Grants Management
EPA Needs to Strengthen Oversight and Enhance Accountability to Address Persistent Challenges Gao ID: GAO-04-122T October 1, 2003The Environmental Protection Agency (EPA) has faced persistent challenges in managing its grants, which, at about $4 billion annually constitute over one-half of the agency's total budget. EPA awards grants to thousands of recipients to implement its programs to protect human health and the environment. Given the size and diversity of EPA's programs, its ability to efficiently and effectively accomplish its mission largely depends on how well it manages its grant resources and builds accountability into its efforts. In our comprehensive report on EPA's management of its grants, released last week, we found that EPA continues to face four key grants management challenges despite past efforts to address them--(1) selecting the most qualified grant applicants, (2) effectively overseeing grantees, (3) measuring the results of grants, and (4) effectively managing its grant staff and resources. The report also discusses EPA's latest competition and oversight policies and its new 5-year plan to improve the management of its grants. This testimony, based on our report, focuses on the extent to which EPA's latest policies and plan address (1) awarding grants competitively, (2) improving oversight of grantees, and (3) holding staff and managers accountable for fulfilling their grants management responsibilities.
Late in 2002, EPA launched new efforts to address some of its long-standing grants management problems. It issued two policies--one to promote competition in awarding grants and one to improve its oversight of grants. Furthermore, in April 2003, EPA issued a 5-year grants management plan to address its long-standing grants management problems. These policies and plan focus on the major grants management challenges we identified but will require strengthening, enhanced accountability, and sustained commitment to succeed. EPA's September 2002 competition policy should improve EPA's ability to select the most qualified applicants by requiring competition for more grants. However, effective implementation of the policy will require a major cultural shift for EPA managers and staff because the competitive process will require significant planning and take more time than awarding grants noncompetitively. EPA's December 2002 oversight policy makes important improvements in monitoring grantees, but it does not build in a process for effectively and efficiently analyzing the results of its monitoring efforts to address systemic grantee problems. Specifically, EPA does not (1) use a statistical approach to selecting grantees for review, (2) collect standard information from the reviews, and (3) analyze the results to identify and resolve systemic problems with grantees. As a result, EPA may not be using its oversight resources as efficiently as it could. With improved analysis, EPA could better identify problem areas and assess the effectiveness of its corrective actions to more efficiently target its oversight efforts. EPA's 5-year grants management plan recognizes the importance of accountability, but it does not completely address how the agency will hold all managers and staff accountable for successfully fulfilling their grants management responsibilities. For example, the plan calls for developing performance standards for staff overseeing grantee performance, but it does not call for including grants management performance standards in their managers' and supervisors' performance agreements. Unless all managers and staff are held accountable for grants management, EPA cannot ensure the sustained commitment required for the plan's success. Our report, Grants Management: EPA Needs to Strengthen Efforts to Address Persistent Challenges, GAO-03-846, details EPA's historically uneven performance in addressing its grants management challenges. Over the years, EPA's past actions to improve grants management have had mixed results because of the complexity of the problems, weaknesses in policy design and implementation, and insufficient management attention to overseeing grants. While EPA's latest policies and new 5-year grants management plan show promise, it is too early to tell if these will succeed more than past actions. If EPA is to better achieve its environmental mission, it must more effectively manage its grants. Our report contains specific recommendations to address critical weaknesses in EPA's new oversight policy and plan. EPA stated that it agreed with GAO's recommendations and it will implement them as part of its 5- year grants management plan.
GAO-04-122T, Grants Management: EPA Needs to Strengthen Oversight and Enhance Accountability to Address Persistent Challenges
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Testimony:
Before the Subcommittee on Water Resources and Environment, Committee
on Transportation and Infrastructure, House of Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 2:00 p.m. EDT:
Wednesday, October 1, 2003:
Grants Management:
EPA Needs to Strengthen Oversight and Enhance Accountability to Address
Persistent Challenges:
Statement of John B. Stephenson, Director, Natural Resources and
Environment:
GAO-04-122T:
GAO Highlights:
Highlights of GAO-04-122T, testimony before the Subcommittee on Water
Resources and Environment, Committee on Transportation and
Infrastructure, House of Representatives
Why GAO Did This Study:
The Environmental Protection Agency (EPA) has faced persistent
challenges in managing its grants, which, at about $4 billion annually
constitute over one-half of the agency‘s total budget. EPA awards
grants to thousands of recipients to implement its programs to protect
human health and the environment. Given the size and diversity of
EPA‘s programs, its ability to efficiently and effectively accomplish
its mission largely depends on how well it manages its grant resources
and builds accountability into its efforts.
