Terrel H. Bell 30, 1974 Te Mo (1) Exactly what was the process by which ESAP/CG proposals: ethsidered by your office? (2) What was your response to Mr. Verville on each of the poin ncerning this program raised in his memoranda? (-) The GAO report describes the process by which review panch crportedly evaluated proposals from institutions and the repo notes (page 21) that no documentary evidence was found that a r.1 had in fact reviewed these proposals. Did you ever see report: of review panels? Did you ever ask that they be provided you a a part of the submission of each proposal to your office? If no.... why not? If you did request that review panel comments be provided you, what was the result? (5) Why did you permit detailed budget negotiations on ESAP/CG grants to take place after the proposals were approved for funding by your office, subject only to a ceiling amount (as noted by Mr. Verville in his memoranda)? The grantees investigated by GAO were able to enter into subcontracts for consultants' services after their grants were approved. In some cases, these subcontracts amounted to as much as 25-30% of the total grant. From this, the inference can be drawn that the original budget must have been. grossly inflated if such a substantial diversion of grant fund: could be accommodated. (6) One of the most disturbing aspects of this affair 18 the reluctance of responsible officials to take action once they were aware of program irregularities. A consistent thread running through the response of USOE to this situation has been its professed inability to follow up on allegations of irregularities in this program. For example, point 12 of Commissioner Ottina's letter to ra mentions "high level discussions" as the first response to detailed charges concerning administration of the EBAP/CG program. These discussions culminated in referral of the matter to the Department of Justice. When Justice sent the matter back to USOE "a second series of deliberations" was begun "lead"; to a Mid-April request to the HEW Audit Agency." Nearly a month later the Audit Agency heard that GAO might be conducting its o investigation and immediately deferred to GAO. One can almost detect the sigh of relief emerging even from this bland recitation of events. COPY Dr. Trrel H. 1 Commissioner Ottina goes on to state that USOE could not have conducted its own investigation because the administration of this program involved officials at all levels of USOE and "the necessary independence for an investigation would have been quite impossible." I recognize that you were not with USOE in 1972 when these non-actions were decided upon. However, I do want to know whethe you share Commissioner Ottina's views with respect to USOE's inability to handle such matters. What do you think is USOE's responsibility to review proposals and monitor grants and contracta not only to guard against financial hanky-panky, but also to assure the quality of the product USOE is paying for. How do you propose to exercise such responsibilities as you perceive USOE to have in this area, particularly in view of the fact ten region commissioners are making separate funding decisions. (7) Do you know the consultants named in the GAO report as being involved in the ESAP/CG program? If so, what is the nature and extent of your relationship? Did you have any contact with any of them during their period of involvement with ESAP/CG. If so, please describe. I would appreciate your attention to this matter so that these questions and your responses can be made a part of the record of the Committee's consideration of your nomination to be Commission of Education. Very truly yours, TFE:Jmw Enclosures Thomas F. Eagleton United States Senator COPY Thank you for your letter of May 30 concerning questions on the Emergency School Assistance Program/Community Groups (ESAP/CG) during my period of service as Deputy Commissioner for School Systems. I will try to give candid answers to the questions you raise, but I would point out that we are referring to events of three years ago and that this particular program, while it did take an inordinate share of my time, was only a $7 million portion of over three billion dollars in activities under my jurisdiction. My answers to each of your questions follows: 1. The abuses which were subsequently revealed with regard to the ESAP/CG program were not brought to my attention during my tenure as Acting Commissioner or Deputy Commissioner, or apparently even to the attention of my Assistant Deputy in charge of the program, until the Fall of 1971 as outlined in the letter of February 20, 1974 to you from Commissioner Ottina. After reviewing the Verville memo of February 12 to James Moore, I do not see it as actually charging abuses as much as anticipating that the procedures involved could lead to abuses. From my recollection, I know we were dealing with a new type of program without an authorization statute. We were operating on appropriation language passed in August of 1970 and were under heavy pressure to get the program implemented in the school year beginning September 1970. We also faced very difficult manpower problems which led to utilizing consultants to a far greater degree than I would have preferred then or now. While the management study was not related to the Verville memo, it did lead us to institute the changes in handling the community grants program by establishing it within the Equal Educational Opportunity Task Force which subsequently became a Bureau. At this time, I also instituted some personnel changes in the program staff which I had inherited. 2. As I recall the process, the recommendations for funding of projects came to me after review by James Moore, my Assistant Deputy Commissioner for ESAP. The recommendations were initially developed by the Community Group program staff. Obviously, my decisions rested heavily upon the recommendations which came through this process. Page --Honorable Thomas F. Eagleto.. 3. While I do not have detailed recollections of the Verville memos included in your letter, I do recall that at about that time I did recommend the reestablishment of the so-called Commissioner's Ad Hoc Committee because I believed it could provide needed insights to procedures under a new and sensitive program. My recommendation was not accepted. 4. I did request, receive, and read sample review panel recommendations. I did not ask that the panel recommendations be submitted for all recommended proposals, since it would have been impossible to review personally every panel recommendation for this and the other programs for which I was responsible. 5. In administering discretionary grant programs, Federal agencies normally conduct a two-stage review of the grant applications. The initial stage is a technical or substantive review conducted by program specialists with expertise in the specific acitivity area for which support is requested; such program specialists are often assisted by a panel of advisory reviewers. The second stage is a business management review conducted by a contracts and grants officer; only that officer has the authority to negotiate and award the grants. The preliminary budget reviews normally conducted by the program specialists serve to identify programatically excessive or inappropriate costs. Detailed budget reviews and negotiations, however, are the responsi bility of the contracts and grants officer and are not normally undertaker until program approval has been given. In this respect, the ESAP/CG review process was not atypical. I looking at Commissioner Ottina's response, however, the process obviously was not working very well, otherwise there would not be as many actions for recoveries. I would, on taking office, certainly continue to support the correction procedures already instituted, and where necessary, would extend and strengthen these procedures. 6. There are some things in matters of these kinds which are beyond the authority of the Commissioner of Education. Prosecution of criminal charges, for example, can only be carried out by the Department of Justice. This does not mean that I believe we are unable to handle the basic elements of such situations and, as Commissioner, I will take actions to strengthen further management resources which are so important to making proper initial decisions and to carry out effective oversight of grants and contracts. I am very much concerned that we fund only high quality projects and that we not only avoid illegal expenditures but support activities which will provide positive educational results in the most efficient manner possible. ge 3--Honorable Thomas F. Eagleton understand from HEW staff that Secretary Weinberger on April 19 sent a tter to all Members of Congress which outlined new procedures which ...ould prevent these kind of abuses from occurring in the future. Α .py of the memorandum discussing the new procedures which accompanied that letter is enclosed. In addition to being the head of the Office of Regional Office Coordination in my first position at the Office of Education, I have had some exposure to the regional commissioner process from the other end as school superintendent, and I believe that, with proper guidelines and regulations to assure reasonable uniformity of program administration nationwide, it can be an effective process. There is a distinct advantage in having the funding decisions made and program monitoring carried out closer to the areas of actual application of the program. I will make every effort to assure that this system is responsive and that adequate protections and safeguards against possible contract and grant abuses will be maintained. 7. I do not know the consultants named in the GAO Report and have had no relationships or contacts with them before, during, or after the alleged events. Please let me know if any additional information is needed. |