Grants Management
EPA Needs to Better Document Its Decisions for Choosing between Grants and Contracts Gao ID: GAO-04-459 March 31, 2004Grants and contracts constitute over two-thirds of the Environmental Protection Agency's (EPA) budget. In fiscal year 2003, EPA awarded $3.6 billion in grants directed by Congress, $656 million in grants awarded at its own discretion, and $934 million in contracts. Under the Federal Grant and Cooperative Agreement Act of 1977, whether EPA should award a grant or a contract depends upon the principal purpose of the award. In this context, GAO was asked to determine (1) the trends over the last 11 years on EPA's expenditures on discretionary grants and contracts and the types of goods and services obtained by each and (2) the extent to which EPA has and follows procedures for deciding when to use grants or contracts.
EPA's funding for discretionary grants and contracts had similar trends from fiscal years 1993 through 2003, suggesting limited migration between these funds in EPA's budget over this period. Although EPA grants data provide little information on goods and services obtained with discretionary grants, GAO estimates, based on its survey of grantees with grants closed in fiscal years 2001 and 2002 and that had project start dates after October 1, 1997, that the majority of goods and services fell into three categories: (1) research and development; (2) training, workshops, and education; and (3) journals, publications, and reports. EPA has specific procedures to guide decisions on choosing grants or contracts but often has not followed a very important one--documenting in its award decision memorandums the reasons for choosing a grant instead of a contract. EPA procedures define staff roles and responsibilities, provide examples of when to use a grant or a contract, and require documentation in the award decision memorandum to justify the use of a grant or a contract. However, in 64 percent (43 of 67) of the memorandums GAO reviewed, EPA did not fully justify its reasons for choosing a grant instead of a contract. It is unclear whether this shortcoming obscured inappropriate decisions to use grants instead of contracts. On the one hand, GAO's survey results showed that an estimated 8 percent of EPA's discretionary grantees would identify EPA as the primary and direct beneficiary. This estimate could suggest that the principal purpose of the grant award was acquiring property or services for EPA's direct benefit, and that EPA should have awarded some grants as contracts. However, for those grantees who identified EPA as the grant's primary and direct beneficiary, GAO's review of grant files and follow-up interviews indicated that some of these grants benefited both the federal government and the public and therefore could arguably have been awarded as either a grant or a contract.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-459, Grants Management: EPA Needs to Better Document Its Decisions for Choosing between Grants and Contracts
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Report to the Chairman, Committee on Transportation and Infrastructure,
House of Representatives:
March 2004:
GRANTS MANAGEMENT:
EPA Needs to Better Document Its Decisions for Choosing between Grants
and Contracts:
GAO-04-459:
GAO Highlights:
Highlights of GAO-04-459, a report to the Chairman, Committee on
Transportation and Infrastructure, House of Representatives
Why GAO Did This Study:
Grants and contracts constitute over two-thirds of the Environmental
Protection Agency‘s (EPA) budget. In fiscal year 2003, EPA awarded $3.6
billion in grants directed by Congress, $656 million in grants awarded
at its own discretion, and $934 million in contracts. Under the Federal
Grant and Cooperative Agreement Act of 1977, whether EPA should award a
grant or a contract depends upon the principal purpose of the award.
In this context, GAO was asked to determine (1) the trends over the
last 11 years on EPA‘s expenditures on discretionary grants and
contracts and the types of goods and services obtained by each and (2)
the extent to which EPA has and follows procedures for deciding when to
use grants or contracts.
What GAO Found:
EPA‘s funding for discretionary grants and contracts had similar trends
from fiscal years 1993 through 2003, suggesting limited migration
between these funds in EPA's budget over this period. Although EPA
grants data provide little information on goods and services obtained
with discretionary grants, GAO estimates, based on its survey of
grantees with grants closed in fiscal years 2001 and 2002 and that had
project start dates after October 1, 1997, that the majority of goods
and services fell into three categories:
(1) research and development; (2) training, workshops, and education;
and (3) journals, publications, and reports.
EPA has specific procedures to guide decisions on choosing grants or
contracts but often has not followed a very important one”documenting
in its award decision memorandums the reasons for choosing a grant
instead of a contract. EPA procedures define staff roles and
responsibilities, provide examples of when to use a grant or a
contract, and require documentation in the award decision memorandum to
justify the use of a grant or a contract. However, in 64 percent (43 of
67) of the memorandums GAO reviewed, EPA did not fully justify its
reasons for choosing a grant instead of a contract. It is unclear
whether this shortcoming obscured inappropriate decisions to use grants
instead of contracts. On the one hand, GAO‘s survey results showed that
an estimated 8 percent of EPA‘s discretionary grantees would identify
EPA as the primary and direct beneficiary. This estimate could suggest
that the principal purpose of the grant award was acquiring property or
services for EPA‘s direct benefit, and that EPA should have awarded
some grants as contracts. However, for those grantees who identified
EPA as the grant‘s primary and direct beneficiary, GAO‘s review of
grant files and follow-up interviews indicated that some of these
grants benefited both the federal government and the public and
therefore could arguably have been awarded as either a grant or a
contract.
GAO Recommends:
GAO recommends that EPA consider ways to improve compliance with its
requirement to properly document in its award decision memorandums the
justification for using a grant instead of a contract.
In commenting on a draft of this report, EPA stated that it agreed with
and will implement GAO‘s recommendation.
www.gao.gov/cgi-bin/getrpt?GAO-04-459.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John B. Stephenson at
(202) 512-6225 or stephensonj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Discretionary Grant and Contract Funding Have Had Similar Trends, but
Existing Data Make It Difficult to Analyze Trends in Goods and Services:
EPA Generally Has More Specific Procedures Than Other Federal Agencies
but Often Does Not Adequately Document Its Reasons for Choosing a Grant
or a Contract:
Conclusions:
Recommendation for Executive Action:
Agency Comments:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Information on Funding and Goods and Services Obtained
from EPA Discretionary Grants:
Appendix III: Survey Results:
Appendix IV: Agency Policy Comparison:
Appendix V: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: EPA Discretionary Grant Funding by Catalog Code, Fiscal Years
1993 and 2003:
Table 2: EPA Contract Funding by SIC Code, Fiscal Years 1993 and 2000:
Table 3: EPA Contract Funding by NAICS Code, Fiscal Years 2001 and 2003:
Table 4: Types of Goods and Services Reported by Surveyed Discretionary
Grant Recipients:
Table 5: Comparison of EPA's Award Instrument Policy and Guidance with
Other Top Grant-Making Agencies:
Table 6: Problems Identified in EPA's Decision Memorandums:
Table 7: EPA Grant and Contract Funding, Fiscal Years 1993 through 2003:
Table 8: Discretionary Grant Funding by EPA Regions and Headquarters,
Fiscal Years 1993 through 2003:
Table 9: EPA Discretionary Grant Funding by CFDA Codes, Fiscal Years
1993 through 2003:
Table 10: EPA Contract Funding by SIC Codes, Fiscal Years 1993 through
2000:
Table 11: EPA Contract Funding by NAICS Codes, Fiscal Years 2001 through
2003:
Table 12: Descriptions of the Types of Goods and Services Reported by
Surveyed Discretionary Grant Recipients:
Table 13: Top 10 Federal Grant-Awarding Agencies in Fiscal Year 2002:
Table 14: Information on Agency Grant Policies and Guidance:
Figures:
Figure 1: Grants and Contracts Awarded as a Percentage of EPA's Fiscal
Year 2003 Budget:
Figure 2: Roles and Responsibilities of EPA Offices in Selecting the
Appropriate Award Instrument:
Figure 3: Trends in EPA Discretionary Grant and Contract Funding, Fiscal
Years 1993 through 2003:
Abbreviations:
CFDA: Catalog of Federal Domestic Assistance:
DEQ: Department of Environmental Quality:
EPA: Environmental Protection Agency:
GICS: Grants Information and Control System:
GMO: Grant Management Office:
IGMS: Integrated Grants Management System:
NAICS: North American Industrial Classification System :
OAM: Office of Acquisition Management:
OIG: Office of Inspector General:
OMB: Office of Management and Budget:
SIC: Standard Industrial Classification:
Letter March 31, 2004:
The Honorable Don Young:
Chairman, Committee on Transportation and Infrastructure:
House of Representatives:
Dear Mr. Chairman:
Grants and contracts constitute over two-thirds of the budget of the
Environmental Protection Agency (EPA) and are the primary tools through
which EPA carries out its mission of protecting the environment and
human health.[Footnote 1] In fiscal year 2003, EPA awarded $3.6 billion
in nondiscretionary grants, $656 million in discretionary grants, and
$934 million in contracts. For nondiscretionary grants, Congress
directs awards to recipients who meet specific eligibility
requirements, often on the basis of formulas prescribed by law or
regulation. For discretionary grants, EPA has the legislative authority
to determine the funding levels and recipients. EPA also awards
contracts to acquire property or services. The Federal Grant and
Cooperative Agreement Act of 1977, as amended, sets out governmentwide
criteria for selecting the most appropriate award instrument--a grant
or a contract.[Footnote 2] The legislative history indicates that
Congress passed this act, in part, because the failure to distinguish
between grants and contracts had led to both the inappropriate use of
grants to avoid the requirements of the procurement system as well as
to unnecessary red tape and administrative requirements for
grants.[Footnote 3]
Under the act, an agency must decide whether to use a grant or a
contract based on the principal purpose of the award. If an agency is
using federal funds to acquire property or services for the direct
benefit of the federal government, it must award the funds as a
contract.[Footnote 4] On the other hand, the agency is to award a grant
when the principal purpose of the award is to transfer a thing of
value, usually funds, to a state or local government or other
recipients to "carry out a public purpose of support or stimulation"
authorized by law. However, the principal purpose of an award is not
always clear because federal agencies, as well as others, may obtain
incidental use or benefit from an award. In 1994, 1999, and 2002, EPA
Inspector General reports questioned EPA's decision to award a
discretionary grant instead of a contract.[Footnote 5] These reports
raised concerns about possible other instances in which EPA may have
made improper award decisions and used discretionary grant money for
services that should have been procured through contracts.
