Ohio ODOD Misuses MEP Funds, Audit Finds

Ohio's Office of Development and Opportunity (ODOD) misused Manufacturing Extension Partnership (MEP) award funds, according to a National Institute of Standards and Technology (NIST) Office of Inspector General audit released on September 19. The audit identified $20.9 million in questionable costs and uncovered $2.8 million in underreported income.

Audit Findings

The NIST OIG report examined Ohio MEP spending from 2017 to 2024, as detailed in the program's stats. It found that ODOD failed to report accurate financial results and did not ensure that subrecipient expenses were allowable. The audit questioned $20.9 million in costs and identified $2.8 million in income that was not reported. Additionally, ODOD understated its unexpended program income by $463,613 and overstated its nonfederal cost share by almost $5 million.

The audit also revealed that ODOD approved direct costs for the Manufacturing Advocacy and Growth Network and other groups that were explicitly unallowable, unnecessary, or unsupported. Inflated indirect costs were approved, and award funds were used for unauthorized subsidies and internships.

Oversight Failures

ODOD did not effectively monitor subrecipients’ compliance with award terms and performance goals. The agency failed to evaluate risks, verify the accuracy of economic impact data, and ensure that subrecipients met the required standards. The OIG noted that ODOD’s subrecipients were not using award funds as intended and were profiting from their awards, even though such profits were explicitly prohibited.

Recommendations and Next Steps

The OIG recommended that NIST determine whether additional enforcement actions are needed, such as terminating ODOD’s award renewal. It also urged NIST to assess the allowability of the $20.9 million in questioned costs and recover any unallowable funds. ODOD must submit revised federal financial reports for all MEP awards since October 1, 2016, and NIST should permanently remove unreliable economic impact data from its publications and website.

NIST should strengthen oversight of all MEP award recipients, require recipients to certify that subrecipients were effectively monitored, and document reported economic impacts. The OIG also suggested that the $5 million in awards intended for Ohio but suspended in December 2025 could be “put to better use.”

Reactions

ODOD Deputy Chief of Media Relations Mason Waldvogel said the agency takes the findings seriously and is committed to responsible stewardship of public funds. 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.

MAGNET President and CEO Ethan Karp said the group has “completed a finding-by-finding review” of the audit. He disputed 95 percent of the $4.6 million in questioned costs attributed to MAGNET and documented evidence supporting that position. Karp acknowledged a small number of administrative errors that the organization will correct.

The audit’s release follows a December 2025 pause of $5.9 million in Ohio MEP program funds pending audit results. The Ohio MEP program, which includes a squad of advisors, experts, 475 service locations, and more than 2,100 partners, has bipartisan support in Congress for helping manufacturers implement automation, artificial intelligence, and other key technologies.

The final audit underscores the importance of rigorous oversight and accurate reporting in federal manufacturing assistance programs. The next steps will determine whether ODOD’s award renewal is terminated and how the identified unallowable costs are recovered.