In our comprehensive report on EPA‘s management of its grants,
released last week, we found that EPA continues to face four key
grants management challenges despite past efforts to address them”(1)
selecting the most qualified grant applicants, (2) effectively
overseeing grantees, (3) measuring the results of grants, and (4)
effectively managing its grant staff and resources. The report also
discusses EPA‘s latest competition and oversight policies and its new
5-year plan to improve the management of its grants.
This testimony, based on our report, focuses on the extent to which
EPA‘s latest policies and plan address (1) awarding grants
competitively, (2) improving oversight of grantees, and (3) holding
staff and managers accountable for fulfilling their grants management
responsibilities.
What GAO Found:
Late in 2002, EPA launched new efforts to address some of its long-
standing grants management problems. It issued two policies”one to
promote competition in awarding grants and one to improve its
oversight of grants. Furthermore, in April 2003, EPA issued a 5-year
grants management plan to address its long-standing grants management
problems. These policies and plan focus on the major grants management
challenges we identified but will require strengthening, enhanced
accountability, and sustained commitment to succeed.
EPA‘s September 2002 competition policy should improve EPA‘s ability
to select the most qualified applicants by requiring competition for
more grants. However, effective implementation of the policy will
require a major cultural shift for EPA managers and staff because the
competitive process will require significant planning and take more
time than awarding grants noncompetitively.
EPA‘s December 2002 oversight policy makes important improvements in
monitoring grantees, but it does not build in a process for
effectively and efficiently analyzing the results of its monitoring
efforts to address systemic grantee problems. Specifically, EPA does
not (1) use a statistical approach to selecting grantees for review,
(2) collect standard information from the reviews, and (3) analyze the
results to identify and resolve systemic problems with grantees. As a
result, EPA may not be using its oversight resources as efficiently as
it could. With improved analysis, EPA could better identify problem
areas and assess the effectiveness of its corrective actions to more
efficiently target its oversight efforts.
EPA‘s 5-year grants management plan recognizes the importance of
accountability, but it does not completely address how the agency will
hold all managers and staff accountable for successfully fulfilling
their grants management responsibilities. For example, the plan calls
for developing performance standards for staff overseeing grantee
performance, but it does not call for including grants management
performance standards in their managers‘ and supervisors‘ performance
agreements. Unless all managers and staff are held accountable for
grants management, EPA cannot ensure the sustained commitment required
for the plan‘s success.
Our report, Grants Management: EPA Needs to Strengthen Efforts to
Address Persistent Challenges, GAO-03-846, details EPA‘s historically
uneven performance in addressing its grants management challenges.
Over the years, EPA‘s past actions to improve grants management have
had mixed results because of the complexity of the problems,
weaknesses in policy design and implementation, and insufficient
management attention to overseeing grants. While EPA‘s latest policies
and new 5-year grants management plan show promise, it is too early to
tell if these will succeed more than past actions. If EPA is to better
achieve its environmental mission, it must more effectively manage its
grants. Our report contains specific recommendations to address
critical weaknesses in EPA‘s new oversight policy and plan. EPA stated
that it agreed with GAO‘s recommendations and it will implement them
as part of its 5-year grants management plan.
What GAO Recommends:
www.gao.gov/cgi-bin/getrpt?GAO-04-122T.
