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In response to an April 3, 2009, hotline request from the Kaibab Band of Paiute Indians, Pipe Spring, AZ (Kaibab), the U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General reviewed HUD’s evaluation of Kaibab’s application for an Indian Community Development Block Grant (Indian Block Grant) under HUD’s 2008 notice of funding availability. The review objective was to evaluate the merits of the complainant’s allegation that the HUD Southwest Office of Native American Programs (Southwest Office) treated Kaibab’s application prejudicially without providing for a fair review.

Our review did not find evidence that the Southwest Office treated Kaibab’s 2008 Indian Block Grant economic development grant application with prejudice or failed to provide a fair review.

The grant application review procedures—as related to project-specific threshold screening—were performed in compliance with program requirements. However, we noted that the review processes were not standardized in a way that easily precluded any perception of unfairness. Specifically, the Southwest Office assigned applications to grants management specialists without regard to ensuring impartial treatment in appearance and in fact. Although economic development proposals tended to be uncommon and more complicated than other Indian Block Grant proposals, application reviewers did not receive training or guidance regarding the evaluation of such proposals. Finally, the Southwest Office did not require reviewers to clearly and thoroughly document the reasons for their determination that an application failed to meet threshold requirements and, therefore, would not be rated or ranked.
We determined that the Southwest Office reviewers’ determinations regarding specific threshold criteria were generally defensible and made in good faith. We agreed that some of the concerns raised by the reviewers regarding criteria for financial feasibility, reasonable chance of success, and public benefit were defensible. We also identified significant weaknesses in the proposals that were not directly addressed by the reviewers.
We concluded that the Southwest Office’s overall decision that Kaibab’s application did not meet all threshold requirements in 2008 (and in 2007) was within the parameters of applicable program criteria. We noted that the Indian Block Grant project-specific threshold criteria and related guidance were nonspecific regarding key requirements for economic development proposals. Accordingly, reviewers had substantial discretion regarding their approach to evaluating financial feasibility for the threshold screening. Further, economic development proposals represented less than 7 percent (in 2008) of the Indian Block Grant applications to the Southwest Office, and the projects were generally perceived to entail greater risk of failure to succeed in the long run. As a result, all economic development proposals—not just the Kaibab proposal—faced similar barriers to approval and funding.
We recommend that the Office of Native American Programs Director of Grants Management require the Southwest Office Administrator to establish a consistent process for assignment of grant applications to reviewers, develop standards to ensure that written review comments are clear and complete, and develop a consistent evaluation approach for certain nonspecific project eligibility criteria.