In this context, you asked us to determine (1) the trends over the last
11 years for EPA's expenditures on discretionary grants and contracts
and the types of goods and services obtained by each and (2) the extent
to which EPA has and follows procedures for deciding when to use grants
or contracts.
To identify the funding trends in discretionary grants and contracts
and the types of goods and services obtained by each, we analyzed EPA's
data on grants and contracts for fiscal years 1993 through 2003. We
interviewed and obtained documents from officials in EPA's Office of
Grants and Debarment and its Office of Acquisition Management. We also
conducted a Web-based survey of 237 randomly selected discretionary
grant recipients whose grants were closed in fiscal years 2001 and 2002
and had project start dates after October 1, 1997. This sample was
selected so that we could project the results to all grant recipients
in the period we reviewed. We used survey results to identify the types
of goods and services obtained by the grants. To determine the extent
to which EPA has and follows procedures for deciding when to use either
a grant or a contract, we (1) identified and discussed with EPA staff
the policies, procedures, and guidelines that they have in place to
make discretionary grant awards; (2) reviewed internal EPA management
reviews and EPA Inspector General reports to find instances where
discretionary grant awards or adherence to correct management
procedures were questioned; (3) compared EPA's discretionary grant
award policy with those of the nine largest granting agencies and spoke
with their Inspectors Generals about award selection issues; (4) asked
our survey respondents whether EPA was the direct beneficiary of the
grant they received, and conducted telephone interviews with selected
respondents to determine if there was evidence that EPA should have
awarded a contract instead of a grant; and (5) performed in-depth file
reviews of 67 grants, selected on the basis of survey responses, to
determine if EPA was following its policies, procedures, and guidelines
when choosing between a grant or a contract.
We conducted our review from January 2003 to February 2004 in
accordance with generally accepted government auditing standards. Our
scope and methodology are presented in appendix I.
Results in Brief:
EPA's funding for discretionary grants and contracts had similar trends
from fiscal years 1993 through 2003, but sufficient and comparable data
were not available to determine the specific goods and services EPA
funded through discretionary grants and those it purchased through
contracts. Funding for EPA discretionary grants and contracts decreased
by 3 percent and 12 percent, respectively, between these fiscal years.
This trend suggests that limited migration occurred between
discretionary grant and contract funds in EPA's budget over this 11-
year period. Although the trends show limited change, we could not
distinguish more specifically between goods and services obtained
through grants and contracts because EPA's databases have limited
information on these goods and services. The data EPA provided to us
had little information on goods and services obtained and cannot be
compared with each other to determine whether activities once funded
under contracts are now being funded under discretionary grants.
Although EPA data provide limited information on goods and services
obtained with discretionary grant funds, we estimate, based on our
survey of discretionary grants, that the majority of goods and services
fell into three categories: (1) research and development; (2) training,
workshops, and education; and (3) journals, publications, and reports.
EPA has procedures to guide decisions on choosing a grant or a
contract, but the agency often has not followed one of its most
important procedures--documenting in its award decision memorandums the
reasons for choosing a grant instead of a contract. We found that EPA's
procedures are generally more specific than those of other federal
agencies that award substantial grant funds. Specifically, EPA's
procedures define staff roles and responsibilities, provide examples of
when to use a grant or a contract, and require documentation in its
award decision memorandum to justify the use of a grant instead of a
contract. Although EPA's procedures are more specific, we found that 64
percent, or 43 of the 67 decision memorandums we reviewed, did not
fully justify the reason for choosing a grant instead of a contract. It
is unclear whether this documentation shortcoming obscured
inappropriate decisions to use grants instead of contracts. On the one
hand, our survey results showed that 8 percent of EPA's discretionary
grantees would identify EPA as the grant's primary and direct
beneficiary. This estimate could suggest that the principal purpose of
the award was to acquire property or services for EPA's direct benefit,
and that EPA should therefore have awarded some grants as contracts.
However, for those grant recipients we surveyed who identified EPA as
the grant's primary and direct beneficiary, we could not determine from
our file reviews and grantee interviews that the principal purpose of
the award was to benefit EPA directly and that a contract should have
been used instead. We found cases in which both EPA and the public
benefited, and therefore the grant could arguably have been awarded as
either a grant or a contract. For instance, we found that both EPA and
the public benefited in the case of a grantee who used EPA funds to
develop waste management standards that the private sector, state and
local governments, and EPA and other federal agencies could use.
Because an award may have multiple beneficiaries and the direct
beneficiary of an award is not always easily discernible, it is
important for EPA to carefully document its reasons for choosing a
grant or a contract.
We are recommending that EPA consider ways to improve project officers'
compliance with EPA's requirement to properly document in award
decision memorandums the reasons for choosing a grant instead of a
contract.
We provided a draft of this report to EPA for its review and comment.
EPA stated that it agreed with and will implement our recommendation.
Background:
EPA used over two-thirds of its fiscal year 2003 budget on grants and
contracts to carry out its environmental programs and obtain services.
Out of an $7.6 billion fiscal year 2003 budget, EPA awarded $4.2
billion in grants and $934 million in contracts, as shown in figure 1.
Figure 1: Grants and Contracts Awarded as a Percentage of EPA's Fiscal
Year 2003 Budget:
[See PDF for image]
[A] Other includes payroll and interagency agreements.
[End of figure]
In fiscal year 2002, EPA made over 8,000 grant awards and
amendments,[Footnote 6] covering 72 separate grant programs to 4,100
grant recipients. EPA offers two types of grant programs--
nondiscretionary and discretionary:
* For nondiscretionary grants, Congress directs awards to prospective
recipients who meet specific eligibility criteria, often awarded on the
basis of formulas prescribed by law or agency regulation. For example,
nondiscretionary grants support water infrastructure projects, such as
the drinking water and clean water state revolving fund program, and
continuing environmental programs, such as the Clean Air Program for
monitoring and enforcing Clean Air Act regulations. In fiscal year
2003, EPA awarded about $3.6 billion in nondiscretionary grants. EPA
has awarded these grants primarily to states and other governmental
entities.
* For discretionary grants, EPA has the legislative authority to
independently determine the recipients and funding levels. These grants
fund a variety of activities, such as environmental research and
training. In fiscal year 2003, EPA awarded $656 million in
discretionary grants. EPA awards these grants primarily to state and
local government entities, nonprofit organizations, universities, and
Native American tribes. In fiscal year 2003, EPA awarded about 40
percent of the discretionary grant dollars through program offices at
EPA headquarters, while its 10 regional offices awarded the remaining
60 percent.
Additionally, at its own discretion, EPA took 6,745 total contract
actions[Footnote 7] totaling $934 million in fiscal year 2003. EPA
contracting activities range from long-term clean-up and remediation
support contracts under the agency's Superfund program, contracts to
support research at EPA laboratories, contracts for management
consultant services, and contracts for janitorial services and building
maintenance.
With discretionary funding, EPA needs to choose the appropriate award
instrument--a procurement contract, a grant, or a cooperative
agreement. The Federal Grant and Cooperative Agreement Act of 1977
established governmentwide criteria that agencies must use in selecting
the most appropriate award instrument. Specifically:
* Procurement contracts are to be used when "the principal purpose of
the instrument is to acquire (by purchase, lease, or barter) property
or services for the direct benefit or use of the United States
Government," or when "the agency decides in a specific instance that
the use of a procurement contract is appropriate.":
* Grant agreements are to be used when "the principal purpose of the
relationship is to transfer a thing of value to the [grant recipient]
to carry out a public purpose of support or stimulation authorized by
[federal law]," and when "substantial involvement is not expected
between the executive agency and the [grant recipient] when carrying
out the activity contemplated in the agreement.":
* Cooperative agreements are to be used when "the principal purpose of
the relationship is to transfer a thing of value to the [grant
recipient] to carry out a public purpose of support or stimulation
authorized by [federal law]," and when "substantial involvement is
expected between the executive agency and the [grant recipient] when
carrying out the activity contemplated in the agreement.":
Under the act, grants and cooperative agreements are closely related to
one another. The essential distinction between a grant and a
cooperative agreement is the degree of federal involvement.
EPA Order 5700.1 is the agency's policy to implement the 1977 Act and
guides EPA in its selection of the appropriate award
instrument.[Footnote 8] The order's purpose is "to clarify the criteria
for and to achieve consistency in the selection and use of contracts,
cooperative agreements and grants by all EPA offices and laboratories."
According to the order, the decision to use a contract or an assistance
agreement (a grant or a cooperative agreement) must be based solely on
the principal purpose of the relationship, and EPA offices and
laboratories must determine whether the government is the direct
beneficiary or user of the activity. The order identifies activities
that must be funded through a contract, such as activities that produce
specific information that EPA will directly incorporate into technical,
policy, or regulatory decisions, and activities that may be funded
through an assistance agreement, such as state and local government
cleanup of hazardous waste sites. The order also gives examples to
clarify areas of ambiguity, such as which instrument to select to fund
a conference when EPA may be attending, and what qualifies as
substantial involvement in the selection of a cooperative agreement.
The order also specifies the roles and responsibilities of both EPA
program and grants management offices, including the responsibilities
of those personnel who handle funding and "technical, legal, and
administrative evaluations." Additional project officer training
guidance specifies that project officers at EPA headquarters and in
regional program offices receive grant proposals resulting from agency
advertisements and solicitations, or through a grantee's unsolicited
proposal. Project officers are responsible for ensuring that grants
meet technical and programmatic requirements. EPA's Office of Grants
and Debarment develops agency grant policies and guidance, and, through
its grants management offices at headquarters and in regions, is
responsible for the administration and management of individual grants.
Grants management offices work with project officers to evaluate
whether individual grant proposals should be approved as a grant, a
cooperative agreement, or referred to EPA's Office of Acquisition
Management, which oversees agency contracting. Figure 2 describes the
process that the EPA offices follow in choosing a grant or a contract.
Figure 2: Roles and Responsibilities of EPA Offices in Selecting the
Appropriate Award Instrument:
[See PDF for image]
Note: The preaward process described above occurs when EPA competes a
grant. However, when unsolicited proposals are received, an electronic
solicitation is not issued and a noncompetitive award can be made based
on the unique qualifications of the applicant.