To view the full product, including the scope And methodology, click
on the link above. For more information, contact John B. Stephenson at
(202) 512-3841 or stephensonj@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here to discuss the Environmental Protection
Agency's (EPA) management of its grants. My testimony is based on our
report released in September 2003, which was requested by the Chairman
of the House Committee on Transportation and Infrastructure and
Representative Anne Northup.[Footnote 1]
To support its mission of protecting human health and the environment,
in fiscal year 2002, EPA awarded grants to a variety of recipients,
including state and local governments, tribes, universities, and
nonprofit organizations. Given the size and diversity of EPA's
programs, its ability to efficiently and effectively accomplish its
mission largely depends on how well it manages its grant resources and
builds accountability into its efforts. As of September 30, 2002, EPA
had 4,100 grant recipients.
As you know, over the years, EPA has faced persistent challenges in
managing its grants, which at about $4 billion annually, constitute
over one-half of its total budget. In our June 2003 testimony before
this Subcommittee and in our report, we identified four key management
challenges EPA continues to face, despite past efforts to address
them.[Footnote 2] These challenges are (1) selecting the most qualified
grant applicants, (2) effectively overseeing grantees, (3) measuring
the results of grants, and (4) effectively managing grant staff and
resources. We also reported that EPA's past efforts to improve its
management had mixed results because of the complexity of the problems,
weaknesses in design and implementation, and insufficient management
attention. EPA must resolve these problems in order to improve its
management of grants.
Late in 2002, EPA launched new efforts to address some of its long-
standing grants management problems. Specifically, it issued two new
policies--one in September 2002 to promote competition in awarding
grants and one in December 2002 to improve its oversight of grants.
Furthermore, in April 2003, EPA issued a 5-year grants management plan
to address its long-standing grants management problems. We found that
these policies and plan focus on the major grants management challenges
we identified but will require strengthening, enhanced accountability,
and sustained commitment to succeed.
For our testimony today, you asked us to comment on the extent to which
EPA's new policies and plan address the challenges concerning (1)
awarding grants competitively, (2) improving oversight of grantees, and
(3) holding staff and managers accountable for fulfilling their grants
management responsibilities. For our report, we, among other things,
obtained and analyzed EPA's 1,232 in-depth reviews of grantee
performance conducted in calendar year 2002 to identify the challenges
EPA faces in managing its grants. We also examined EPA's new policies
and plan and interviewed EPA officials responsible for key aspects of
the plan.
In summary, we found the following:
* EPA's September 2002 competition policy should improve EPA's ability
to select the most qualified applicants by requiring competition for
more grants. However, effective implementation of the policy will
require a major cultural shift for EPA managers and staff because the
competitive process will require significant planning and take more
time than awarding grants noncompetitively.
* EPA's December 2002 oversight policy makes important improvements in
monitoring grantees, but it does not build in a process for effectively
and efficiently analyzing the results of its monitoring efforts to
address systemic grantee problems. Specifically, EPA does not (1) use a
statistical approach to selecting grantees for review, (2) collect
standard information from the reviews, and (3) analyze the results to
identify and resolve systemic problems with grantees. As a result, EPA
may not be using its oversight resources as efficiently as it could.
With improved analysis, EPA could better identify problem areas and
assess the effectiveness of its corrective actions to more efficiently
target its oversight efforts.
* EPA's April 2003 grants management plan recognizes the importance of
accountability but it does not completely address how the agency will
hold all managers and staff accountable for successfully fulfilling all
their grants management responsibilities. For example, the plan does
not call for including grants management performance standards in
managers' and supervisors' performance agreements. Unless all managers
and staff are held accountable for grants management, EPA cannot ensure
the sustained commitment required for the plan's success.
We made recommendations in our report to the EPA Administrator to
strengthen grants management by more systematically overseeing grantees
and by holding all managers and staff in headquarters and the regions
accountable for fulfilling their grants management responsibilities. We
also recommended that EPA report on the progress of its efforts in its
annual report to Congress. EPA agreed with our recommendations and
stated it will implement them as part of its 5-year grants management
plan.
Background:
EPA administers and oversees grants primarily through the Office of
Grants and Debarment, 10 program offices in headquarters,[Footnote 3]
and program offices and grants management offices in EPA's 10 regional
offices. Figure 1 shows EPA's key offices involved in grants activities
for headquarters and the regions.
