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JLARC Releases Scathing Report on Virginia Economic Development Partnership (VEDP)

The Joint Legislative Audit & Review Commission (JLARC) has released a scathing report on the Virginia Economic Development Partnership (VEDP). JLARC had eight findings and 35 recommendations.

Findings Summary

  1. VEDP is not an efficiently or effectively managed organization
  2. VEDP’s approach to marketing Virginia compromises its effectiveness
  3. VEDP’s marketing efforts do not fully adhere to any fundamental industry practices for effective marketing
  4. VEDP has demonstrated success in promoting international exports
  5. VEDP’s unstructured approach to administering incentive grants leaves the state vulnerable to fraud and poor use of limited resources
  6. VEDP had no documented policies and procedures for critical aspects of administering grant awards prior to January 2016
  7. Lack of systematic coordination of statewide economic development activities undermines impact of state’s total investment
  8. Systemic deficiencies at VEDP necessitate more accountability through an effective, engaged, and informed board of directors

Fraud and Financial Loss
JLARC found that 46% of 133 projects did not meet their individual requirements in the Commonwealth Development Opportunity Fund ($58.7 Million). “VEDP’s approach to administering state incentive grants has been highly unstructured and has left the state exposed to avoidable risk of fraud and poor use of limited resources. VEDP staff responsible for administering incentives exercise an undue level of discretion when awarding, monitoring, verifying, and enforcing performance contract requirements such as clawbacks (repayments).”

Staff Accountability
One of the most surprising recommendations is that JLARC has included a recommendation for VEDP to track the time staff work and establish penalties for staff when they don’t come to work. “According to multiple staff, including staff in VEDP’s administrative offices, an unknown but significant number of staff have routinely shown up for work late, left early, and have not reported their leave.” JLARC states the extent of this problem is unknown. “When a staff member was asked whether their most recent performance evaluation was a fair reflection of their performance, the staff member said, “You know what? I don’t care.”” JLARC further found that VEDP staff have higher salaries than similar economic developers.

VEDP Agency Response Prompts Further JLARC Response
Further, the agency response included in the report prompted JLARC to add a staff response that stated VEDP has made “misleading claims” and restate that one of the recommendations was for VEDP to hire an internal auditor. JLARC staff stated they disagreed with VEDP’s assessment in 23 items of 27 comments where VEDP provided a response.

Official Comments
Governor McAuliffe has stated “it is my hope that we can work collaboratively with members of the General Assembly and other stakeholders to reform VEDP to ensure better management of taxpayer dollars and more accountability throughout the organization. I have instructed Secretary of Commerce and Trade Todd Haymore and other members of my administration to review the JLARC report and identify opportunities, either through legislative or executive action, to maximize the impact of Virginia’s economic development efforts.”

House Speaker William J. Howell has also released a statement on the report. “Today’s JLARC report on VEDP is extremely disappointing. VEDP lacks the basic practices necessary for effective management and marketing of Virginia’s economic development activities. It is important that we do everything we can to get VEDP back on the right track so that Virginia can remain competitive when attracting new jobs and investment. I appreciate JLARC’s work to uncover these problems and I look forward to working with my colleagues to fix them.”

For full details, including the report, please read the JLARC summary.

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