Intragovernmental Revolving Funds: NIST's Interagency Agreements and Workload Require Management Attention

We reported that the National Institute of Standards and Technology (NIST) lacked a high-level, senior management focus on managing its interagency agreement workload. Specifically, senior managers played no role in determining whether appropriate resources were available agencywide to support NIST's workload and may have contributed to NIST accepting more work than it had the resources to accomplish. To help NIST ensure efficient, effective deployment of its workforce and be a responsible steward of federal resources, we recommended that NIST holds senior managers accountable for strategically managing its interagency agreements. NIST agreed with our recommendation and in May 2011 created the Reimbursable Agreements Coordination Office--to oversee how NIST accepts and manages interagency agreements. Further, NIST took steps to focus senior managers' attention on ensuring that resources are available agency-wide before accepting new work. For example, as of fiscal year 2011, senior managers are required to sign a document certifying that resources exist to begin work within a reasonable amount of time (which NIST considers to be 120 days) before accepting new work. Senior managers' compliance with this requirement is also part of individual performance reviews. NIST officials told us that in fiscal year 2012, they are reviewing to ensure that the compliance statements are incorporated into the individual performance review plans for that fiscal year.

The National Institute of Standards and Technology (NIST) accepts funds from federal clients to support interagency agreements to conduct scientific research. In a 2010 report, we determined that NIST's processes for managing these agreements are insufficient to help ensure compliance with applicable fiscal laws, in part because NIST does not monitor the period of availability of appropriations advanced to NIST from client agencies. Without this information, NIST cannot be sure that funds are legally available when it bills against them. As a result, federal clients could be vulnerable to Antideficiency Act violations. To remedy this, we recommended that NIST monitor key information about the period of availability of appropriations advanced from client agencies. NIST agreed with our recommendation and, in response, implemented a system that tracks and monitors information including the period of availability of advanced funds. This allows NIST to determine the amount of unobligated funds legally available for use in the next fiscal year. As a result, the agency has returned $1,151,731 to customers as of February 2012.

The National Institute of Standards and Technology (NIST) accepts funds from federal clients to support interagency agreements to conduct scientific research. In a 2010 report, we determined that NIST's processes for managing these agreements are insufficient to help ensure compliance with applicable fiscal laws, in part because NIST does not monitor the period of availability of appropriations advanced to NIST from client agencies. Without this information, NIST cannot be sure that funds are legally available when it bills against them. As a result, federal clients could be vulnerable to Antideficiency Act violations. To remedy this, we recommended that NIST monitor key information about the period of availability of appropriations advanced from client agencies. NIST agreed with our recommendation and, in response, implemented a system that tracks and monitors information including the period of availability of advanced funds. This allows NIST to determine the amount of unobligated funds legally available for use in the next fiscal year. As a result, the agency has returned $1,151,731 to customers as of February 2012.

We reported that some interagency agreements at the National Institute of Standards and Technology (NIST) were incomplete or included incorrect information. Specifically, some agreement files lacked documentation needed to provide a complete and accurate record of the agreement as well as transactions between NIST and client agencies; others incorrectly recorded the dates on which funds were advanced to NIST from client agencies. To provide reasonable assurance that NIST's interagency agreements are complete, accurate, and constitute a binding legal agreement, we recommended that NIST create, document, and implement a robust fiscal and legal review process for its interagency agreements. NIST agreed with our recommendation and in 2010 conducted a 90-day legal review of all its interagency agreements, which led to a number of improvements to NIST's processes for managing and reviewing agreements. The Department of Commerce's General Law Division now conducts a legal review of all work before NIST accepts an agreement. NIST also developed an interagency agreement checklist form to ensure that all required legal and financial information is included in each agreement file. In addition, NIST conducted staff trainings on how to process NIST's interagency agreements to comply with federal fiscal law.

In 2011, we determined that the National Institute of Standards and Technology's (NIST) processes for managing interagency agreements are insufficient to help ensure compliance with applicable fiscal laws. Specifically, NIST's processes for closing out completed agreements only required it to return unused funds in excess of $1,000 to the client. Absent clear authority to do so, NIST may not write off any amount of unearned funds. We recommended that NIST review its close-out policies and adjust its accounts accordingly. NIST agreed with our recommendation and, in response, revised its policies and procedures to return all unused funding to its clients. NIST notified us that they returned $8 million to its clients as a result of this revised policy in fiscal year 2011.