Although TANF contractors provide a wide array of services, the most commonly contracted services reported by our survey respondents include employment and training services, job placement services, and support services to promote job entry or retention. In 2001, state and local governments expended at least $1.5 billion in TANF funds for contracted services. Finally, some states and localities are using TANF funds to contract for services related to the TANF objectives of preventing and reducing the incidence of nonmarital pregnancies and encouraging the formation and maintenance of two-parent families. Single Audits Assess TANF Procurement and Subrecipient Monitoring

HHS relies primarily on state single audits to oversee TANF contracting by states and localities. HHS officials said that HHS regional offices review state single audits and perform follow-up actions in cases where deficiencies were identified. Different Approaches Have Been Used To Help Ensure Compliance with, and Identify Problems in, Implementing Bid Solicitation and Contract Award Processes

State and local governments rely on third parties to help ensure compliance with procurement requirements, including bid protests, judicial processes, and external audits. However, HHS officials told us that they do not know the extent and nature of problems pertaining to the oversight of TANF contractors that state single audit reports have cited because HHS does not analyze these reports in such a comprehensive manner. This is due, in part, to HHS’s focus on those problems identified by single audit reports that involve unallowable or questionable costs.
What GAO Found

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 changed the nation's cash assistance program for needy families with children by replacing the Aid to Families with Dependent Children program, with the Temporary Assistance for Needy Families (TANF) block grant. As specified in PRWORA, TANF's goals include ending the dependence of families receiving government benefits by promoting job preparation, work, and marriage; preventing and reducing the incidence of non-marital pregnancies; and encouraging two-parent families. Contracting with nongovernmental entities to provide TANF-funded services occurs in most states and exceeded $1.5 billion in federal and state funds in 2001. A GAO survey indicated that the most commonly contracted services included education and training, job placement, and support services to promote job entry or retention. The Department of Health and Human Services (HHS) relies primarily on state single audit reports to oversee TANF contracting by states and localities. HHS officials told GAO that their regional offices follow up on the TANF deficiencies identified and that HHS focuses on reported deficiencies that involve unallowable or questionable costs. However, HHS officials said that they do not know the extent and nature of problems pertaining to the oversight of nongovernmental TANF contractors that have been cited in state single audits. State and local governments rely on third parties to help ensure compliance with bid solicitation and contract award procedures, including bid protests, judicial processes, and external audits. They use various approaches to oversee TANF contractors, but problems persist in contract oversight and contractor performance.