[End of figure]
To document compliance with the 1977 Act, EPA Order 5700.1 requires
that a designated approval official sign a decision memorandum prepared
by the responsible project officer verifying the selection of the
appropriate award instrument.[Footnote 9] Additional Office of Grants
and Debarment guidance listed in its project officer training manual
requires that the decision memorandum must include, among other items,
the objectives of the project or program, the total amount of the
award, and a brief justification why the award should be awarded as a
grant or a cooperative agreement. Internal management reviews conducted
by the Office of Grants and Debarment note that the justification
should address the criteria identified in the order: principal purpose
of the relationship, direct benefit or use, support or stimulation, and
legislative authority to enter into a grant relationship.[Footnote 10]
In addition, if the award is to be a cooperative agreement, the
memorandum must include a description of the substantial federal
involvement. For proposals to fund conferences or Web sites, the Office
of Grants and Debarment has developed separate, specific guidance for
project officers to use in order to determine whether EPA is the direct
beneficiary of the conference or Web-site proposal.
Discretionary Grant and Contract Funding Have Had Similar Trends, but
Existing Data Make It Difficult to Analyze Trends in Goods and
Services:
EPA's funding for discretionary grants and contracts have had similar
trends from fiscal years 1993 through 2003, and this trend suggests
there has been limited migration between discretionary grant and
contract funds in EPA's budget over this period. However, the data EPA
provided to us had little information on goods and services obtained
and cannot be compared with each other to determine whether activities
once funded under contracts are now being funded under discretionary
grants. We estimate, on the basis of our survey responses from
recipients of discretionary grants closed in fiscal years 2001 and 2002
and that had project start dates after October 1, 1997, that the
majority of discretionary grants' goods and services fell into three
categories: research and development; training, workshops, and
education; and journals, publications, and reports. A large number of
grants were also used to fund conferences and smaller presentations and
meetings. Although fewer in number, discretionary grants used for
cleanup and monitoring activities, such as support for state leaking
underground storage tank programs, made up one of the largest dollar
categories of discretionary grant funding for any spending category we
identified.
EPA Discretionary Grants and Contracts Have Had Similar Trends:
For fiscal years 1993 through 2003, both discretionary grant and
contract spending show similar trends, as figure 3 shows. Both the
overall and annual trends suggest there has been limited migration
between discretionary grant and contract funds in EPA's budget over
this period.
Figure 3: Trends in EPA Discretionary Grant and Contract Funding,
Fiscal Years 1993 through 2003:
[See PDF for image]
[End of figure]
In total, EPA funded $6.4 billion in discretionary grants and $11.3
billion in contracts over the 11-year period. For discretionary grants,
annual funding decreased by $18 million over the period, from $674
million to $656 million; annual funding for contracts decreased by $130
million, from $1.06 billion to $934 million--decreases of 3 and 12
percent, respectively. See table 7 in appendix II for annual funding
levels for EPA discretionary grants and contracts for fiscal years 1993
through 2003. Table 8 in appendix II shows annual funding levels for
EPA discretionary grants at EPA headquarters and regional offices for
fiscal years 1993 through 2003.
EPA Databases Make It Difficult to Identify Trends in the Use of Grants
and Contracts to Obtain Goods and Services:
EPA's databases do not provide sufficient information to identify and
track specific goods and services obtained with grants and contracts.
EPA currently uses two databases for grant management purposes--the
Grants Information and Control System (GICS) and the Integrated Grants
Management System (IGMS). Both databases are useful for retrieving
information about specific grants, but neither is useful in analyzing
the kinds of goods and services funded by discretionary grants. For our
grant analysis, EPA was able to query these databases by Catalog of
Federal Domestic Assistance (the catalog) program codes.[Footnote 11]
As shown in table 1, the catalog codes provide little information on
goods and services obtained through discretionary grants because single
codes can encompass broad miscellaneous groupings of goods and
services, and several codes have been merged with other codes between
fiscal years 1993 and 2003.
Table 1: EPA Discretionary Grant Funding by Catalog Code, Fiscal Years
1993 and 2003:
Million current dollars.
Catalog code: 66.606;
Description: Surveys, Studies, Investigations, and Special Purpose
Grants;
FY93 amount: $135;
FY03 amount: $48.
Catalog code: 66.500;
Description: Consolidated Research Grants;
FY93 amount: $40;
FY03 amount: $80.
Catalog code: 66.802;
Description: Superfund State Site Specific Cooperative Agreements;
FY93 amount: $182;
FY03 amount: $56.
Catalog code: 66.508;
Description: Senior Environmental Employment Program;
FY93 amount: $45;
FY03 amount: $54.
Catalog code: 66.805;
Description: Leaking Underground Storage Tank Trust Fund Program;
FY93 amount: $17;
FY03 amount: $53.
Catalog code: 66.811;
Description: Brownfield Pilots Cooperative Agreements;
FY93 amount: $0;
FY03 amount: $-1.
Catalog code: 66.607;
Description: Training and Fellowship Grants;
FY93 amount: $12;
FY03 amount: $11.
Catalog code: 66.501;
Description: Air Pollution Control Research;
FY93 amount: $64;
FY03 amount: $0.
Catalog code: 66.809;
Description: Superfund State Core Program Cooperative Agreements;
FY93 amount: $14;
FY03 amount: $10.
Catalog code: 66.471;
Description: State Grants to Reimburse Operators of Small Water Systems
for Training and Certification Costs;
FY93 amount: $0;
FY03 amount: $67.
Source: GAO analysis of EPA data.
[End of table]
In 6 of the 11 fiscal years, EPA program offices awarded the most EPA
discretionary grant funds under a miscellaneous catalog code, 66.606,
called Surveys, Studies, Investigations, and Special Purpose Grants.
This code also received the most funds overall during the 11-year
period, or $1.4 billion. Because this code is not program-specific, it
provided limited use in drawing conclusions about goods and services
obtained under this code. In 2002, the EPA Inspector General found that
EPA could have awarded many of its assistance agreements under a
program-specific catalog code, rather than the miscellaneous 66.606
code, that would better link activities to measurable assistance
agreement outcomes.[Footnote 12] EPA substantially reduced its use of
this code in 2003. In addition, several grant programs were merged
under new catalog codes. As shown in table 1, discretionary grant
funding under the Consolidated Research Grants program code rose, but
this increase occurred because the code subsumed the Air Pollution
Control Research and Water Protection Consolidated Research program
codes. The Consolidated Research Grants program code is also a generic,
miscellaneous catalog code and provides little information on the
specific goods and services obtained under it. In fiscal year 2003, EPA
awarded $128 million, or 20 percent of its discretionary grant dollars,
under these two miscellaneous catalog codes. See table 9 in appendix II
for EPA discretionary grant funding by catalog code from fiscal years
1993 through 2003.
Regarding contracts, we could not analyze trends for fiscal years 1993
through 2003 of goods and services EPA obtained through contracts.
EPA's contract data come from the Federal Procurement Data System,
which changed its industrial coding categories in 1997, and EPA adopted
these changes in 2001. The original coding categories came from the
Small Business Administration--the Standard Industrial Classification
(SIC) codes. The Federal Procurement Data System then switched to the
North American Industrial Classification System (NAICS)
codes.[Footnote 13] However, SIC codes categorize goods and services
differently than NAICS codes, and therefore we could not compare goods
and services purchased for the 11-year period. Moreover, because EPA's
database could only provide data for major SIC and NAICS codes, we
could not determine, except in a general way, the goods and services
EPA obtained through contracts under these codes.[Footnote 14]
For the SIC codes, we found that four codes comprised 93 percent of all
contract spending for the period of fiscal years 1993 through 2000.
Table 2 shows selected year data for these codes. As the table shows,
Engineering, Accounting, Research, Management, and Related Services was
consistently the highest category of contract spending. This category
accounted for 58 percent of the total contract spending for the period.
Table 2: EPA Contract Funding by SIC Code, Fiscal Years 1993 and 2000:
Million current dollars.
SIC Code: 87;
Description: Engineering, Accounting, Research, Management, and Related
Services;
FY93 amount: $542;
FY00 amount: $593.
SIC Code: 73;
Description: Business Services;
FY93 amount: $107;
FY00 amount: $170.
SIC Code: 89;
Description: Services, Not Elsewhere Classified[A];
FY93 amount: $195;
FY00 amount: $115.
SIC Code: 49;
Description: Electric Gas and Sanitary Services;
FY93 amount: $162;
FY00 amount: $-3.
Source: GAO analysis of EPA data.
[A] Examples of Services, Not Elsewhere Classified, are services
provided by authors, lecturers, radio commentators, songwriters,
weather forecasters, writers, and artists working on their own account.
[End of table]
Similarly, our analysis of NAICS codes shows that four codes accounted
for 90 percent of the contract spending for fiscal years 2001 and 2003.
Table 3 shows the five highest dollar contract spending codes for these
fiscal years.
Table 3: EPA Contract Funding by NAICS Code, Fiscal Years 2001 and 2003:
Million current dollars.
NAICS code: 541;
Description: Professional, Scientific, and Technical Services;
FY01 amount: $454;
FY03 amount: $449.
NAICS code: 561;
Description: Administrative and Support Services;
FY01 amount: $333;
FY03 amount: $251.
NAICS code: 514;
Description: Information Services and Data Processing Services;
FY01 amount: $87;
FY03 amount: $33.
NAICS code: 562;
Description: Waste Management and Remediation Services;
FY01 amount: $16;
FY03 amount: $103.
NAICS code: 513;
Description: Broadcasting and Telecommunications;
FY01 amount: $42;
FY03 amount: $23.
Source: GAO analysis of EPA data.
See tables 10 and 11 in appendix II for EPA contract funding by SIC
code (fiscal years 1993 through 2000) and NAICS code (fiscal years 2001
through 2003).
[End of table]
Most Grant Funds Were Used for Education, Research, and Publications:
On the basis of our survey responses, we estimate that of all the goods
and services indicated by grant recipients, 59 percent were in three
categories: (1) research and development; (2) training, workshops, and
education; and (3) journals, publications, and reports. These three
categories accounted for the majority of grant funds, but we identified
a total of eight categories from the survey responses, as shown in
table 4. Although these results provide more information than catalog
codes on goods and services, they only apply to discretionary grants
closed out in fiscal years 2001 and 2002 that had project start dates
after October 1, 1997. Discretionary grants used for cleanup and
monitoring activities, such as support for state leaking underground
storage tank programs, make up one of the largest dollar categories of
discretionary grant funding of the spending categories we identified.
