests for
            reimbursement. However, we believe this example demonstrates the need for
            AMS to more closely monitor grant recipients.
        ·   One of the recipients we visited submitted three cash advance requests for office
            supplies, totaling $3,185, which are limited to amounts needed to meet actual and
            immediate cash needs. However, the recipient could not provide support it spent
            this funding within 90 days of receiving it. As of the date of our site visit (nearly
            9 months after the initial request), this recipient only spent $188 of $3,185 in the
            cash advances it requested.
        ·   During another site visit, we reviewed documentation to support expense
            reimbursement requests and determined that the recipient underreported a request
            amount by $7. While this amount is minor, this recipient did not correctly support
            its request for reimbursement. The recipient stated that it would be more
            cognizant of this in the future. This example demonstrates the need for AMS to
            conduct onsite reviews and more effective document reviews.
        ·   AMS identified errors with one grant recipient’s documentation to support a
            $16,008 reimbursement request in April 2018, and required the recipient to
            correct the errors before it would issue the grant recipient a payment in this
            amount. However, at the time of our August 2018 visit, the recipient had neither
            corrected those errors nor submitted another request for reimbursement.




8   AUDIT REPORT 01601-0001-24
           AMS agreed that site visits may identify issues such as these. In June 2017, AMS
           finalized post-award site visit guidance and, as of April 2018, it had visited its first site
           and plans to visit more. In addition, we believe AMS should implement sampling
           methodology to conduct more comprehensive reviews of payment requests to ensure it
           identifies all potentially erroneous payment requests.

           Grantee Performance Concerns

           We visited a recipient’s farmers market to evaluate the grant’s performance and review
           records.



                              We asked the grant recipient multiple times during our visit to provide
           this plan and the grantee could not do so. In addition, we asked the grant program
           manager to show us                                                          , but he could
           not.

           Additionally, AMS’ site visit guidance that it plans to use when conducting future site
           visits contains provisions to review financial records prior to the visit, which could have
           marked this grant as an area of concern. For example, while this site’s grant began on
           September 30, 2017, as of August 21, 2018, with only 40 days left in the fiscal year, it
           had only requested and received a total of $15,767 (9.4 percent) out of the $166,024 in
           FY 2018 it budgeted towards this goal. As noted in the section above, this grantee
           submitted an erroneous request for an additional $16,008 from AMS, but did not correct
           the request as of the date of our visit. We believe that performing site visits would help
           AMS hold grant recipients accountable for the objectives outlined in their grant
           agreements.

           Suspension and Debarment

           Federal regulations require non-Federal entities entering into a contract with another
           entity to ensure that the entity is not excluded or disqualified from entering into a contract
           involving Federal funding. Therefore, grant recipients that participate in FMLFPP and
           use Federal funding to enter into a contract with another entity to complete work on their
           grants are required by Federal regulations to check the System for Award Management
           Exclusions,16 collect a certification from that entity, or add a clause or condition to the
           covered transaction with that entity. FMLFPP grant terms and conditions cite the
           suspension and debarment regulations. However, this was not effective enough to ensure
           all recipients were aware of suspension and debarment requirements. Of the 18 recipients
           we visited, 11 stated that they were not aware of the requirement to check potential
           vendors for suspension and debarment status. To address this issue, AMS officials

16
     This system tracks persons who are excluded or disqualified from these types of transactions.

                                                                           AUDIT REPORT 01601-0001-24      9
       agreed to strengthen their oversight of grant recipient compliance with suspension and
       debarment policies. Additionally, in AMS’ post-award site visit guidance, AMS has
       required grants management specialists to verify that the grant recipients are aware of
       their grant management responsibilities. We encourage AMS to also cover suspension
       and debarment requirements with recipients during the course of their site reviews.

       Pass-through Entity/Fiscal Sponsor Responsibilities

       Finally, one grant recipient we visited did not adequately include the applicable Federal
       award information in the subaward contract, as required by 2 C.F.R. 200. Occasionally,
       the grant recipient will work with a subrecipient to execute the grant. In such instances,
       the primary grant recipient serves as a pass-through entity, or fiscal sponsor, and is
       responsible for helping the sub-recipient meet the administrative responsibilities of the
       grant and ensure compliance with grant provisions. The subrecipient assumes the
       responsibility for executing the grant objectives of providing access to local and regional
       produce through farmers markets and related activities. In our sample of 40 grant
       recipients, 2 were fiscal sponsors with subaward contracts with subrecipients.

