Audit of the New York Work Alliance H-1B Technical Skills ... H-1B visa holders. The H-1B visa program

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  • AUDIT OF THE NEW YORK

    WORK ALLIANCE H-1B TECHNICAL SKILLS TRAINING

    GRANT NUMBER AH-10854-00-60 AUGUST 1, 2000 THROUGH JUNE 30, 2001

    U.S. DEPARTMENT OF LABOR OFFICE OF INSPECTOR GENERAL REPORT NO.: 02-02-211-03-390 DATE: September 30, 2002

  • TABLE OF CONTENTS

    ACRONYMS....................................................................................................................................i

    EXECUTIVE SUMMARY ............................................................................................................1

    INTRODUCTION ..........................................................................................................................3

    BACKGROUND .................................................................................................................3

    AUDIT OBJECTIVES.........................................................................................................4

    AUDIT SCOPE AND METHODOLOGY..........................................................................4

    FINDINGS AND RECOMMENDATIONS

    I. PROGRAM IMPLEMENTATION.........................................................................6

    II. PROGRAM OUTCOMES .....................................................................................10

    III. REPORTED OUTLAYS .......................................................................................11

    IV. OTHER MATTERS...............................................................................................17 APPENDIX THE NY WORK ALLIANCE’S RESPONSE TO DRAFT REPORT .............................18

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    ACRONYMS

    ACWIA American Competitiveness and Workforce Improvement Act

    CY Calendar Year

    CFR Code of Federal Regulations

    CUNY City University of New York

    FSR Financial Status Report

    IT Information Technology

    JTPA Job Training Partnership Act

    NYSIA New York Software Industry Association

    OMB Office of Management and Budget

    TAP Tuition Assistance Program

    USDOL U.S. Department of Labor

    WIA Workforce Investment Act

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    EXECUTIVE SUMMARY

    The U.S. Department of Labor (USDOL), Office of Inspector General, conducted an audit of the New York Work Alliance’s (Work Alliance) H-1B technical skills training grant for the interim period August 1, 2000 through June 30, 2001. The overall audit objective was to evaluate if the Work Alliance was meeting the intent of the H-1B Technical Skills Training Program and the requirements of its grant. The subobjectives were to determine if:

    • The project had been implemented as stated in the grant.

    • Program outcomes were measured, achieved, and reported.

    • Reported costs were reasonable, allocable, and allowable in accordance with applicable Federal regulations, and Office of Management and Budget (OMB) Circular A-122, Cost Principles for Non-Profit Organizations.

    The H-1B Technical Skills Training Program was designed to help U.S. workers acquire the technical skills for occupations that are in demand and being filled by foreign workers holding H-1B visas. USDOL awarded the Work Alliance $2,940,162, for the period August 1, 2000 through July 31, 2002, to train 300 participants in information technology (IT) to meet demands for skilled workers in the Internet and DOT.COM industries. AUDIT RESULTS As of June 30, 2001, the Work Alliance had not been successful in meeting the intent of the H-1B Technical Skills Training program and the requirements of its grant. Most areas of the project were affected when demand for skilled workers in the Internet and DOT.COM industries declined significantly in Calendar Years (CYs) 2000 and 2001. Due to changes in the economy, the Work Alliance started to refocus the project by recruiting employers in other industries that needed trained IT workers. Nevertheless, the Work Alliance had not met essent ial grant requirements and the grant ending date is July 31, 2002.

    • The Work Alliance proposed and agreed to implement a project with three training tracks: web design and administration, employer-specific classroom training, and internships. Only one track was implemented, web design and administration. Employer-specific classroom training and internships had not yet been implemented. Additionally, as implemented, the project will not be sustainable after the grant expires.