We estimate that 15 percent of grants fall into this category,
accounting for $56 million of the estimated $209 million[Footnote 15]
spent on grants closed in fiscal years 2001 and 2002 that had project
start dates after October 1, 1997.
Table 4: Types of Goods and Services Reported by Surveyed Discretionary
Grant Recipients:
Type of goods or services: Training, workshops, and education;
Percentage of grants listing this category of deliverable: 34;
Estimated dollars for deliverable category (in millions): $40[B].
Type of goods or services: Research and development;
Percentage of grants listing this category of deliverable: 24;
Estimated dollars for deliverable category (in millions): 67[ A].
Type of goods or services: Journals, publications, and reports;
Percentage of grants listing this category of deliverable: 20;
Estimated dollars for deliverable category (in millions): 54[A].
Type of goods or services: Cleanup, monitoring, and site assessment;
Percentage of grants listing this category of deliverable: 15;
Estimated dollars for deliverable category (in millions): 56[A].
Type of goods or services: Meetings, conferences, and presentations;
Percentage of grants listing this category of deliverable: 15;
Estimated dollars for deliverable category (in millions): 27[B].
Type of goods or services: Project support and assistance;
Percentage of grants listing this category of deliverable: 10;
Estimated dollars for deliverable category (in millions): 19[C].
Type of goods or services: Web sites;
Percentage of grants listing this category of deliverable: 7;
Estimated dollars for deliverable category (in millions): 14[C].
Type of goods or services: Other;
Percentage of grants listing this category of deliverable: 8;
Estimated dollars for deliverable category (in millions): 18[B].
Source: GAO analysis of survey responses.
Note: Percentage totals are greater than 100 and dollar totals are more
than the $209 million estimate because many grants provided more than 1
good or service.
[A] Sampling error is between one-fourth and one-third of the value of
this estimate.
[B] Sampling error is between one-third and one-half of the value of
this estimate.
[C] Sampling error is between 60 and 70 percent of the value of this
estimate.
[End of table]
Table 12 in appendix II provides a more detailed description of the
goods and services under the categories listed in table 4.
Although we were able to identify and categorize goods and services
from survey responses, we could not link these to environmental
results. According to EPA's Grants Management Plan, released April
2003, the agency plans to link grant performance to achievements of the
agency's five performance goals: clean air, clean and safe water,
preserve and restore the land, healthy communities and ecosystems, and
compliance and environmental stewardship. To implement this initiative,
the agency planned to issue policy guidance to ensure that all grant
work plans, decision memorandums, and/or terms of condition include
environmental outcomes and how to measure them in 2003. On January 14,
2004, EPA's Office of Grants and Debarment issued an interim policy
order requiring program offices to include a discussion of how a
proposed project or program supports the goals of EPA's Strategic Plan
in funding packages submitted to the grants management offices, on or
after February 9, 2004. Office of Grants and Debarment officials told
us that they expected the final policy order to be issued in October
2004.
EPA Generally Has More Specific Procedures Than Other Federal Agencies
but Often Does Not Adequately Document Its Reasons for Choosing a Grant
or a Contract:
EPA has procedures to guide decisions on choosing a grant or a
contract, but often has not followed one of its most important
procedures--documenting in its award decision memorandums the reasons
for choosing a grant instead of a contract. We found that EPA's
procedures are generally more specific than those of other federal
agencies that award substantial grant funds. Although EPA's procedures
are more specific, in our detailed review of 67 EPA grant and
cooperative agreement awards, we found that EPA often did not follow
its requirements for documenting its decision on why it chose to award
a grant instead of a contract. It is unclear whether this documentation
shortcoming obscured inappropriate decisions to use grants instead of
contracts. On the one hand, on the basis of our survey results, we
estimate that 8 percent of EPA's grantees would identify EPA as the
grant's primary and direct beneficiary. This estimate could suggest
that the principal purpose of the award was to acquire property or
services for EPA's direct benefit, and that EPA should therefore have
awarded some grants as contracts. However, for those grant recipients
we surveyed who identified EPA as the grant's primary and direct
beneficiary, we could not determine from our file reviews and grantee
interviews that the principal purpose of the award was to benefit EPA
directly and that a contract should have been used instead. We found
that both EPA and the public benefited, as in the case of a grantee who
used EPA funds to develop waste management standards that the private
sector, state and local governments, and EPA and other federal agencies
could use. Because the principal purpose of an award is not always
clear, it is important for EPA to carefully document its reasons for
choosing a grant or a contract.
EPA's Award Policy and Procedures Are Generally More Specific Than
Other Agencies:
EPA's policy and procedures to select the appropriate award instrument
are generally more specific than those of other federal agencies that
award substantial grant funds. See table 14 in appendix IV for more
detailed information. As shown in table 5, our analysis of the award
policies and guidance of the top 10 federal grant-making
agencies[Footnote 16] shows that EPA's policy on the selection of a
funding instrument met all nine of the features we used to compare
agencies' policies for determining whether to award a grant, a
cooperative agreement, or a contract.
Table 5: Comparison of EPA's Award Instrument Policy and Guidance with
Other Top Grant-Making Agencies:
Policy/Guidance feature: Guidance to clarify selection of award
instrument: Includes examples of when to award a grant or a cooperative
agreement instead of a contract;
Number of other agencies with the policy/guidance feature: 8;
Feature included in EPA's policy/ guidance? Yes.
Policy/Guidance feature: Guidance to clarify selection of award
instrument: Includes examples of when to award a grant instead of a
cooperative agreement;
Number of other agencies with the policy/guidance feature: 7;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Guidance to clarify selection of award
instrument: Provides guidance for using intermediaries that will, in
turn, use the funding to award subgrants and subcontracts;
Number of other agencies with the policy/guidance feature: 7;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Guidance to clarify selection of award
instrument: Provides guidance for awards for conferences;
Number of other agencies with the policy/guidance feature: 4;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Guidance to clarify selection of award
instrument: Provides guidance about funding of evaluations and studies;
Number of other agencies with the policy/guidance feature: 3;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Guidance to clarify selection of award
instrument: Provides guidance for in-kind, instead of monetary,
assistance;
Number of other agencies with the policy/ guidance feature: Guidance to
clarify selection of award instrument: 3;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Descriptions of roles and responsibilities:
Outlines roles and responsibilities of grants management and program
staff specifically relating to selection of the award instrument;
Number of other agencies with the policy/guidance feature: 4;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Internal control documentation requirements:
Requires statement of substantial involvement to justify the use of
cooperative agreements;
Number of other agencies with the policy/guidance feature: 3;
Feature included in EPA‘s policy/guidance? Yes.
Policy/Guidance feature: Internal control documentation requirements:
Requires documentation to justify the selection of the award instrument;
Number of other agencies with the policy/guidance feature: 2;
Feature included in EPA‘s policy/guidance? Yes.
Source: GAO analysis of top grant-making agencies' policies.
[End of table]
EPA Order 5700.1 includes the following features:
* the use of an internal control mechanism (decision memorandum) to
document the appropriate selection of a grant or a contract award
instrument;
* the roles and responsibilities of grants management and program
personnel in selecting and approving the appropriate award instrument;
* the statement that the type of recipient does not determine the award
instrument;
* specific guidance and examples on handling awards for conferences and
subgrantees and "in-kind" assistance;
* the use of examples for awarding a grant, a cooperative agreement, or
a contract; and:
* the use of case-study material to supplement the examples and provide
additional guidance.
Although not included in the order, additional EPA Office of Grants and
Debarment guidance requires that the decision memorandum must include a
description of the substantial involvement when a cooperative agreement
is selected. Each of the agencies' policy features is discussed in
greater detail in table 14 of appendix IV.
EPA Does Not Always Fully Document Its Justifications for Decisions to
Award Grants or Cooperative Agreements:
EPA's award policy requires a decision memorandum to document the
selection of an award instrument, but our review of 67 decision
memorandums showed that EPA often did not follow the award
documentation requirements, as identified in order 5700.1 and the
project officer training manual, and further expanded upon in internal
management reviews conducted by the Office of Grants and Debarment.
Table 6 summarizes the problems we found with EPA award documentation
from grant and cooperative agreement awards made at EPA headquarters
and six EPA regional offices.
Table 6: Problems Identified in EPA's Decision Memorandums:
Problem identified: Decision memorandum was missing from grant and
project officer file;
Award instrument: Grants (number reviewed): Headquarters: (15): 0;
Award instrument: Grants (number reviewed): Regions: (19): 1;
Award instrument: Grants (number reviewed): Subtotal: (34): 1;
Award instrument: Cooperative agreements (number reviewed):
Headquarters: (19): 0;
Award instrument: Cooperative agreements (number reviewed):
Regions: (14): 0;
Award instrument: Cooperative agreements (number reviewed):
Subtotal: (33): 0;
Total: (67): 1.
Problem identified: Decision memorandum did not identify statutory
authority for grant or cooperative agreement;
Award instrument: Grants (number reviewed): Headquarters: (15): 0;
Award instrument: Grants (number reviewed): Regions: (19): 6;
Award instrument: Grants (number reviewed): Subtotal: (34): 6;
Award instrument: Cooperative agreements (number reviewed):
Headquarters: (19): 1;
Award instrument: Cooperative agreements (number reviewed):
Regions: (14): 1;
Award instrument: Cooperative agreements (number reviewed):
Subtotal: (33): 2;
Total: (67): 8.
Problem identified: Inadequate justification for grant versus contract
in decision memorandum;
Award instrument: Grants (number reviewed): Headquarters: (15): 9;
Award instrument: Grants (number reviewed): Regions: (19): 16;
Award instrument: Grants (number reviewed): Subtotal: (34): 25;
Award instrument: Cooperative agreements (number reviewed):
Headquarters: (19): 6;
Award instrument: Cooperative agreements (number reviewed):
Regions: (14): 12;
Award instrument: Cooperative agreements (number reviewed):
Subtotal: (33): 18;
Total: (67): 43.