       AMS’ terms and conditions required the fiscal sponsor agreement to include the
       applicable AMS award terms and conditions, as well as the provisions required under
       Federal requirements for pass-through entities, also known as the grant recipients. Grant
       recipients that issue subawards are required to include the applicable AMS award terms
       and conditions, as well as the pass through entity provisions, required under 2 C.F.R.
       200.331, in subaward agreements. However, instead of discussing how the subrecipient’s
       project would comply with grant terms and conditions, the subaward agreement focused
       on the subrecipient’s business needs, such as tax compliance, rather than addressing grant
       terms and conditions, including those necessary to ensure compliance with all applicable
       Federal regulations and policies.

       AMS officials were unaware of this issue until we brought it to their attention and the
       primary grant recipient was unaware of its fiscal sponsor oversight responsibilities.
       When we presented this issue to AMS officials, they agreed that this was an issue that
       needed to be resolved. We encourage AMS to ensure its post-award site visit guidance
       includes specific provisions for subaward contracts. In the site visit guidance, AMS has
       required grant management specialists to verify that the grant recipients are aware of their
       grant management responsibilities. In instances where a grant recipient is a fiscal
       sponsor, this should include fiscal sponsor responsibilities. Additionally, as part of
       AMS’ site visit guidance, AMS will request that recipients provide signed agreements
       with subrecipients for review during the site visits. We note that this also should include
       any subaward contracts.

AMS officials generally agreed with our findings. They stated they developed site visit
methodology procedures and have begun conducting site visits during FY 2019. In addition,
AMS officials stated that ezFedGrants will help streamline the grant approval process and will
help AMS address the documentation issues we identified in this finding. However, as of
October 2019, AMS was only using this system for the post-award process and not the pre-award

10     AUDIT REPORT 01601-0001-24
process. While we could not assess whether AMS’ assertions would address the conditions
noted in this finding, we believe that AMS should, at a minimum, implement a plan to
effectively document pre-award requirements.

Recommendation 1
Develop and implement a plan to ensure FMLFPP effectively documents pre-award
requirements, including AMS senior management’s approval of the award list.

Agency Response

AMS updated the FMLFPP application checklist to capture the program’s pre-award
requirements, and grants management specialists are trained annually to reinforce the importance
of completing and documenting the checklists. In 2018, AMS partnered with the U.S.
Department of Health and Human Services to access GrantSolutions’ pre-award functions and its
associated services, ensuring proper approval controls and documentation in AMS’ competitive
process and the associated grant selection decisions. Application selections are included in a
decision memorandum for the Under Secretary of the Marketing and Regulatory Programs,
requesting approval of each set of grant awards. Once approved, the decision memorandum is
saved in the Program’s files. In addition, the Program’s Deputy Administrator must approve each
individual grant award in the ezFedGrants system for the grant offer to be issued, and that
approval is recorded in the system.

OIG Position

We accept management decision on this recommendation.

Recommendation 2
Develop and implement a schedule and associated checklist for performing site visits on a
recurring basis that ensures compliance with FMLFPP requirements, including 2 C.F.R. 200.

Agency Response

In FY 2018, AMS developed and initiated a grant recipient onsite document review protocol that
includes FMLFPP. This protocol was based on the requirements provided under 2 C.F.R. 200,
and it provides guidance and a standard checklist for grants management specialists. A sample
of recipients with open agreements are selected annually and an annual site visit schedule is
generated from this sample.

OIG Position

We accept management decision on this recommendation.



                                                          AUDIT REPORT 01601-0001-24        11
Recommendation 3
Develop and implement a sampling methodology and tests to conduct reviews of requests for
payment, Federal financial reports, and performance reports that will support and complement
site visits to ensure grant recipients comply with FMLFPP grant terms and conditions, including
2 C.F.R 200.

Agency Response

AMS drafted a monitoring plan in FY 2018 for sampling grant recipients based on financial and
programmatic risk for oversight and monitoring. The plan is designed to conform to the
oversight and monitoring requirements of 2 C.F.R. 200, as well as the “AMS Grants Division
General Award Terms and Conditions.” The grants monitoring plan is currently being piloted by
several grants management specialists to refine the methodology prior to full implementation.