Figure 1: EPA's Key Offices Involved in Grant Activities:
[See PDF for image]
[End of figure]
The management of EPA's grants program is a cooperative effort
involving the Office of Administration and Resources Management's
Office of Grants and Debarment, program offices in headquarters, and
grants management and program offices in the regions. The Office of
Grants and Debarment develops grant policy and guidance. It also
carries out certain types of administrative and financial functions for
the grants approved by the headquarters program offices, such as
awarding grants and overseeing the financial management of these
grants. On the programmatic side, headquarters program offices
establish and implement national policies for their grant programs, and
set funding priorities. They are also responsible for the technical and
programmatic oversight of their grants. In the regions, grants
management offices carry out certain administrative and financial
functions for the grants, such as awarding grants approved by the
regional program offices,[Footnote 4] while the regional program staff
provide technical and programmatic oversight of their grantees.
As of June 2003, 109 grant specialists in the Office of Grants and
Debarment and the regional grants management offices were largely
responsible for administrative and financial grant functions.
Furthermore, 1,835 project officers were actively managing grants in
headquarters and regional program offices. These project officers are
responsible for the technical and programmatic management of grants.
Unlike grant specialists, however, project officers generally have
other primary responsibilities, such as using the scientific and
technical expertise for which they were hired.
In fiscal year 2002, EPA took 8,070 grant actions[Footnote 5] totaling
about $4.2 billion.[Footnote 6] These awards were made to six main
categories of recipients as shown in figure 2.
Figure 2: Percentage of EPA Grant Dollars Awarded by Recipient Type,
Fiscal Year 2002:
[See PDF for image]
[End of figure]
EPA offers two types of grants--nondiscretionary and discretionary:
* Nondiscretionary grants support water infrastructure projects, such
as the drinking water and clean water state revolving fund programs,
and continuing environmental programs, such as the Clean Air Program
for monitoring and enforcing Clean Air Act regulations. For these
grants, Congress directs awards to one or more classes of prospective
recipients who meet specific eligibility criteria; the grants are often
awarded on the basis of formulas prescribed by law or agency
regulation. In fiscal year 2002, EPA awarded about $3.5 billion in
nondiscretionary grants. EPA has awarded these grants primarily to
states or other governmental entities.
* Discretionary grants fund a variety of activities, such as
environmental research and training. EPA has the discretion to
independently determine the recipients and funding levels for grants.
In fiscal year 2002, EPA awarded about $719 million in discretionary
grants. EPA has awarded these grants primarily to nonprofit
organizations, universities, and government entities.
The grant process has the following four phases:
* Preaward. EPA reviews the application paperwork and makes an award
decision.
* Award. EPA prepares the grant documents and instructs the grantee on
technical requirements, and the grantee signs an agreement to comply
with all requirements.
* Postaward. After awarding the grant, EPA provides technical
assistance, oversees the work, and provides payments to the grantee;
the grantee completes the work, and the project ends.
* Closeout of the award. EPA ensures that all technical work and
administrative requirements have been completed; EPA prepares closeout
documents and notifies the grantee that the grant is completed.
As part of its oversight of grantee performance, EPA conducts in-depth
reviews to analyze grantees' compliance with grant regulations and
specific grant requirements.[Footnote 7] EPA conducts two types of in-
depth reviews. Administrative reviews, conducted by the grants
management offices, are designed to evaluate grantees' financial and
administrative capacity. In contrast, programmatic reviews, conducted
by the program offices, are designed to assess the grantees' activities
in five key areas: (1) assessing progress of work, (2) reviewing
financial expenditures, (3) meeting the grant's terms and conditions,
(4) meeting all programmatic, statutory, and regulatory requirements,
and (5) verifying that equipment purchased under the award is managed
and accounted for. Both administrative and programmatic reviews are
conducted either at the grantee's location (on-site) or at EPA's office
or another location (off-site). Furthermore, to determine how well
offices and regions oversee grantees, EPA conducts internal management
reviews of headquarters and regional offices.
EPA's Competition Policy Shows Promise but Requires a Major Cultural
Shift:
EPA's September 2002 competition policy requires that most
discretionary grants be competed. These grants totaled about $719
million of the $4.2 billion in grants awarded in fiscal year 2002. The
policy applies to most discretionary grant programs or individual
grants of more than $75,000.[Footnote 8] The policy also promotes
widespread solicitation for competed grants by establishing specific
requirements for announcing funding opportunities in, for example, the
Federal Register and on Web sites. EPA has also appointed a grant
competition advocate to coordinate this effort.