Problem identified: Missing description of substantial federal
involvement in decision memorandum;
Award instrument: Grants (number reviewed): Headquarters: (15): [A];
Award instrument: Grants (number reviewed): Regions: (19): [A];
Award instrument: Grants (number reviewed): Subtotal: (34): [A];
Award instrument: Cooperative agreements (number reviewed):
Headquarters: (19): 13;
Award instrument: Cooperative agreements (number reviewed):
Regions: (14): 13;
Award instrument: Cooperative agreements (number reviewed):
Subtotal: (33): 26;
Total: (67): 26.
Problem identified: Missing signature of Award Official on decision
memorandum;
Award instrument: Grants (number reviewed): Headquarters: (15): 1;
Award instrument: Grants (number reviewed): Regions: (19): 1;
Award instrument: Grants (number reviewed): Subtotal: (34): 2;
Award instrument: Cooperative agreements (number reviewed):
Headquarters: (19): 0;
Award instrument: Cooperative agreements (number reviewed):
Regions: (14): 0;
Award instrument: Cooperative agreements (number reviewed):
Subtotal: (33): 0;
Total: (67): 2.
Source: GAO analysis of file review information.
Note: From the responses we received from our survey of EPA grant
recipients, we selected 67 grant files to review based on responses to
survey questions. We reviewed award decision memorandums at EPA
headquarters and six EPA regions--Regions 1, 3, 4, 5, 7, and 10.
[A] A description of substantial federal involvement is not required
for grant awards.
[End of table]
Sixty-four percent, or 43 of the 67 decision memorandums reviewed,
lacked adequate justification for selecting a grant instead of a
contract at EPA headquarters and EPA regional offices. The decision
memorandums did not fully address the criteria identified by EPA. These
criteria include the principal purpose of the relationship, direct
benefit or use, support or stimulation, and the legislative authority
to enter into a grant relationship. Frequently, the justification used
boilerplate language from EPA's award policy citing that EPA was not
the direct beneficiary of the award and that the grant was meant for a
public purpose. Additionally, 84 percent, or 26 of the 33 decision
memorandums reviewed for cooperative agreements, did not include
justification for the award of a cooperative agreement instead of a
grant, as required by EPA's guidance, or the justification was not
specific. These justifications were usually missing from the decision
memorandums completely or simply stated that EPA would be substantially
involved in carrying out the award without detailing the type or degree
of involvement.[Footnote 17] Of the four grants we reviewed from one
EPA region, none of the decision memorandums associated with the grant
awards identified the statutory authority for making the award. For two
awards, the appropriate signature was missing on the decision
memorandums.
Internal reviews conducted by the Office of Grants and Debarment's
Grants Administration Division identified similar problems with
documentation in award decision memorandums. According to a July 2003
internal management review of EPA Region 9, many of the memorandums did
not fully explain the link between the statutory authority being
selected and the specific grantee activities. Furthermore, almost all
of the decision memorandums used a formula statement for the
justification, rather than the criteria referenced in section 6 of
order 5700.1. The management review stated that the justification
should address the criteria referenced in section 6 of the order, which
it identified as the principal purpose of the relationship, direct
benefit or use, support or stimulation, and the legislative authority
to enter into a grant relationship. Internal management reviews of
Regions 5 and 4, in July and August 2003, respectively, found similar
problems with the regions' award decision memorandums and stated that
the decision memorandums should address the criteria referenced in
section 6 of the order. The Grants Administration Division recommended
that the Assistant Regional Administrator for Management in these
regions strengthen the justifications for "contracts versus grants" and
"statutory authority" with respect to discretionary grants. Internal
review staff in the Office of Grants and Debarment with whom we spoke
noted that although their reviews found documentation problems, they
found no evidence that any grants should have been awarded as
contracts.
Although EPA's Office of Grants and Debarment has raised concerns about
the lack of documentation in decision memorandums and made
recommendations to strengthen them, officials in the Office of Grants
and Debarment told us that the decision memorandum does not always
reflect the full level of consideration given to the grant or contract
issue because the decision memorandum is written by the project officer
prior to the review by the grants management office. For example, after
reviewing the decision memorandum, grants specialists in the Office of
Grants and Debarment may request that the project officer provide
clarifying information. Office of Grants and Debarment staff told us
that evidence of the grant or contract discussions is often found
elsewhere in the project file, such as in revisions in the recipient's
work plan or in clarifying e-mails sent back-and-forth between the
project officer and the grants specialist during the review process.
They told us that they consider these clarifying e-mails and other
documentation as an addendum to the decision memorandum, and that the
decision memorandum is not always rewritten to reflect this process or
any additional information that is developed. Finally, according to
Office of Grants and Debarment officials, beginning in April 2004, EPA
regions will be required to attach or enter documentation
electronically justifying their decision to award a grant or a
cooperative agreement instead of a contract, and headquarters offices
are scheduled to begin this practice by the end of 2006.
Follow-up Analysis of Survey Results Shows That Both EPA and the Public
Benefited from Some Grants:
We estimate that 88 percent of EPA's grant recipients would identify
the general public or entities other than EPA as the grant's primary
beneficiary, and that 8 percent would identify EPA. Specifically, we
estimate that grant recipients would identify the primary beneficiary
of their grants as the following:
* 33 percent--general public;
* 8 percent--EPA;
* 13 percent--schools and universities;
* 10 percent--other audiences;
* 9 percent--state agencies;
* 7 percent--grant recipient;
* 6 percent--research and academic communities;
* 6 percent--business or private sector;
* 3 percent--Indian tribes;
* 1 percent--nonprofit organizations; or:
* 4 percent--don't know, or no response.
To determine whether EPA was the direct and primary beneficiary as the
respondents had indicated,[Footnote 18] we reviewed EPA's grant and
project officer files for 20 grants and conducted interviews with those
grant recipients. These recipients noted that while EPA benefited from
the grant, other entities benefited as well. Our file reviews confirmed
this statement. As EPA's policy notes, there may be some cases in which
EPA expects to derive some incidental use or benefit from funded
activities. Such incidental use or benefit does not preclude a grant
award when the principal purpose is public support or stimulation.
Although some of these grants could arguably be described as having a
principal purpose of acquiring property or services for the direct
benefit or use of EPA, in which case a contract would have been the
award instrument, we could not make this determination from our review
of the files or grant recipient interviews.
For instance, in 1998, EPA awarded a noncompetitive cooperative
agreement to an international nonprofit organization that develops
voluntary waste management standards that are used worldwide by
industry, regulatory bodies, and individuals. According to award
documents and the award recipient, the main purpose of the award was to
assist EPA in developing waste management standards that could be
incorporated into EPA's Resource Conservation and Recovery Act
Program,[Footnote 19] and which could also be used by federal, state,
and local regulatory bodies; industry; and individuals.
During EPA's internal review of the justification contained in the
decision memorandum for the award, questions arose as to whether
funding the proposed project as a cooperative agreement rather than a
contract would violate provisions of the 1977 Act. Subsequent review by
EPA legal counsel found that since the proposal focused on developing
standards that could be used by both the public and private sector, a
case could be made that federal use would be incidental to the
principal public purpose of support and stimulation, and awarding the
project as a cooperative agreement could be justified. However, EPA
legal counsel also pointed out that to fund the project as a
cooperative agreement, reference to EPA direct use and benefit would
have to be removed from the decision memorandum because "Technical
materials that EPA uses to set guidelines or to prepare EPA guidance
documents or manual must be obtained under a contract. EPA Order
5700.1, p. 10." As such, EPA would have to delete portions of the
memorandum that stated "These standards will form a nucleus from which
OSWER[Footnote 20] will develop updated sampling guidance for inclusion
in Chapter Nine of 'Test Methods for Evaluating Solid Waste, Physical/
Chemical Methods', (SW-846), the RCRA test methods manual." EPA staff
modified the decision memorandum accordingly and awarded the project as
a cooperative agreement. The EPA project officer acknowledged that EPA
could have funded the project as a contract, but the agency instead
took the steps necessary to award the project as a cooperative
agreement because it was "a faster process.":
In another instance, in 1999, EPA awarded a cooperative agreement to a
state Department of Environmental Quality (DEQ) to develop a wet-
weather monitoring program for a watershed within that state. According
to the award recipient, the state and the public benefited from this
project, as well as EPA. However, EPA was under court order to develop
Total Maximum Daily Loads (water quality indicators) for the watershed
involved and instead opted to award a cooperative agreement to the
state to perform this work for them. The state DEQ did not actually
perform the work involved but subcontracted the project to a state
university laboratory. Our review of project files confirmed that EPA
was not the only beneficiary of this project, but EPA might otherwise
have chosen to contract directly with the university laboratory
involved for the performance of this work.
According to officials we interviewed at the Office of Management and
Budget (OMB), OMB does not review agencies' policies implementing the
1977 Act. These officials stated that agencies have latitude to
interpret the act.
Conclusions:
Although EPA has specific guidance to implement the Federal Grants and
Cooperative Agreement Act, our review showed that EPA often did not
follow its own requirements for adequately documenting in its decision
memorandums the reasons for choosing a grant or a cooperative agreement
instead of a contract. Because an award may have multiple beneficiaries
and the direct beneficiary of an award is not always easily
discernible, it is important for EPA to fully document in its decision
memorandums its reasons for choosing a grant or a contract.
Recommendation for Executive Action:
We recommend that the Administrator of EPA consider ways to improve
project officers' compliance with EPA's requirement to properly
document in award decision memorandums the justification for using a
grant or a cooperative agreement instead of a contract.
Agency Comments:
We provided a draft of this report to EPA for comment. In response, we
received oral comments from EPA officials, including the Director of
the Office of Grants and Debarment. EPA officials agreed with the
recommendation in our draft report and stated that they have already
begun to take steps to implement it. Furthermore, EPA officials
commented that they were pleased that we did not find any instances
where a contract should have been awarded instead of a grant. EPA
officials also commented that our review of decision memorandum
documentation did not reflect the full level of consideration given by
EPA when deciding whether to use a grant instead of a contract. While
we included language in this report to reflect EPA's comment regarding
the full level of consideration given to the decision, both EPA and we
have found and agree that the decision memorandum documentation
justifying the use of a grant instead of a contract needs
strengthening. Finally, EPA provided some clarifying comments that we
incorporated into this report, as appropriate.