OIG Position

We accept management decision on this recommendation.




12     AUDIT REPORT 01601-0001-24
Scope and Methodology 
We conducted a survey phase from March through May 2018 at AMS headquarters in
Washington, D.C. to gain an understanding of how AMS oversees FMLFPP. To accomplish this
survey, we reviewed actions AMS took to promote farmers markets and local foods. We
alsoreviewed FMLFPP grant management procedures. Based on our survey work, we narrowed
the focus of our audit phase to AMS outreach and also pre-award and post award oversight. Our
audit covered 529 grants awarded between FYs 2015–2017, totaling approximately $78.8 million
(see Table 3). We conducted fieldwork between March 2018 and June 2019.
Table 3. Total grants for FYs 2015–2017, which comprised of 529 LFPP and FMPP grants totaling
approximately $78.8 million.

 Year Awarded                           Program Type                               Amount
 2015                                   LFPP                                    $11,865,444
 2015                                   FMPP                                    $13,348,800
 2016                                   LFPP                                    $13,406,200
 2016                                   FMPP                                    $13,409,581
 2017                                   LFPP                                    $13,390,187
 2017                                   FMPP                                    $13,398,333
 Total                                  529 grants                              $78,818,545


We non­statistically selected 40 grants, totaling approximately $6.8 million, for review based on 
program type (FMPP or LFPP), fiscal year, grant status (opened or closed grants), grant type, 
grant amounts, geographic location, and organization type.  We conducted our audit at AMS 
headquarters in Washington, D.C. and also made 18 site visits to grant recipients.  We visited 
recipients located in Alabama, Colorado, Connecticut, Massachusetts, Mississippi, North 
Carolina, Oregon, South Carolina, Washington, and Wisconsin.  In total, we reviewed 
approximately 7.6 percent of the total grants and 8.6 percent of the total funding provided during 
our scope period.

We reviewed FYs 2015–2017 FMLFPP grant agreements to determine whether AMS complied 
with approval and monitoring requirements.  We reviewed AMS’ policies and procedures for 
managing its grant process.  We also reviewed AMS documentation supporting its outreach 
activities. 

To accomplish our objectives, we: 

   ·   Reviewed laws, regulations, policies and procedures, LFPP and FMPP grant terms and 
       conditions, and FMLFPP site visit guidance; 
   ·   Reviewed executive summary reports; 
   ·   Interviewed grant program officials and grant recipients; 
   ·   Performed a desk review of 22 closed FY 2015 grants, totaling approximately 
       $1.7 million; 
   ·   Conducted 18 site visits for FY 2015–2017 open grant recipients, totaling approximately 
       $5 million; 
   ·   Reviewed requests for applications, applications, and approvals in FYs 2015–2018; 

                                                              AUDIT REPORT 01601-0001-24        13
     ·   Selected a non­statistical sample of 40 grants (22 closed and 18 open) based on program 
         type (FMPP or LFPP), fiscal year, application status, grant type, grant amounts, 
         geographic location, and organization type; 
     ·   Reviewed supporting financial documentation for 40 grant awards (22 closed and 
         18 open); 
     ·   Reviewed documentation to support AMS outreach activities; and 
     ·   Assessed the reliability of the grant data by reviewing AMS system security roles 
         documentation, interviewing system security staff, and testing whether system users had 
         submitted access request documentation.  We determined that the data were sufficiently 
         reliable for the purposes of this report. 

As mentioned above, we obtained the FYs 2015–2017 grant data for open and closed grants.  We 
reviewed these data for inconsistency errors and completeness.  When we found discrepancies, 
we brought them to the attention of FMLFPP officials and worked with them to correct the 
discrepancies before conducting our analyses.  From these efforts, we determined that the grant 
data were sufficiently reliable for the purposes of this report. 

We conducted our audit in accordance with Generally Accepted Government Auditing 
Standards.  Those standards require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and conclusions based on our 
audit objective.  We believe that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objective. 




