In this context, the Denali Commission was established  in 1998 as a federal agency to provide, among other things, infrastructure  and economic development services to rural Alaskan communities. Accordingly, Commerce officials review and approve his or her time card. Funding for the Commission steadily increased until fiscal year 2005 and  peaked in fiscal year 2007 at $141 million. The Commission Faces Two Key Challenges in Fulfilling Part of Its Statutory Purpose, but Several Options Exist to Address Them

The Commission faces two key challenges in fulfilling the statutory  purpose to promote rural development and provide for infrastructure  needs, but there are options to assist the Commission in addressing  them.making to achieve the rural development portion of its statutory purpose  in light of significant funding decreases and (2) the application of the  conflict-of-interest law which sometimes prevents commissioners—who  hold key specialized knowledge—from being actively involved in  developing the annual work plan. The Commission’s Reliance on Grant Making May Not Be Sustainable Given Significant Funding Decreases, but Options Exist to Address This Challenge

Significant decreases in funding have raised questions about whether the  Commission can sustain its current approach of grant making alone to  fulfill its statutory purpose. The Commission could shift its approach to act  more as a facilitator of grants. Maintain existing infrastructure. Options Exist to Better Leverage Commissioner Expertise in Developing the Work Plan

Since Justice’s 2006 determination that commissioners were subject to  the principal federal conflict-of-interest law, Commission management  and commissioners have attempted to implement the Denali Commission  Act—which requires the Commission to develop a work plan—while also  taking steps to ensure that commissioners did not violate the conflict-of- interest law—which prohibits commissioner participation in matters that  would have a direct and predictable effect on their or their employers’  financial interests. These include periodic vacancies in the  Federal Cochair position; issues related to the implementation of Dodd- Frank; and not having a Commission attorney. Vacancy in Federal Cochair Position Has Stymied the Commission

The Federal Cochair position has been vacant on two separate  occasions, which has stymied the Commission from fulfilling its statutory  responsibilities even though the Denali Commission Act states that any  vacancy in the Commission shall not affect its powers. Furthermore, unlike enabling  legislation for other federal agencies, the act does not contain a  “delegation of authority” provision that would allow the Federal Cochair to  authorize another person to perform the Federal Cochair’s statutory  responsibilities during a vacancy that occurs at any point in the Federal   In contrast to a holdover provision, a Federal Cochair  Cochair’s term.could use a delegation of authority provision while he was in office or if he  left before the end of his term. Without an attorney to help the Commission identify and navigate risks  consistent with federal standards for internal control, the Commission is at  increased risk for making legal mistakes. The Commission Has Some Administrative Grant Management Procedures, but Has Several Shortcomings in How It Has Managed Its Grants

The Commission has some key procedures in place for administering its  grants, but we found several shortcomings in how the Commission has  managed its grants. In our review of a sample of projects funded by Commission  grants, we found several shortcomings in how the Commission has  managed its grants, including not having documented policies for  awarding and managing grants; inconsistent monitoring of grant and  project recipients; and lengthy delays in closing projects, among other  things. Without documented policies to specify such requirements, the  Commission may not be setting clear expectations for grantees, making it  difficult to hold them accountable for fulfilling the terms of the grant  agreement. In addition, while  the Commission has faced numerous and complex legal questions, it has  never had a full-time attorney providing it legal advice and support on a  routine and consistent basis, which has led to avoidable legal mistakes. While the Commission has awarded over $1 billion in grants to help  develop the infrastructure and economy of rural communities in Alaska, it  has done so without documented policies for how it awards and manages  its grants, resulting in inconsistencies in how the Commission awards and  monitors grants. Matters for Congressional Consideration

To better leverage the commissioners’ expertise in the development of  the annual work plan, Congress should consider amending the Denali  Commission Act, potentially with one of the identified options. Recommendations for Executive Action

To enhance the Commission’s operations, we recommend that the  Commission’s Federal Cochair direct the Commission to consider options  for fulfilling the Commission’s statutory purpose and finalize that new  approach in a new strategic plan. The other six  commissioners of the Denali Commission also concurred with our  conclusions and recommendations. Appendix I: Objectives, Scope, and Methodology

