Audit finds major contract and oversight failures in Commerce's Digital Navigator program; agency vows reforms

The State Auditor's Office told a legislative subcommittee on May 13 that the Department of Commerce's management of the Digital Navigator program exhibited serious grant- and contract-management problems, undermining accountability for roughly $92 million in program funds.

Patrick Anderson, a senior performance auditor, said the Digital Navigator program (operated by Commerce's Broadband Office between October 2021 and 2025) used a consortium-based grant model that placed substantial responsibility on lead grantees, but Commerce did not consistently apply five essential grant-management components: a clear competitive process, adequate vetting of grantees and subgrantees, contract specificity, consistent performance monitoring with usable data, and clear reimbursement terms.

Auditors flagged multiple specific failures: out of 18 applications, Commerce selected applicants ranked 1, 8 and 18, with an unexplained selection of the 18th-ranked applicant; Commerce significantly expanded grant contracts in funding and scope without re-solicitation; the contracts lacked essential deliverable detail and did not define Commerce, lead-grantee, or sub-grantee roles clearly; monthly reporting from sub-grantees was frequently incomplete or inconsistent because the department never issued the required reporting format; and Commerce issued $10,700,000 in fiscal year 2024 reimbursements without sufficient documentation to verify allowability.

Anderson told the committee that Commerce had no internal grant-management procedures at the time the digital navigator contracts were signed and that, in at least one instance in May 2023, a former broadband-office director ordered payments to proceed despite staff concerns and contractual prohibitions on payments before documentation was received.

Justin Stowe read the state auditor's formal conclusion into the record: "This performance audit report serves as a case study in how neglecting the fundamental tenets of government accountability can sabotage even the most noble goals," and the auditor noted that the review covered approximately $92 million (the report text references $92,000,000 while a reading into the record used $92,500,000). The audit recommended Commerce adopt standard grant-management procedures, require clearer contracts and reimbursement guidance, enforce consistent performance reporting, train staff, and define senior-official oversight roles.

Commerce officials, including Chief Contracts and Compliance Officer Sarah Champion and Assistant Director Mark Barclay, told the committee that new agency leadership in 2025 has taken steps: a centralized contracts-compliance team has been established, agency-wide contract management standards are being rolled out, a memorandum outlining risk-assessment and monitoring requirements was issued April 1, and the agency is reconciling outstanding reimbursements and will pursue recapture if funds are owed. Commerce referred one staff employment matter to the Executive Ethics Board for review and said it would consider disciplinary or recapture actions where appropriate.

Legislators asked for detailed grantee-level payment records, for clarification of the $92 million figure and for evidence of program outcomes (how many people were served). Commerce agreed to provide additional documentation to the committee and to follow up on outcome metrics. The committee did not vote on policy at the hearing but requested follow-up information and commended SAO and Commerce for their work and commitments to corrective action.