US News
Federal audit recommends ending Ohio manufacturing program over $20.9 million in alleged misspending
The Department of Commerce inspector general cited poor oversight, self-dealing, and waste across state-funded manufacturing affiliates.
The short version
- A Department of Commerce audit recommends that the National Institute of Standards and Technology permanently terminate funding for Ohio's Manufacturing Extension Partnership and recoup misspent funds.
- Federal auditors identified $20.9 million in alleged waste, unauthorized spending, self-dealing, and mismanagement covering the years 2017 to 2024.
- A federal funding freeze implemented in December has already prompted several regional manufacturing affiliates to lay off staff, cut back services, or prepare for closure.
- Federal officials are currently reviewing the report's recommendations, while local affiliate executives contest several of the audit's findings.
Key facts
- The U.S. Department of Commerce's Office of Inspector General cited $20.9 million in waste, abuse, unauthorized spending, and self-dealing within Ohio's Manufacturing Extension Partnership.[Associated Press]
- The audit recommends that the National Institute of Standards and Technology consider permanently ending federal funding for the state's program and seeking repayment.[Associated Press]
- Specific findings include $9 million given to Cincinnati's TechSolve despite failed performance reviews, $2.3 million spent on unnecessary marketing and events, and undisclosed revenue handling related to $6.6 million in COVID-19 PPE sales by Cleveland-based MAGNET.[Associated Press]
- Auditors cited self-dealing involving board members and affiliates, including payments linked to a former board member's university research and funding for interns at companies whose executives sat on an affiliate board.[Associated Press]
- The federal government paused Ohio's program funding in December following preliminary audit findings, leading regional entities like TechSolve, FastLane, and the Center for Innovative Food Technology to plan closures or suspend operations, while MAGNET laid off about half its staff.[Associated Press]
- MAGNET CEO Ethan Karp disputed the audit's accuracy, stating the agency was not given a chance to review the report beforehand and made no profit on the pandemic PPE sales.[Associated Press]
What remains uncertain
- Whether the National Institute of Standards and Technology will follow the audit's recommendations to permanently terminate the program and attempt to recover the funds remains unannounced.[Associated Press]