A new performance audit from the Washington State Auditor’s Office has found that the Department of Commerce failed at nearly every stage of grant oversight while administering the now‑defunct Digital Navigator Program, mishandling tens of millions of dollars in public funds and leaving auditors unable to verify whether work was actually performed.
The audit examined Commerce’s management of the Digital Navigator Program between 2021 and 2025, a digital equity initiative that distributed more than $92 million to nonprofit organizations, tribes, and other partners tasked with helping underserved communities access and navigate the internet. According to State Auditor Pat McCarthy, the breakdowns were so extensive that they went beyond routine internal control failures.
“In my view, this report details failures in the management of this program so pervasive they go beyond a lack of basic internal controls,” McCarthy wrote. “There is no excuse for the myriad actions taken at the time by management at the Department of Commerce, who were tasked with overseeing $92.5 million in public funds for the Digital Navigator program alone.”
Auditors found that Commerce used a questionable process to award grants, failed to consistently use competitive selection methods, and did not adequately vet either grantees or their subgrantees. In some cases, grants were awarded to applicants that did not meet eligibility requirements, while subgrantees receiving large sums were never formally reviewed by the state.
Contracts governing the program were found to be vague and incomplete. They lacked clear descriptions of responsibilities, deliverables, timelines, and compliance requirements, even though the program relied on a complex consortium model in which lead organizations were supposed to oversee dozens of subgrantees. Auditors concluded that the lack of specificity made it difficult, and sometimes impossible, to determine what grantees were required to deliver in exchange for public funds.
Despite the program’s stated goals of improving digital access and literacy, Commerce did not effectively track whether grantees were achieving meaningful outcomes. While some data on activities was collected, auditors found that it focused largely on counts of interactions rather than whether services actually improved participants’ ability to access online resources, employment services, education, or health care.
Inconsistent data collection, missing reports, and a lack of validation further undermined oversight. In some cases, grantees stopped submitting data altogether, while Commerce failed to follow up or enforce reporting requirements. As a result, auditors said the agency could not demonstrate whether the program benefited the populations it was designed to serve.
Auditors found that inadequate documentation prevented them from verifying nearly $11 million in payments made to one primary grantee. In reviewing reimbursement requests, the State Auditor’s Office determined that most expenses either lacked sufficient supporting documentation or were not allowable under state rules.
Internal Commerce staff raised concerns about approving payments without evidence that services had been provided, but auditors found those objections were overridden by senior leadership at the time. In one instance, leadership directed payments to proceed despite contracts explicitly prohibiting advance reimbursement.
The audit also identified a potential ethics violation after a program staff member left Commerce and accepted employment with a grantee shortly thereafter. The matter was referred to the State Ethics Board.
The Digital Navigator Program ceased operations in July 2025 after Gov. Bob Ferguson vetoed its funding from the state budget, citing fiscal constraints while acknowledging the value of digital access services.
The Commerce audit comes as Washington state faces growing scrutiny over how taxpayer‑funded grant programs are managed across multiple agencies. Recent audits have raised alarms about weak oversight, missing documentation, and limited accountability in programs ranging from child care subsidies to parks and community grants.
In King County, auditors recently found that the Parks and Recreation Division could not confirm whether millions of dollars in grants were used in line with program intent due to gaps in documentation and performance tracking. At the state level, a separate audit of a $770 million child care subsidy program identified more than 1,300 overpayments totaling over $2 million in just one year.
State Rep. Jenny Graham has called for federal scrutiny of taxpayer‑subsidized programs, while Rep. Michael Baumgartner (R-WA) has urged investigations into whether Washington’s systems are vulnerable to Minnesota‑style fraud schemes.
Democratic leaders, including Attorney General Nick Brown, have pushed back on claims of widespread fraud, calling them baseless, despite State Auditor McCarthy warning that repeated failures in grant oversight risk eroding public trust.
“Government accountability, including accountability for grantees, improves results and maintains public trust,” McCarthy wrote. “Trust that I am afraid will be undermined by the severity of the findings we must report here.”