EPA's competition policy faces implementation barriers because it
represents a major cultural shift for EPA staff and managers, who
historically awarded most grants noncompetitively and thereby have had
limited experience with competition, according to the Office of Grants
and Debarment. The policy requires EPA officials to take a more
planned, rigorous approach to awarding grants. That is, EPA staff must
determine the evaluation criteria and ranking of these criteria for a
grant, develop the grant announcement, and generally publish it at
least 60 days before the application deadline. Staff must also evaluate
applications--potentially from a larger number of applicants than in
the past--and notify applicants of their decisions. These activities
will require significant planning and take more time than awarding
grants noncompetitively. Office of Grants and Debarment officials
anticipate a learning curve as staff implement the policy and will
evaluate the policy's effectiveness in 2005, including the $75,000
threshold level. While the policy and subsequent implementing guidance
have been in effect for a number of months, it is too early to tell if
the policy has resulted in increased competition over the entire fiscal
year. EPA officials believe that preliminary results indicate that the
policy is increasing the use of competition.
EPA Needs A More Systematic Approach to Strengthen Oversight:
EPA's December 2002 oversight policy makes important improvements in
monitoring grantees, but it does not enable the agency to identify and
address systemic problems with grant recipients. Specifically, EPA
cannot develop systemic information because the policy does not (1)
incorporate a statistical approach to selecting grantees for review;
(2) require a standard reporting format for in-depth reviews to ensure
consistency and clarity in reporting review results; and (3) identify
needed data elements or develop a plan for analyzing data in its
grantee compliance database to identify and act on systemic grantee
problems. Therefore, EPA cannot use data from these reviews to
determine the overall compliance of grantees or be assured that it is
using its resources to effectively target its oversight efforts. With a
more rigorous statistical approach to selecting grantees, standard
reporting format, and a plan for using information from in-depth and
other reviews, EPA could identify problem areas and develop trends to
assess the effectiveness of corrective actions in order to better
target its oversight efforts.
EPA Needs to Incorporate a Statistical Approach to Selecting Grantees
for Review:
EPA's new policy allows each office to determine what criteria it will
use to select at least 10 percent of its grant recipients for in-depth
review. However, because this policy does not employ a statistical
method to selecting grantees for review, it limits the usefulness of
these reviews as a tool to determine the overall compliance of grant
recipients. Furthermore, EPA cannot determine whether 10 percent or any
other percentage is the appropriate number of reviews. With a
statistical approach, EPA could increase the efficiency and
effectiveness of its oversight of grantees by (1) adjusting the number
and allocation of its in-depth reviews to match the level of risk
associated with each type of grant recipient and (2) projecting the
results of its reviews to all EPA grantees.
EPA Needs to Require a Standard Reporting Format for In-depth Reviews:
EPA's in-depth reviews can provide valuable information that the agency
can use to identify problems and implement corrective actions. However,
EPA does not have a standard reporting format to ensure consistency,
clarity, and usefulness in reporting review results. Consequently, EPA
is not able to effectively and efficiently analyze these data to
determine systemic grantee problems.
Although EPA was requiring offices to conduct in-depth review of
grantees in 2002, it did not systematically collect and analyze
information from these reviews as part of its oversight efforts. We
requested that EPA provide us with its in-depth reviews conducted in
2002 so we could do the analysis. Many of the documents EPA provided
were, not in fact, in-depth reviews, but various types of other
oversight documents. We sorted through these documents to identify the
in-depth reviews using a data collection instrument. Through this
approach, we identified 1,232 in-depth reviews. Using a data collection
instrument, we collected and analyzed information from each of these
in-depth reviews on, among other things, problems with grantees, and
significant actions taken against grantees. The full results of our
analysis are presented in our report.