This report examines (1) the challenges, if any, the Denali Commission   (Commission) and commissioners face in fulfilling the Commission’s  statutory purpose and options to address them; (2) the challenges, if any,  that have hindered the daily operations of the Commission; and (3) the  Commission’s policies and procedures for awarding and managing grants  and the extent to which grantees and commission officials complied with  these policies and procedures.
Why GAO Did This Study

Since establishment in 1998 by statute, the Denali Commission has awarded over $1 billion in federal grants to help develop Alaska's remote communities. The Commission has a Federal Cochair and six other commissioners.
GAO was asked to review the management of the Commission. This report examines (1) challenges the Commission has faced in fulfilling its statutory purpose and options to address them; (2) challenges that hindered the Commission's daily operations; and (3) the Commission's policies and procedures for managing grants and the extent of compliance with them. GAO reviewed key laws and policies; interviewed former and current commissioners and such stakeholders as state agencies that received grants; and analyzed a random sample of 100 projects funded by Commission grants for fiscal years 1999 through 2013.

What GAO Found

The Denali Commission has faced two key challenges in fulfilling its statutory purpose of providing, among other things, infrastructure and economic development services to rural communities; but options exist to address them. First, a 90 percent decrease in Commission funding from its peak in fiscal year 2007 has raised concerns about whether the Commission can sustain its current approach as primarily a grant-making agency. Given its funding challenge, stakeholders GAO interviewed identified several options for how the Commission could approach fulfilling its statutory purpose in the future, such as shifting its focus to facilitating economic development projects or maintaining existing infrastructure rather than funding new projects. Even though the Commission has taken some steps to reassess its long-term approach, such as conducting statewide listening sessions on how best to assist rural Alaskans in the future, it has not finalized such an approach in a new multiyear strategic plan. Second, the Department of Justice's 2006 determination on the applicability of the principal federal conflict-of-interest law has resulted in a Commission that is, at times, deprived of the expertise of its six commissioners. Concerns about possible criminal prosecution for conflicts of interest have resulted in commissioners regularly recusing themselves from Commission decision-making activities. Based on various sources, GAO identified four options for restructuring the Commission so that it can better leverage the expertise of its commissioners in light of the 2006 determination. Each of the options would require changes to the Denali Commission Act, which established the Commission.
The Commission has faced several challenges that have hindered its daily operations, including having periodic vacancies in the Federal Cochair position and not having an attorney. Having a vacancy in the Federal Cochair position has twice stymied the Commission because only the Federal Cochair is authorized to take certain critical actions, such as approving new grants. The Denali Commission Act does not provide for an acting Federal Cochair and does not allow the Federal Cochair to delegate authority to another person or to remain in office beyond the expiration of his or her 4-year term (holdover). In addition, even in the face of numerous complex legal questions, such as the applicability of the principal federal conflict-of-interest law, the Commission has never had a full-time attorney to provide it with legal advice and support on a routine and consistent basis. Without an attorney to help the Commission identify and navigate risks consistent with federal standards for internal control, the Commission is at increased risk for making legal mistakes.
The Commission has some key procedures in place for administering its grants, but GAO found several shortcomings in how the Commission has managed its grants. Both the Commission's internal checklists and its online grants database meet established criteria for good grant management and oversight. However, the Commission does not have documented grant-making policies in place, leading to inconsistencies in how it awards and manages grants. For example, the Commission's awarding of grants has not always been open or competitive, and its monitoring of grant and project recipients has been inconsistent. Unless it issues grant management policies, the Commission may not be setting clear expectations for grantees, making it difficult to hold them accountable for fulfilling the terms of grant agreements.

What GAO Recommends

Congress should consider amending the Denali Commission Act to, among other things, restructure the Commission to better leverage the commissioners' expertise, and create a delegation of authority or holdover provision for the Federal Cochair position. GAO recommends, among other things, that the Commission consider options for fulfilling its statutory purpose and finalize its approach in a new strategic plan; obtain a full-time attorney; and issue grants management policies. The Denali Commission, including its commissioners, agreed with GAO's conclusions and recommendations.