Dive Brief:
- The Ohio Department of Development failed to report accurate financial results and ensure that Manufacturing Extension Partnership subrecipient expenses were allowable, according to an audit of an MEP award to the ODOD.
- The ODOD also did not effectively monitor subrecipients’ compliance with award terms and performance, report on subrecipients as required or verify the accuracy of the Ohio MEP center’s economic impact data, the OIG said.
- Based on its findings, the OIG questioned $20.9 million in costs and identified $2.8 million in underreported income. Among other things, it recommended that NIST determine whether additional enforcement action was needed and determine and recover unallowable costs.
Dive Insight:
The Ohio MEP has been scrutinized in recent years for alleged misuse of funds. In December 2025, NIST paused $5.9 million in Ohio MEP program funds pending the results of an OIG audit covering program spending from 2017 to 2024.
NIST, part of the U.S. Department of Commerce, oversees a national network of MEP centers that comprises about 1,400 advisors and experts, 475 service locations and more than 2,100 partners. The centers provide manufacturers with services and access to resources to enhance growth, improve productivity and expand capacity.
The MEP program has bipartisan support in Congress for helping manufacturers implement automation, artificial intelligence and other key technologies. In March, senators from both parties asked whether Under Secretary of Commerce for Standards and Technology and NIST Director Arvind Raman would continue the program before ultimately confirming him. During the hearing, Sen. Bernie Moreno, R-Ohio, noted that the OIG’s final audit had not yet been released.
Nevertheless, President Donald Trump has repeatedly targeted the MEP Program. Last year, the Department of Commerce terminated funding for 10 state MEP programs in an effort to reduce federal spending. Trump also sought to eliminate nearly all MEP funds during his first term, but Congress ultimately restored them.
The final audit, released Sept. 19, determined that the ODOD, which administers the Ohio MEP, did not comply with key award terms and conditions of its MEP funding. Among other things, the report said the ODOD misrepresented financial results to NIST by failing to report program income generated by award funds and overstating nonfederal cost share.
For example, according to the OIG, the ODOD did not report $2.8 million in program income its subrecipients generated from federal awards. The report also said the ODOD understated its unexpended program income by $463,613 and overstated its nonfederal cost share by almost $5 million.
“By not reporting program income, understating UPI, and overstating nonfederal cost share, ODOD’s subrecipients are not using award funds as intended and are profiting from their awards even though they were explicitly prohibited from doing so,” the OIG said.
According to the report, the ODOD also:
- Approved direct costs incurred by the Manufacturing Advocacy and Growth Network and other groups that were “explicitly unallowable, unnecessary and unreasonable for award performance, or unsupported”
- Approved inflated indirect costs by that group and others
- Used award funds for unauthorized costs for subsidies and internships
- Failed to evaluate its subrecipients for risks and monitor them to ensure they complied with award terms and conditions and achieved performance goals and objectives
- Failed to monitor subrecipients’ responses to NIST to ensure reported economic impacts were valid**
Based on its findings, the OIG recommended that NIST:
- Determine whether additional enforcement actions are needed, such as terminating ODOD’s award renewal.
- Determine the allowability of the $20.9 million in questioned costs and recover any unallowable funds.
- Require ODOD to submit revised federal financial reports for all MEP awards since Oct. 1, 2016.
- Permanently remove known unreliable data on Ohio MEP economic impacts and other topics submitted by ODOD from NIST’s publications and website.
- Strengthen its oversight of all MEP award recipients.
- Require award recipients to certify that all subrecipients were effectively monitored to ensure compliance requirements and performance goals were met, as well as certify the accuracy of subrecipient economic impacts.
- Require award recipients to document reported economic impacts.
The OIG also suggested that $5 million in awards that were intended for Ohio but suspended in December 2025 could be “put to better use.”
ODOD “takes the findings in the Inspector General’s report seriously and is committed to responsible stewardship of public funds,” ODOD Deputy Chief of Media Relations Mason Waldvogel said in an emailed statement.
“We have zero tolerance for fraud, waste and abuse – and we expect the programs we administer, and the organizations that receive public funds through those programs – to meet the highest standards of accountability and compliance,” he said.
He added that ODOD “cooperated fully” with the OIG during its audit and suspended the MEP program following NIST’s suspension of the federal award in December 2025.
ODOD “will continue to work with NIST to address the report’s recommendations, including reviewing and, where necessary, revising financial reports to ensure they are current, accurate and complete,” he said. “We will also continue to review and strengthen our oversight of the programs we administer, including our processes for monitoring subrecipients and verifying financial and performance information.”
In an emailed statement, MAGNET President and CEO Ethan Karp said the group has “completed a finding-by-finding review” of the OIG audit.
“We dispute 95 percent of the $4.6 million in questioned costs attributed to MAGNET and have documented the evidence supporting our position,” he said. “We have also identified a small number of administrative errors that we accept and will correct.”