According to our analysis of EPA's 1,232 in-depth reviews in 2002, EPA
grant specialists and project officers identified 1,250 problems in 21
areas. Tables 1 and 2 show the most frequently identified problems for
the 189 administrative and 1,017 programmatic reviews we examined. For
example, 73 of 189 administrative reviews found problems with grantees'
written procedures, while 308 of the 1,017 programmatic reviews
identified technical issues.
Table 1: Most Frequently Identified Problems, by Problem Area for
Administrative Reviews, 2002:
Type of problem: Written procedures; Number of reviews with reported
problem: 73.
Type of problem: Procurement; Number of reviews with reported problem:
70.
Type of problem: Personnel/payroll; Number of reviews with reported
problem: 51.
Type of problem: Accounting; Number of reviews with reported problem:
37.
Source: GAO analysis of EPA's in-depth reviews.
[End of table]
Table 2: Most Frequently Identified Problems, by Problem Area for
Programmatic Reviews, 2002:
Type of problem: Technical issues; Number of reviews with reported
problem: 308.
Type of problem: Progress reports; Number of reviews with reported
problem: 167.
Type of problem: Personnel/payroll; Number of reviews with reported
problem: 92.
Type of problem: Quality assurance; Number of reviews with reported
problem: 71.
Source: GAO analysis of EPA's in-depth reviews.
[End of table]
The differences in types of problems frequently identified, as shown in
tables 1 and 2, reflect differences in the focus of administrative and
programmatic reviews. Table 3 describes the nature of these problems.
Table 3: Description of Most Frequently Identified Problems in EPA's
In-depth Reviews:
Problem: Accounting; Types of problems included in EPA's in-depth
reviews: Any failure of a grantee's financial management system or
shortcomings in the procedures it used to ensure the proper accounting
of federal funds. For example, EPA found cases in which a grantee: *
could not compare budgeted amounts to actual expenditures, * did not
properly reconcile report balances to the general ledger, or; * did not
separately track funds for different grants.
Problem: Personnel/payroll; Types of problems included in EPA's in-
depth reviews: Problems varied depending on the type of review
conducted. Administrative reviews included cases in which a grantee did
not track the amount of time its employees spent on specific grant
activities. Programmatic reviews included cases in which grantees did
not have sufficient staff resources to perform the grant activities.
Problem: Procurement; Types of problems included in EPA's in-depth
reviews: Grantees lacked documentation to support sole-source
contracts, and grantees did not report their efforts to encourage
procurement from minority-and woman-owned businesses.
Problem: Progress reports; Types of problems included in EPA's in-depth
reviews: A grantee's progress report was missing, late, or did not
include all the necessary information.
Problem: Quality assurance; Types of problems included in EPA's in-
depth reviews: A grantee needed to revise its quality assurance plan,
which is required to ensure the quality of data collected during the
grant work.
Problem: Technical issues; Types of problems included in EPA's in-depth
reviews: A grantee was behind in the progress of his or her work.
Problem: Written procedures; Types of problems included in EPA's in-
depth reviews: A grantee's written policies or procedures were either
missing or inadequate.
Source: GAO analysis of EPA's in-depth reviews.
[End of table]
Despite the importance of standard information, our analysis of EPA's
2002 in-depth reviews shows that EPA officials across the agency report
in various formats that do not always clearly present the results of
the review. For example, some EPA officials provided a narrative report
on the results of their reviews, while others completed a protocol that
they used in conducting their review. In 349 instances, the project
officer or grant management specialist did not clearly explain whether
he or she had discovered a problem.
EPA Needs to Develop a Plan for Using Information in Its Grantee
Compliance Database:
EPA has recognized the importance of the information in its in-depth
reviews by establishing a grantee compliance database to store the
reviews, forming a database work group, and collecting a limited amount
of data from its in-depth reviews. However, as of August 29, 2003, EPA
had not yet developed data elements or a plan for using data from all
its oversight efforts--in-depth reviews, corrective actions, and other
compliance efforts--to fully identify systemic problems and then inform
grants management officials about oversight areas that need to be
addressed.
As our analysis of EPA's 2002 in-depth reviews showed, valuable
information could be collected from them for assessing such issues as
the (1) types of grantees having problems, (2) types of problem areas
needing further attention, (3) types of reviews--on-site or off-site--
that provide the best insights into certain problems areas, and (4)
corrective actions required or recommended to resolve problems.