As agreed with your office, unless you release its contents earlier, we
plan no further distribution of this report until 30 days from its
issuance date. At that time, we will send copies of this report to the
appropriate congressional committees; interested Members of Congress;
the Administrator, Environmental Protection Agency; and other
interested parties. We will also make copies available to others on
request. In addition, the report will be available at no charge on the
GAO Web site at [Hyperlink, http://www.gao.gov].
Signed by:
Should you or your staff need further information, please call me at
(202) 512-3841. Key contributors to this report are listed in appendix
V.
Sincerely yours,
Signed by:
John B. Stephenson
Director, Natural Resources and Environment:
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Our objectives were to determine (1) the trends over the last 11 years
on the Environmental Protection Agency's (EPA) expenditures on grants
and contracts and the types of goods and services obtained by each and
(2) the extent to which EPA has and follows procedures for deciding
when to use grants or contracts.
Initially, we conducted a literature search to identify reports,
studies, legislation, and other documents relevant to EPA's grant
versus contract management. Our work was closely coordinated with EPA's
Office of Inspector General (OIG) to prevent duplication with ongoing
OIG efforts. To achieve our first objective, we interviewed and
obtained documents from officials in EPA's Office of Grants and
Debarment and Office of Acquisition Management (OAM). These offices
provided grant and contract award data to us for fiscal years 1993
through 2003. The grant trend data were pulled from EPA's Grants
Information Control System (GICS) and their Integrated Grants
Management System (IGMS). The contract trend data were pulled from the
Federal Procurement Data System. We assessed the reliability of these
databases by reviewing existing information and documentation about the
data and the systems that produced them, and by interviewing Office of
Grants and Debarment and OAM officials who were knowledgeable about the
data and the checks and procedures used internally to verify data
reliability, particularly with regard to financial information. Based
on this information, we determined that these data were sufficiently
reliable for the purposes of our report.
EPA's data were used to develop overall financial trends for grant and
contract awards for fiscal years 1993 through 2003. Grant financial
trends by Catalog of Federal Domestic Assistance (CFDA) codes were also
developed for the 11-year period. However, contract financial trends
could only be developed for fiscal years 1993 through 2000. For these
years, EPA classified contract awards by Standard Industrial
Classification (SIC) codes. These four-digit codes included 1,004
industries and classified businesses by the products or services they
made available. Beginning in fiscal year 2001, EPA adopted the new
North American Industrial Classification System (NAICS) codes. These
six-digit codes included 1,170 industries and classified businesses
based on the production or processes used. Consequently, contract data
for fiscal years 2001 through 2003 were not comparable with previous
years. It was also not possible to develop trends regarding the
specific goods and services obtained under EPA grants for the 11-year
period because EPA's automated databases do not track awards in this
manner.
To determine the extent to which EPA has and follows procedures for
deciding when to use either a grant or a contract, we reviewed the
congressional hearing report covering the introduction and passage of
the Federal Grant and Cooperative Agreement Act of 1977, provisions in
the act itself, associated EPA implementation guidance such as EPA
Order 5700.1, and the EPA Project Officer Training Manual. We also
contacted EPA's OIG and obtained and discussed past OIG reports
regarding EPA grant versus contract management issues.
To obtain a comparison of EPA's grant versus contract award policies
and procedures with those of other federal agencies, we compared the
award policies and guidance of the 10 federal agencies across the
federal government that obligated the highest dollar value of
assistance awards in fiscal year 2002 with requirements spelled out in
the 1977 Act. EPA ranked seventh in fiscal year 2002, with $4.2 billion
in grant obligations. We then compared provisions of each agency's
policies with one another. The results of this comparison are
summarized in table 5. We also sent a standard set of questions to
grant managers and Inspector Generals at each of these 10 agencies that
asked them to identify all implementation issues identified in their
agencies' award policies.
To help determine EPA compliance with provisions in the 1977 Act, as
well as its own implementation guidance in selecting discretionary
grants versus contracts, we drew a stratified random probability sample
of 237 discretionary grants from a population of 2,163 discretionary
grants for which the grant amount, according to EPA, was a positive
dollar amount, and which was thought to represent all discretionary
grants that had project start dates after October 1, 1997, and closed
in fiscal years 2001 and 2002. Grants were stratified by whether they
were issued by EPA headquarters or by an EPA regional office, and then
by dollar amount. After the sample was selected, we found that some of
the grants in the sample were earmark grants and were out of scope for
this study. Also, we were unable to obtain information for a small
portion of the remaining discretionary grants. We were ultimately able
to analyze data from 174 discretionary grants. With this statistically
valid probability sample, each discretionary grant in the study
population had a nonzero probability of being included, and that
probability could be computed for every grant. Each sampled
discretionary grant was subsequently weighted in the analysis to
account statistically for all discretionary grants in the study
population, including those that were not selected. The study
population data were drawn from EPA's IGMS. We assessed the reliability
of the IGMS data by (1) reviewing existing information and
documentation about these data and the system that produced them, (2)
interviewing EPA officials who were knowledgeable about these data, (3)
performing electronic testing of the required elements, and (4)
comparing grant recipient responses about the type of grant they
received with the information in the database. Based on this
information, we determined that these data were sufficiently reliable
for the purposes of our report.
Because we followed a probability procedure that was based on random
selections, our sample is only one of a large number of samples that we
might have drawn. Since each sample could have provided different
estimates, we express our confidence in the precision of our particular
sample's results as 95 percent confidence intervals (e.g., +/-x
percentage points). These are intervals that would contain the actual
population value for 95 percent of the samples we could have drawn. As
a result, we are 95 percent confident that each of the confidence
intervals in this report will contain the true values in the study
population. All percentage estimates from the file review have sampling
errors (widths of 95 percent confidence intervals) of +/-10 percentage
points, unless otherwise noted.
To obtain grantee information regarding the grant sample selections, we
developed a Web-based survey. We met with EPA headquarters officials
and spoke with an EPA OIG official in developing the survey and
pretested the survey with six grantees. These grantees were
judgmentally selected to ensure coverage of large and small awards,
headquarters-and field-awarded grants, and type of grant recipient. We
asked these recipients to complete the survey over the Internet while
we monitored their responses and checked for their understanding of
each question. After completion of the pretest, we interviewed the
respondents to ensure that (1) the questions were clear and
unambiguous, (2) the terms that we used were precise, (3) the survey
did not place an undue burden on the recipients completing it, and (4)
the survey was independent and unbiased. Technical corrections and
adjustments were made to the survey based on the feedback we received.
Grantees selected by our random sample were then contacted by telephone
and e-mail. Information about accessing the survey was provided in a
second e-mail, the survey was activated, and recipients were informed
of its availability on July 18, 2003. The survey remained available
until December 31, 2003. To ensure security and data integrity, each
recipient was provided with a unique user name and password. No one
else could access that survey or edit its data. We also provided
recipients with a pledge of confidentiality to ensure their candor in
completing the survey. Of the 237 grantees surveyed, 213 were eligible
sample cases. We used the results of 174, or 82 percent, of those
responses to make population estimates. The results of our survey are
summarized in appendix III.
EPA project officer and grant specialist files were obtained and
reviewed for 67 cases in which grantee responses indicated the possible
existence of a contract versus a grant award relationship. To verify/
clarify these responses, follow-up telephone interviews were conducted
with 20 respondents who had identified EPA as the primary beneficiary
of the award and/or indicated that EPA had directed purchases under the
award, directed work outside the scope of the original grant work plan,
and/or had passed on more than 75 percent of the awarded funds to
subcontractors.
[End of section]
Appendix II: Information on Funding and Goods and Services Obtained
from EPA Discretionary Grants:
Table 7: EPA Grant and Contract Funding, Fiscal Years 1993 through 2003:
Million current dollars.
Nondiscretionary grants;
FY93: $2,850;
FY94: $2,014;
FY95: $3,609;
FY96: $2,452;
FY97: $2,287;
FY98: $3,559;
FY99: $3,451;
FY00: $3,571;
FY01: $3,551;
FY02: $3,496;
FY03: $3,589;
Total: $34,429.
Discretionary grants;
FY93: $674;
FY94: $537;
FY95: $521;
FY96: $402;
FY97: $513;
FY98: $637;
FY99: $591;
FY00: $573;
FY01: $579;
FY02: $719;
FY03: $656;
Total: 6,402.
Contract funding;
FY93: $1,064;
FY94: $1,231;
FY95: $1,014;
FY96: $1,079;
FY97: $928;
FY98: $990;
FY99: $1,069;
FY00: $986;
FY01: $992;
FY02: $1,031;
FY03: $934;
Total: 11,318.
Total;
FY93: $4,588;
FY94: $3,782;
FY95: $5,144;
FY96: $3,933;
FY97: $3,728;
FY98: $5,186;
FY99: $5,111;
FY00: $5,130;
FY01: $5,122;
FY02: $5,246;
FY03: $5,179;
Total: $52,149.
Source: EPA.
[End of table]
Table 8: Discretionary Grant Funding by EPA Regions and Headquarters,
Fiscal Years 1993 through 2003:
Million current dollars.
Region/HQ: 1;
FY93: $8.6;
FY94: $13.8;
FY95: $14.5;
FY96: $12.2;
FY97: $23.6;
FY98: $23.0;
FY99: $34.2;
FY00: $24.2;
FY01: $34.6;
FY02: $34.5;
FY03: $44.6;
Total: $267.8.
Region/HQ: 2;
FY93: $32.2;
FY94: $36.8;
FY95: $18.3;
FY96: $17.6;
FY97: $5.0;
FY98: $19.4;
FY99: $27.7;
FY00: $24.2;
FY01: $27.4;
FY02: $53.6;
FY03: $- 0.1;
Total: 262.1.
Region/HQ: 3;
FY93: $9.7;
FY94: $5.8;
FY95: $8.2;
FY96: $8.3;
FY97: $12.5;
FY98: $18.5;
FY99: $22.5;
FY00: $25.1;
FY01: $21.8;
FY02: $25.8;
FY03: $41.8;
Total: 200.0.
