Link2Health Solutions, Inc., Budgeted Costs That Were Not Appropriate and Claimed Some Unallowable Hurricane Sandy Disaster Relief Act Funds

In September 2013, nearly 1 year after Hurricane Sandy made landfall, the Substance Abuse and Mental Health Services Administration (SAMHSA) awarded $2.1 million in Disaster Relief Act funding to Link2Health Solutions, Inc. (L2HS), for the implementation and operation of the Sandy Helpline, which was developed to provide crisis response services to individuals impacted by Hurricane Sandy for 2 years.

L2HS submitted detailed Disaster Relief Act budgets to SAMHSA that were not appropriate by the time L2HS applied for Year 2 funding. Specifically, L2HS based its Year 2 budgeted costs on its initial estimated number of contacts and did not adjust these costs to reflect the substantially lower actual number of contacts received during Year 1 of the grant period. In addition, L2HS improperly claimed some Disaster Relief Act costs that did not comply with applicable Federal requirements. L2HS claimed $60,000 in unallowable Disaster Relief Act costs because it (1) based salaries, fringe benefits, and other costs on budgeted employee hours rather than actual employee hours; (2) claimed costs incurred before the start of the grant; and

(3) claimed duplicate indirect costs. Based on inquiries we made during our fieldwork, L2HS adjusted the direct cost base it used to calculate its indirect costs, which reduced L2HS's claimed indirect costs by approximately $5,000.

On September 9, 2014, during our fieldwork, SAMHSA began the process for L2HS to relinquish its Disaster Relief Act funding because of low contact volume. SAMHSA also revised the Notice of Award to reflect the deobligation of Year 2 funds and specify that the end of the grant period was September 29, 2014. Therefore, we have no recommendation related to L2HS's Year 2 budgeted costs.

We recommended that SAMHSA ensure that L2HS refunds $55,000 to the Federal Government for unallowable actual costs. L2HS officials partly agreed and partly disagreed with our findings.