A Systematic Approach to Collection and Analysis of Compliance
Information Would Enhance Oversight:
With a statistical approach to selecting grantees for review, standard
reporting format, and a plan for using information from in-depth and
other reviews, EPA could identify problem areas and develop trends to
assess the effectiveness of corrective actions to better target its
oversight efforts. In particular, according to our analysis of EPA's
2002 in-depth reviews, administrative reviews identify more problems
when conducted on site, while the number of problems identified by
programmatic reviews does not differ by on-site or off-site reviews.
However, nearly half of the programmatic reviews, which constituted
more than 80 percent of the 2002 reviews, were conducted on-site. Since
on-site reviews are resource intensive because of travel costs and
staff used, a systematic analysis could enable EPA to better target its
resources. Similarly, EPA could incorporate other information into its
grantee compliance database, such as Inspector General reports, to
identify problem areas, and target oversight resources. In addition,
EPA could use the database to track the resolution of problems.
EPA Faces Challenges to Enhancing Accountability:
Successful implementation of EPA's 5-year grants management plan
requires all staff--senior management, project officers, and grant
specialists--to be fully committed to, and accountable for, grants
management. Recognizing the importance of commitment and
accountability, the plan has as one of its objectives the establishment
of clear lines of accountability for grants oversight. The plan, among
other things, calls for (1) ensuring that performance standards
established for grant specialists and project officers adequately
address grants management responsibilities in 2004; (2) clarifying and
defining the roles and responsibilities of senior resource officials,
grant specialists, project officers, and others in 2003; and (3)
analyzing project officers' and grant specialists' workload in 2004.
In implementing this plan, however, EPA faces challenges to enhancing
accountability. First, although the plan calls for ensuring that
project officers' performance standards adequately address their grants
management responsibilities, agencywide implementation may be
difficult. Currently, project officers do not have uniform performance
standards, according to officials in EPA's Office of Human Resources
and Organizational Services. Instead, each supervisor sets standards
for each project officer, and these standards may or may not include
grants management responsibilities. It could take up to a year to
establish and implement a uniform performance standard, according to
these officials. Instead, the Assistant Administrator for the Office of
Administration and Resources Management is planning to issue guidance
this month including grants management responsibilities in individual
performance agreements for the next performance cycle beginning in
January 2004. Once individual project officers' performance standards
are established for the approximately 1,800 project officers, strong
support by managers at all levels, as well as regular communication on
performance expectations and feedback, will be key to ensuring that
staff with grants management duties successfully meet their
responsibilities.
Although EPA's current performance management system can accommodate
the development of performance standards tailored to each project
officer's specific grants management responsibilities, the current
system provides only two choices for measuring performance--
satisfactory or unsatisfactory--which may make it difficult to make
meaningful distinctions in performance. Such an approach may not
provide enough information and dispersion in ratings to recognize and
reward top performers, help everyone attain their maximum potential,
and deal with poor performers. GAO has identified key practices that
federal agencies can use to establish effective performance management
systems, which include making distinctions in performance.[Footnote 9]
Furthermore, it is difficult to implement performance standards that
will hold project officers accountable for grants management because
(1) grants management is often a small part of a wide range of project
officers' responsibilities, (2) some project officers manage few
grants, and (3) project officers' grants management responsibilities
often fall into the category of "other duties as assigned." To address
this issue, EPA officials are considering, among other options, whether
the agency needs to develop a smaller cadre of well-trained project
officers to oversee grantees, rather than rely on the approximately
1,800 project officers with different levels of grants management
responsibilities and skills. Some EPA officials believe that having a
cadre may help the agency more effectively implement revised grants
management performance standards because fewer officers with greater
expertise would oversee a larger percentage of the grants.
Second, EPA will have difficulty achieving the plan's goals unless, not
only project officers, but all managers and staff are held accountable
for grants management. The plan does not call for including grants
management standards in all managers' and supervisors' agreements.