Region/HQ: 4;
FY93: $15.3;
FY94: $19.5;
FY95: $23.5;
FY96: $18.3;
FY97: $41.7;
FY98: $41.8;
FY99: $44.0;
FY00: $40.3;
FY01: $44.0;
FY02: $50.7;
FY03: $43.0;
Total: 382.1.
Region/HQ: 5;
FY93: $29.9;
FY94: $29.0;
FY95: $27.1;
FY96: $25.5;
FY97: $38.0;
FY98: $63.4;
FY99: $66.2;
FY00: $57.4;
FY01: $45.0;
FY02: $63.3;
FY03: $80.0;
Total: 524.8.
Region/HQ: 6;
FY93: $120.9;
FY94: $52.6;
FY95: $-48.7;
FY96: $40.5;
FY97: $15.4;
FY98: $29.5;
FY99: $47.6;
FY00: $23.6;
FY01: $34.5;
FY02: $38.0;
FY03: $40.0;
Total: 393.9.
Region/HQ: 7;
FY93: $7.6;
FY94: $6.7;
FY95: $9.6;
FY96: $7.6;
FY97: $12.6;
FY98: $12.0;
FY99: $15.4;
FY00: $20.8;
FY01: $22.0;
FY02: $23.8;
FY03: $29.0;
Total: 167.1.
Region/HQ: 8;
FY93: $21.4;
FY94: $23.0;
FY95: $78.6;
FY96: $15.2;
FY97: $20.5;
FY98: $40.3;
FY99: $25.4;
FY00: $32.3;
FY01: $7.1;
FY02: $22.2;
FY03: $20.5;
Total: 306.5.
Region/HQ: 9;
FY93: $33.3;
FY94: $13.0;
FY95: $72.3;
FY96: $25.6;
FY97: $24.1;
FY98: $23.8;
FY99: $25.9;
FY00: $35.7;
FY01: $29.5;
FY02: $38.9;
FY03: $51.5;
Total: 373.6.
Region/HQ: 10;
FY93: $9.5;
FY94: $7.1;
FY95: $10.1;
FY96: $12.6;
FY97: $16.9;
FY98: $25.2;
FY99: $19.2;
FY00: $23.3;
FY01: $20.7;
FY02: $31.4;
FY03: $42.0;
Total: 218.0.
Region/HQ: HQ;
FY93: $385.0;
FY94: $329.3;
FY95: $307.3;
FY96: $218.0;
FY97: $303.2;
FY98: $339.7;
FY99: $262.4;
FY00: $265.9;
FY01: $292.6;
FY02: $337.2;
FY03: $263.9;
Total: 3,304.5.
Total;
FY93: $673.4;
FY94: $536.6;
FY95: $520.8;
FY96: $401.4;
FY97: $513.5;
FY98: $636.6;
FY99: $590.5;
FY00: $572.8;
FY01: $579.2;
FY02: $719.4;
FY03: $656.2;
Total: $6,400.4.
Source: EPA.
[End of table]
Table 9: EPA Discretionary Grant Funding by CFDA Codes, Fiscal Years
1993 through 2003:
Million current dollars.
Code: 66.606;
FY93: $134.6;
FY94: $113.2;
FY95: $158.4;
FY96: $100.5;
FY97: $128.4;
FY98: $116.4;
FY99: $134.0;
FY00: $139.6;
FY01: $152.0;
FY02: $132.2;
FY03: $48.3;
Total: $1,357.6.
Code: 66.500;
FY93: $40.3;
FY94: $60.5;
FY95: $86.9;
FY96: $56.8;
FY97: $112.1;
FY98: $172.1;
FY99: $121.4;
FY00: $140.7;
FY01: $146.4;
FY02: $128.7;
FY03: $80.1;
Total: 1,146.0.
Code: 66.802;
FY93: $182.4;
FY94: $115.2;
FY95: $50.4;
FY96: $81.2;
FY97: $54.5;
FY98: $107.6;
FY99: $93.0;
FY00: $86.9;
FY01: $45.0;
FY02: $70.6;
FY03: $56.2;
Total: 943.0.
Code: 66.508;
FY93: $45.4;
FY94: $50.0;
FY95: $50.2;
FY96: $34.6;
FY97: $49.5;
FY98: $63.1;
FY99: $53.5;
FY00: $45.1;
FY01: $58.1;
FY02: $53.3;
FY03: $54.2;
Total: 557.0.
Code: 66.805;
FY93: $16.9;
FY94: $18.5;
FY95: $29.6;
FY96: $31.7;
FY97: $42.4;
FY98: $50.1;
FY99: $57.4;
FY00: $51.9;
FY01: $56.2;
FY02: $57.9;
FY03: $53.1;
Total: 465.7.
Code: 66.811;
FY93: $-;
FY94: $0.2;
FY95: $3.0;
FY96: $5.2;
FY97: $15.7;
FY98: $30.8;
FY99: $46.4;
FY00: $39.6;
FY01: $36.2;
FY02: $40.1;
FY03: $- 0.9;
Total: 216.3.
Code: 66.607;
FY93: $11.5;
FY94: $15.6;
FY95: $13.6;
FY96: $13.9;
FY97: $23.4;
FY98: $33.6;
FY99: $23.4;
FY00: $19.5;
FY01: $25.1;
FY02: $22.8;
FY03: $11.3;
Total: 213.7.
Code: 66.501;
FY93: $64.3;
FY94: $56.9;
FY95: $41.1;
FY96: $17.6;
FY97: $13.5;
FY98: $0.8;
FY99: $0.2;
FY00: $-;
FY01: $-;
FY02: $-;
FY03: $-;
Total: 194.4.
Code: 66.809;
FY93: $14.4;
FY94: $13.3;
FY95: $13.5;
FY96: $10.4;
FY97: $19.0;
FY98: $22.5;
FY99: $21.1;
FY00: $16.7;
FY01: $19.8;
FY02: $17.4;
FY03: $10.2;
Total: 178.3.
Code: 66.471;
FY93: $-;
FY94: $-;
FY95: $-;
FY96: $-;
FY97: $-;
FY98: $-;
FY99: $-;
FY00: $-;
FY01: $-;
FY02: $47.0;
FY03: $66.7;
Total: 113.7.
Code: Other;
FY93: $163.9;
FY94: $93.4;
FY95: $74.2;
FY96: $49.6;
FY97: $54.8;
FY98: $39.5;
FY99: $40.1;
FY00: $32.8;
FY01: $40.4;
FY02: $149.4;
FY03: $277.1;
Total: 1,015.2.
Total;
FY93: $673.7;
FY94: $536.8;
FY95: $520.9;
FY96: $401.5;
FY97: $513.3;
FY98: $636.5;
FY99: $590.5;
FY00: $572.8;
FY01: $579.2;
FY02: $719.4;
FY03: $656.3;
Total: $6,400.9.
Source: EPA.
Note: The 10 CFDA codes identified account for 84 percent of EPA's
discretionary grant funding for the period of fiscal years 1993 through
2003. The CFDA codes correspond to the following descriptions:
66.606--Surveys, Studies, Investigations, and Special Purpose Grants:
66.500--Consolidated Research Grants:
66.802--Superfund State Site Specific Cooperative Agreements:
66.508--Senior Environmental Employment Program:
66.805--Leaking Underground Storage Tank Trust Fund Program:
66.811--Brownfield Pilots Cooperative Agreements:
66.607--Training and Fellowship Grants:
66.501--Air Pollution Control Research:
66.809--Superfund State Core Program Cooperative Agreements:
66.471--State Grants to Reimburse Operators of Small Water Systems for
Training and Certification Costs:
[End of table]
Table 10: EPA Contract Funding by SIC Codes, Fiscal Years 1993 through
2000:
Million current dollars.
87;
FY93: $541.9;
FY94: $648.5;
FY95: $514.1;
FY96: $604.5;
FY97: $582.3;
FY98: $653.2;
FY99: $713.7;
FY00: $592.7;
Total: $4,850.9.
Code: 73;
FY93: $106.8;
FY94: $142.7;
FY95: $109.8;
FY96: $142.5;
FY97: $99.3;
FY98: $142.2;
FY99: $155.5;
FY00: $170.0;
Total: 1,068.8.
Code: 89;
FY93: $195.2;
FY94: $148.3;
FY95: $126.1;
FY96: $102.2;
FY97: $78.1;
FY98: $88.8;
FY99: $108.4;
FY00: $115.1;
Total: 962.2.
Code: 49;
FY93: $161.9;
FY94: $196.4;
FY95: $181.0;
FY96: $129.1;
FY97: $121.3;
FY98: $49.7;
FY99: $19.2;
FY00: $-2.8;
Total: 855.8.
Code: 35;
FY93: $19.7;
FY94: $42.8;
FY95: $17.1;
FY96: $9.1;
FY97: $3.3;
FY98: $2.8;
FY99: $1.5;
FY00: $0.0;
Total: 96.3.
Code: 48;
FY93: $7.7;
FY94: $11.2;
FY95: $14.8;
FY96: $8.2;
FY97: $2.6;
FY98: $15.6;
FY99: $15.7;
FY00: $11.5;
Total: 87.3.
Code: 82;
FY93: $3.6;
FY94: $5.3;
FY95: $11.1;
FY96: $19.1;
FY97: $9.8;
FY98: $6.9;
FY99: $11.7;
FY00: $12.7;
Total: 80.2.
Code: 95;
FY93: $1.5;
FY94: $2.1;
FY95: $0.0;
FY96: $0.2;
FY97: $0.0;
FY98: $0.2;
FY99: $15.8;
FY00: $56.6;
Total: 76.4.
Code: 50;
FY93: $8.5;
FY94: $13.0;
FY95: $16.0;
FY96: $7.9;
FY97: $15.5;
FY98: $3.2;
FY99: $2.6;
FY00: $0.0;
Total: 66.7.
Code: 15;
FY93: $0.2;
FY94: $0.4;
FY95: $0.6;
FY96: $38.4;
FY97: $1.9;
FY98: $3.4;
FY99: $5.9;
FY00: $4.3;
Total: 55.1.
Code: Other;
FY93: $17.3;
FY94: $20.3;
FY95: $23.4;
FY96: $17.8;
FY97: $13.9;
FY98: $24.0;
FY99: $19.0;
FY00: $25.9;
Total: 161.6.
