Audit: Soft Warfare used Base 1 grant funds for allowable items but missed original spending deadline

A Legislative Post Audit review presented on Feb. 24 found that Soft Warfare, a cybersecurity and software company, spent Base 1 grant funds on items the award agreement allowed but failed to spend all funds within the original two-year deadline.

Kristen, a Legislative Post Audit auditor, told the committee the audit's short answer: "Soft Warfare spent Base 1 grant funds on items generally allowed in its grant award, but it did not spend all funds within 2 years as the original contract required." The audit covered spending documentation through Sept. 30, 2024.

The audit said the Base 1 grant program was created in December 2021, used federal pandemic (ARPA) funds and was administered by the Kansas Department of Commerce. Commerce awarded $99 million to 35 recipients by April 13, 2022. Soft Warfare received a $3,000,000 award in April 2022 for a project the company estimated would cost $4,000,000, with the company providing a required 25% match (about $1,000,000).

Audit findings presented to the committee noted that, through Sept. 30, 2024, Soft Warfare had spent just over $1.6 million of the $3.0 million grant on costs tied to the Great Bend data center site. The company purchased land and an existing building in Great Bend and spent grant funds on renovations, data center containers (described in the audit as large modular enclosures to house servers), legal fees,…