Overview
MGCC did not always score applications when assessing COVID-19 SBRGP applications to prioritize grant applicants considered to be from underserved demographic groups. Specifically, grants awarded under the COVID-19 SBRGP were to be prioritized by being given to businesses owned by people of color, women, and veterans, as well as to businesses focused on serving gateway cities in Massachusetts.
If MGCC does not consistently apply priority scoring of applications from businesses that serve gateway cities and businesses owned by people of color, women, and veterans, then applicants that might be entitled to receive grants earlier under the terms of a contract might not receive priority. If the funds are insufficient, then some applicants might not receive a grant at all.
Authoritative Guidance
For Sector Specific grants, Section III of Amendment to Attachment A of the Small Business Relief Grant Program–Part II between MGCC and EOED stated that there would be a new round of grants related to specific industry sectors and specified these sectors. These sectors included the following:
- Restaurants, bars, and caterers
- Indoor recreation and entertainment establishments
- Gyms and fitness centers
- Event-support professionals (photographers, videographers, etc.)
- Personal services
- Retail
However, this section did not exempt Sector Specific grants from the prioritization of businesses serving gateway cities and businesses owned by people of color, women, and veterans, which was required by the COVID-19 SBRGP contract with EOED. Rather, it specifically required that these factors be included in the awarding of grants. Section III of Amendment to Attachment A of the Small Business Relief Grant Program–Part II contract between MGCC and EOED stated,
The grants are awarded to small businesses with a priority given to underserved markets, specifically [people of color–], women-owned, and veteran-owned companies. . . .
SCORING / PRIORITIZATION
- Businesses focused on serving the Gateway Cities of Massachusetts
- [people of color–]owned, women-owned, and veteran-owned businesses
Reasons for Issue
MGCC officials told us during our interview on June 29, 2023 that there was enough funding available to give grants to all qualified applicants. Therefore, it was not necessary to apply a score to all eligible applications and apply any prioritization.
Recommendation
MGCC should consistently apply priority scoring in accordance with its contractual obligations to ensure appropriate documentation regarding sector specific grant requirements including, but not limited to, those regarding gateway cities and businesses owned by people of color, women, and veterans.
Auditee’s Response
When making grant awards under the COVID-19 SBRGP MGCC did prioritize the sectors identified as priority sectors in the contract with EOHED. Prioritization was achieved by asking each applicant if their business was part of a priority sector. If an applicant indicated in its application that its business was within a priority sector, that application was prioritized for funding. Based on program data currently available, MGCC can confirm that 100 percent of all applicants from priority sectors received grants.
Auditor’s Reply
We do not dispute MGCC’s statement that all applicants that met eligibility requirements from priority sectors received COVID-19 SBRGP grants. This may have occurred because sufficient funding was available to fund all of these applications. A purpose of the priority scoring by MGCC was to give priority to businesses owned by underserved demographic groups (specifically businesses owned by people of color, women, and veterans). During the audit, we determined that MGCC did not apply priority scoring to all Sector Specific COVID-19 SBRGP applicants, which leaves room for potential challenges and inconsistencies regarding the equitable application of grant distribution. While MGCC has stated it used a process, it should have complied with the process outlined in the grant contract regarding the use of priority scoring, because that is what was required under the contract. Additionally, MGCC may not have known there was sufficient funding for all applicants, because MGCC grouped applications as they approved them and periodically sent them to EOED (see “COVID-19 Small Business Relief Grant Program” in this report for more information). Using priority scoring helps ensure that businesses that serve gateway cities and businesses owned by people of color, women, and veterans receive funding in situations where there may not be sufficient funding for all eligible applicants.
We reiterate our recommendation that MGCC should consistently follow its contractual obligations to ensure accountability regarding the appropriate and equitable distribution of taxpayer-funded grants.
| Date published: | August 28, 2024 |
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