    • The Work Alliance had not accomplished or accurately measured and reported

    program outcomes as stated in the grant. Training required by the grant was provided to only 40 percent of the participants (120 out of 300 participants). Placement outcomes were negligible with only two reported. Without related placements, the project does not meet the intent of ACWIA technical skills training that participants

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    be trained and placed in highly skilled H-1B occupations. The Work Alliance has a pending grant modification request to extend the grant period through January 31, 2003, to accomplish placements and upgrades.

    • We question $231,675, or 18 percent of Federal outlays, because these costs were not

    reasonable, allocable, or allowable. Further, the matching requirement of 25 percent was not being met as of June 30, 2001. Future costs may have to be questioned if the matching requirement is not met.

    THE WORK ALLIANCE’S RESPONSE In a response to our draft report, the President and Chief Operating Officer of the Work Alliance stated that he did not agree with the major conclusions of our report. He stated that the Work Alliance has continually sought to improve the program consistent with the intent of the grant solicitation, changing circumstances and feedback received from USDOL. OIG’S COMMENTS Based on information submitted in response to the draft report, we have resolved classroom training costs of $64,800 that we had originally questioned. However, we have not changed our overall conclusion that as of June 30, 2001, the Work Alliance had not been successful in meeting the intent of the H-1B Technical Skills Training program and the requirements of the grant. Achieving placement outcomes is essential to the success of an H-1B Technical Skills Training program and, as of June 30, 2001, the Work Alliance had achieved only two placements and had not yet implemented two of three training tracks. Excerpts of the Work Alliance’s response to the draft report have been incorporated into appropriate sections of the report. The response is included in its entirety as an Appendix. RECOMMENDATIONS We recommend the Assistant Secretary for Employment and Training recover questioned costs of $231,675 and ensure that the Work Alliance operates the project in accordance with the intent and requirements of its grant. .

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    INTRODUCTION

    The American Competitiveness and Workforce Improvement Act of 1998 (ACWIA) was enacted to help employed and unemployed U.S. workers acquire technical skills for occupations that are in demand and being filled by

    H-1B visa holders. The H-1B visa program allows employers to temporarily employ foreign workers on a nonimmigrant basis to work in specialized jobs not filled by U.S. workers (8 U.S.C. 1101(a)(15)(H)(i)(b)). A $1,000 user fee is imposed on employers for H-1B applications. ACWIA provides that over half of that fee be used to finance the H-1B Technical Skills Training Program administered by USDOL. H-1B technical skills training grants are demonstration grants awarded under the authority of Title IV-D of the Job Training Partnership Act (JTPA) and Title I-D of the Workforce Investment Act (WIA). As of December 31, 2001, USDOL conducted 4 rounds of grant competition and awarded 52 grants totaling approximately $120 million.

    Grant Round

    Solicitation Date

    Number of Grants

    Award Amount

    1 August 16, 1999 9 $12,383,995 2 March 29, 2000 12 $29,166,757 3 August 1, 2000 22 $54,000,000 4 April 13, 2001 9 $24,394,8011

    Totals 52 $119,945,553 In the second round, the Work Alliance was awarded $2,940,162 under Grant Number AH-10854-00-60 for the period August 1, 2000 through July 31, 2002. The Work Alliance proposed and agreed to train 300 participants in IT to meet demands for skilled workers in the Internet and DOT.COM industries. The Work Alliance administered the project and partnered with City University of New York (CUNY) and New York Software Industry Association (NYSIA). CUNY was to provide classroom training in web design and web administration, and other IT training designed specifically to meet individual employers’ needs. NYSIA was to develop internships and placement opportunities in the Internet and DOT.COM industries. The Work Alliance, formerly known as the Private Industry Council for the City of New York, was incorporated in 1979, as a not- for-profit corporation under section 501(c)(3) of the Internal Revenue Code. Under WIA, the Work Alliance develops and operates demonstration projects, but does not establish workforce development policy as it had under JTPA.

    1 As of December 31, 2001, Round 4 was still an open solicitation with an additional $111 million available.

    BACKGROUND

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    The overall audit objective was to evaluate if the Work All