14       AUDIT REPORT 01601-0001-24
Abbreviations 
AMS .......................................Agricultural Marketing Service
C.F.R. .....................................Code of Federal Regulations
FMPP .....................................Farmers Market Promotion Program
FMLFPP .................................Farmers Market and Local Food Promotion Program
FY ..........................................fiscal year
LFPP ......................................Local Food Promotion Program
OIG ........................................Office of Inspector General




                                                             AUDIT REPORT 01601-0001-24   15
16   AUDIT REPORT 01601-0001-24
Agency’s Response 




                AGENCY’S
         RESPONSE TO AUDIT REPORT




                        AUDIT REPORT 01601-0001-24   17
                                                              1400 Independence Avenue, SW
                                                              Room 3071-S, STOP 0201
                                                              Washington, D.C. 20250-0201




TO:           Gil H. Harden
              Assistant Inspector General for Audit
              Office of Inspector General

FROM:         Bruce Summers /s/
              Administrator

SUBJECT:      Agricultural Marketing Service (AMS) Response to Office of Inspector General
              Audit #01601-0001-24: AMS Oversight of the Farmers Market and Local Food
              Promotion Program


We have reviewed the subject audit report and agree with the recommendations. Our detailed
response, including actions to be taken to address the recommendations, is attached.

If you have any questions or need further information, please contact Frank Woods, Internal
Audits Branch Chief, at 202-720-8836.

Attachment
 Agricultural Marketing Service (AMS) Response to Office of Inspector General (OIG)
Audit #01601-0001-24: AMS Oversight of the Farmers Market and Local Food Promotion
                                     Program


The U.S. Department of Agriculture’s (USDA) AMS agrees with the OIG findings in the “AMS
Oversight of the Farmers Market and Local Food Promotion Program” audit. Please find the
Program’s response to OIG’s finding and recommendations below.

Finding 1: AMS Oversight of Farmers Market and Local Food Promotion Program
(FMLFPP) Grant Recipients Needs Improvement

Recommendation 1

Develop and implement a plan to ensure FMLFPP effectively documents pre-award
requirements, including AMS senior management’s approval of the award list.

Agency Response:

AMS updated the FMLFPP application checklist to capture the program’s pre-award
requirements, and grants management specialists are trained annually to reinforce the
importance of completing and documenting the checklists. In 2018, AMS partnered with the
U.S. Department of Health and Human Services to access GrantSolutions’ pre-award functions
and its associated services, ensuring proper approval controls and documentation in AMS’
competitive process and the associated grant selection decisions. Application selections, based
on the competition conducted in GrantSolutions, are compiled for inclusion in a decision
memorandum for the Under Secretary of the Marketing and Regulatory Programs, requesting
approval of each set of grant awards. Once approved, the decision memorandum is saved in the
Program’s files. In addition, the Program’s Deputy Administrator must approve each individual
grant award in the ezFedGrants system for the grant offer to be issued, and that approval is
recorded in the system.

Actual Completion Date: October 2019

Recommendation 2

Develop and implement a schedule and associated checklist for performing site visits on a
recurring basis that ensures compliance with FMLFPP requirements, including 2 C.F.R. 200.

Agency Response:

In fiscal year (FY) 2018, AMS developed and initiated a grant recipient on-site document review
(site visit) protocol that is inclusive of FMLFPP. This protocol was based on the requirements
provided under 2 C.F.R. 200, and it provides guidance and a standard checklist for grants
management specialists. A sample of recipients with open agreements are selected annually for
reasons that include, but are not limited to: risk assessment results, geography, indication of


                                               1
problems, recipient point of contact experience level, Agency priority, and/or crises. An annual
site visit schedule is generated from this sample.

Actual Completion Date: January 2019

Recommendation 3

Develop and implement a sampling methodology and tests to conduct reviews of requests for
payment, Federal financial reports, and performance reports that will support and complement
site visits to ensure grant recipients comply with FMLFPP grant terms and conditions, including
2 C.F.R. 200.

Agency Response:

AMS drafted a monitoring plan in FY 2018 for sampling grant recipients based on financial and
programmatic risk for oversight and monitoring. The plan is designed to conform to the
oversight and monitoring requirements of 2 C.F.R. 200, as well as the “AMS Grants Division
General Award Terms and Conditions.” The grants monitoring plan is currently being piloted by
several grants management specialists to refine the methodology prior to full implementation.

Estimated Completion Date: October of 2020




                                                2
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