Senior grants managers in the Office of Grants and Debarment as well as
other Senior Executive Service managers have performance standards that
address grants management responsibilities,[Footnote 10] but middle-
level managers and supervisors, who oversee many of the staff that have
important grants management responsibilities, do not. According to
Office of Grants and Debarment officials, they are working on
developing performance standards for all managers and supervisors with
grants responsibilities.
Third, it may be difficult to hold all managers and staff accountable
because the Office of Grants and Debarment does not have direct control
over many of the managers and staff who perform grants management
duties--particularly the approximately 1,800 project officers in
headquarters and regional program offices. The division of
responsibilities between the Office of Grants and Debarment and program
and regional offices will continue to present a challenge to holding
staff accountable and improving grants management, and will require the
sustained commitment of EPA's senior managers.
Conclusions:
If EPA is to better achieve its environmental mission, it must more
effectively manage its grants programs--which account for more than
half of its annual budget. EPA's new policies and 5-year grants
management plan show promise, but they are missing several critical
elements necessary for the agency to address past grants management
weaknesses. Specifically to improve EPA's oversight of grantees, our
report recommends that EPA' (1) incorporate appropriate statistical
methods to identify grantees for review; (2) require EPA staff to use a
standard reporting format for in-depth review so that the results can
be entered into the grantee compliance database and analyzed agency
wide; and (3) develop a plan, including modifications to the grantee
compliance database, to integrate and analyze compliance information
from multiple sources. These actions would help EPA identify systemic
problems with its grantees and better target its oversight resources.
To enhance accountability, our report further recommends establishing
performance standards for all managers and staff responsible for grants
management and holding them accountable for meeting these standards.
Until EPA does so, it cannot be assured that is fulfilling its grants
management responsibilities.
While EPA's 5-year grants management plan shows promise, we believe
that, given EPA's historically uneven performance in addressing its
grants management challenges, congressional oversight is important to
ensure that EPA's Administrator, managers, and staff implement the plan
in a sustained, coordinated fashion to meet the plan's ambitious
targets and time frames. To help facilitate this oversight, our report
recommends that EPA annually report to Congress on its progress in
improving grants management.
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions that you or Members of the Subcommittee may
have.
Contacts and Acknowledgments:
For further information about this testimony, please contact John B.
Stephenson at (202) 512-3841. Individuals making key contributions to
this testimony were Andrea Wamstad Brown, Carl Barden, Christopher
Murray, Paul Schearf, Rebecca Shea, Carol Herrnstadt Shulman, Bruce
Skud, Kelli Ann Walther, and Amy Webbink.
FOOTNOTES
[1] U.S. General Accounting Office, Grants Management: EPA Needs to
Strengthen Efforts to Address Persistent Challenges, GAO-03-846
(Washington, D.C.: Aug. 29, 2003). This report is available at no
charge on the GAO Web site at htpp://www.gao.gov.
[2] U.S. General Accounting Office, Environmental Protection Agency:
Problems Persist in Effectively Managing Grants, GAO-03-628T
(Washington, D.C: June 11, 2003). This report is available at no charge
on the GAO Web site at htpp://www.gao.gov.
[3] According to EPA officials, two headquarters' offices, EPA's Office
of General Counsel, and the Office of the Chief Financial Officer,
conduct limited grant activity.
[4] Program offices in Regions 4, 5, 6, 9, and 10 award grants
directly.
[5] Grant actions include new awards and increase and decrease
amendments. The 8,070 grant actions involving funding were composed of
4,374 new grants, 2,772 increase amendments, and 924 decrease
amendments. In addition, EPA awarded 1,620 no cost extensions, which
did not involve funding, in fiscal 2002.
[6] GAO did not verify EPA's budget data.
[7] EPA refers to these in-depth reviews as advance monitoring.
[8] The policy exempts individual grants only if they meet certain
criteria, such as national security interests. Exemptions require
detailed, written justification, and approval.
[9] See U.S. General Accounting Office, Results-Oriented Cultures:
Creating a Clear Linkage Between Individual Performance and
Organizational Success, GAO-03-488 (Washington, D.C.: Mar. 14, 2003).
[10] The senior managers include the Director of the Office of Grants
and Debarment, the Director of the Grants Administration Division, and
the Grants Competition Advocate.
