The Substance Abuse and Mental Health Services Administration (SAMHSA) awards grants to provide funding to individuals for graduate training or development in psychology, psychiatry, nursing, and social work. Generally, trainees are required to repay each month of financial support through an equal period of service to underserved mentally ill populations in public facilities. If the trainee fails to satisfy this service obligation, the trainee must repay the Federal Government three times the cost of the traineeship plus interest. The SAMHSA contracts with a private corporation to monitor and track the appointments and payback activities of trainees. Our final report points out that the contractor did not adequately fulfill this responsibility. The contractor did not identify and refer for debt collection the trainees who did not satisfy their service payback obligation. Also, the contractor did not audit and report on the service payback status of trainees in debt collection. As a result collection actions were not taken against trainees who owed the Federal Government approximately $260,000. We recommended that SAMHSA ensure the contractor complies with contract requirements, require the contractor to audit the status of the service payback activities of all trainees, and implement procedures to refer trainees, who default on their payback obligations, to the Office of Inspector General for exclusion from participation in the Medicare and Medicaid programs. The SAMHSA concurred with our recommendations.