Total;
FY93: $1,064.3;
FY94: $1,231.0;
FY95: $1,014.0;
FY96: $1,079.0;
FY97: $928.0;
FY98: $990.0;
FY99: $1,069.0;
FY00: $986.0;
Total: $8,361.3.
Source: EPA.
Note: The 10 SIC codes identified account for 98 percent of EPA's
contract funding for the period of fiscal years 1993 through 2000. The
SIC codes correspond to the following descriptions:
87--Engineering, Accounting, Research, Management, and Related
Services:
73--Business Services:
89--Services, Not Elsewhere Classified:
49--Electric Gas and Sanitary Services:
35--Industrial and Commercial Machinery and Computer Equipment:
48--Communications:
82--Educational Services:
95--Administration of Environmental Quality and Housing Program:
50--Wholesale Trade-durable Goods:
15--Building Construction General Contractors and Operative Builders:
[End of table]
Table 11: EPA Contract Funding by NAICS Codes, Fiscal Years 2001
through 2003:
Million current dollars.
Code: 541;
FY01: $454.2;
FY02: $446.4;
FY03: $449.3;
Total: $1,349.9.
Code: 561;
FY01: $332.8;
FY02: $317.4;
FY03: $251.7;
Total: 901.9.
Code: 514;
FY01: $86.9;
FY02: $78.7;
FY03: $32.9;
Total: 198.5.
Code: 562;
FY01: $15.6;
FY02: $72.4;
FY03: $102.9;
Total: 190.9.
Code: 513;
FY01: $41.6;
FY02: $47.9;
FY03: $23.2;
Total: 112.7.
Code: 924;
FY01: $20.9;
FY02: $23.5;
FY03: $14.8;
Total: 59.2.
Code: 334;
FY01: $6.5;
FY02: $8.0;
FY03: $14.2;
Total: 28.7.
Code: 233;
FY01: $6.2;
FY02: $2.8;
FY03: $9.4;
Total: 18.4.
Code: 611;
FY01: $5.6;
FY02: $5.8;
FY03: $7.0;
Total: 18.4.
Code: 493;
FY01: $2.9;
FY02: $5.3;
FY03: $5.0;
Total: 13.2.
Code: Other;
FY01: $18.3;
FY02: $22.9;
FY03: $23.6;
Total: 64.8.
Total;
FY01: $991.5;
FY02: $1,031.1;
FY03: $934.0;
Total: $2,956.6.
Source: EPA.
Note: The 10 NAICS codes identified account for 98 percent of EPA's
contract funding for the period of fiscal years 2001 through 2003. The
NAICS codes correspond to the following descriptions:
541--Professional, Scientific, and Technical Services:
561--Administrative and Support Services:
514--Information Services and Data Processing Services:
562--Waste Management and Remediation Services:
513--Broadcasting and Telecommunications:
924--Administration of Environmental Quality Programs:
334--Computer and Electronic Product Manufacturing:
233--Building, Developing, and General Contracting:
611--Educational Services:
493--Warehousing and Storage:
[End of table]
Table 12: Descriptions of the Types of Goods and Services Reported by
Surveyed Discretionary Grant Recipients:
Type of goods or services: Training, workshops, and education: This
category includes course development, classroom curriculums, resource
guides, training sessions, educational projects and products for
students, workshops, educational seminars, educational events, fact
sheets, educational videos, nature trails and gardens, educational
environmental programs, and on-site training for environmental workers;
Percentage of grants listing this category of deliverable: 34;
Estimated dollars for deliverable category (in millions): $40[B].
Type of goods or services: Research and development: This category
includes scientific research, surveys and questionnaires, assimilation
of data, data outputs such as CD-ROMS and databases, development of
analytical tools/models/software/standards/baseline data, field
studies, case studies, environmental indicators research, policy
reviews, environmental software reviews, evaluations, identification of
environmentally sound procedures and materials, conservation analyses,
and inventories;
Percentage of grants listing this category of deliverable: 24;
Estimated dollars for deliverable category (in millions): $67[A].
Type of goods or services: Journals, publications, and reports: This
category includes peer-reviewed publications, abstracts and
proceedings, articles, research reports, reference manuals,
manuscripts, newsletters, book chapters, manuals, legislative reports
to states and Congress, booklets, internet publications (other than Web
sites), and guidebooks;
Percentage of grants listing this category of deliverable: 20;
Estimated dollars for deliverable category (in millions): $54[A].
Type of goods or services: Cleanup, monitoring, and site assessment:
This category includes cleanup and monitoring of the Leaking
Underground Storage Tank, Superfund, CERCLA, and Brownsfield sites;
other State-run and EPA-coordinated efforts; cleanup and monitoring of
landfills and water sources; household radon monitoring; habitat
restorations; site assessments; groundwater monitoring; and air
pollution prevention;
Percentage of grants listing this category of deliverable: 15;
Estimated dollars for deliverable category (in millions): $56[A].
Type of goods or services: Meetings, conferences, and presentations:
This category includes stakeholder meetings, professional conferences,
paper presentations, demonstrations, board meetings, symposiums,
seminars, special sessions, discussion forums, community meetings,
special events, and committee meetings;
Percentage of grants listing this category of deliverable: 15;
Estimated dollars for deliverable category (in millions): $27[B].
Type of goods or services: Project support and assistance: This
category includes administrative and program support, equipment
purchase, travel assistance, supplies, conference attendance, and
technical assistance;
Percentage of grants listing this category of deliverable: 10;
Estimated dollars for deliverable category (in millions): $19[C].
Type of goods or services: Web sites: This category includes Web-site
development and maintenance;
Percentage of grants listing this category of deliverable: 7;
Estimated dollars for deliverable category (in millions): $14[C].
Type of goods or services: Other;
Percentage of grants listing this category of deliverable: 8;
Estimated dollars for deliverable category (in millions): $18[B].
Source: GAO analysis of survey responses.
Note: Percentage totals are greater than 100 and dollar totals are more
than the $209 million estimate because many grants provided more than 1
good or service.
[A] Sampling error is between one-fourth and one-third of the value of
this estimate.
[B] Sampling error is between one-third and one-half of the value of
this estimate.
[C] Sampling error is between 60 and 70 percent of the value of this
estimate.
[End of table]
[End of section]
Appendix III: Survey Results:
To help determine EPA compliance with provisions of the Federal Grant
and Cooperative Agreement Act as well as its own implementation
guidance in selecting discretionary grants versus contracts, we drew a
stratified random probability sample of 237 discretionary grants from a
study population of 2,163 discretionary grants that had project start
dates after October 1, 1997, and closed in fiscal years 2001 and 2002,
and for which the grant amount (according to EPA) was a positive dollar
amount. Of the 237 grantees surveyed, 213 were eligible sample cases.
We used the results of 174, or 82 percent, of those responses to make
population estimates. The population estimates for key questions from
our survey are summarized below.
Q2. Was this financial assistance award made in the form of a grant or
a cooperative agreement?
Answer: Grant;
Percent: 73.31.
Answer: Cooperative Agreement;
Percent: 23.48.
Answer: No answer;
Percent: 0.33.
Answer: Not checked;
Percent: 2.88.
Answer: Total;
Percent: 100.00.
[End of table]
Q12. Were the project outputs/deliverables designed to directly benefit
EPA?
Answer: Yes;
Percent: 16.58.
Answer: No;
Percent: 75.88.
Answer: Don't know;
Percent: 6.09.
Answer: Not checked;
Percent: 1.44.
Answer: Total;
Percent: 100.00.
[End of table]
Q15. Please indicate the primary beneficiary of the project outputs/
deliverables.
Answer: EPA;
Percent: 8.35.
Answer: Your organization;
Percent: 7.11.
Answer: State agencies;
Percent: 9.28.
Answer: Nonprofits;
Percent: 0.58.
Answer: Business/Private sector;
Percent: 5.63.
Answer: Schools/Universities;
Percent: 13.17.
Answer: Research/Academic community;
Percent: 5.73.
Answer: Indian tribes;
Percent: 2.61.
Answer: General public;
Percent: 33.23.
Answer: Other audiences;
Percent: 9.81.
Answer: Don't know;
Percent: 3.06.
Answer: Not checked;
Percent: 1.44.
Answer: Total;
Percent: 100.00.
[End of table]
Comparison of Q12 and Q15.
Q15. Primary beneficiary of the project outputs/deliverables: EPA;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 7.64;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 0.65.
Q15. Primary beneficiary of the project outputs/deliverables: Your
organization;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 0;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 5.67.
Q15. Primary beneficiary of the project outputs/deliverables: State
agencies;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 2.56;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 5.61.
Q15. Primary beneficiary of the project outputs/deliverables:
Nonprofits;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 0;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 0.58.
Q15. Primary beneficiary of the project outputs/deliverables: Business/
Private sector;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 1.44;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 3.07.
Q15. Primary beneficiary of the project outputs/deliverables: Schools/
Universities;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 0;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 13.17.
Q15. Primary beneficiary of the project outputs/deliverables: Research/
Academic community;
Q12. Were the project outputs/ deliverables designed to directly
benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 1.60;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 3.81.
Q15. Primary beneficiary of the project outputs/deliverables: Indian
tribes;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 0;
Q12. Were the project outputs/ deliverables designed to directly
benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 2.61.
Q15. Primary beneficiary of the project outputs/deliverables: General
public;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 1.91;
Q12. Were the project outputs/ deliverables designed to directly
benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 31.22.
Q15. Primary beneficiary of the project outputs/deliverables: Other
audiences;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 0;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 9.48.
Q15. Primary beneficiary of the project outputs/deliverables: Don't
know;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 1.44;
Q12. Were the project outputs/ deliverables designed to directly
benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 0.
Q15. Primary beneficiary of the project outputs/deliverables: Total;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking yes - EPA as direct beneficiary: 16.59;
Q12. Were the project outputs/deliverables designed
to directly benefit EPA? (16.58 percent of respondents):
Percentage marking no - EPA not the direct beneficiary: 75.87.
Note: The remaining 7.54 percent of total were included in the "don't
know" or "not checked" responses for Q15.
[End of table]
Q17. During the performance period (postaward), did EPA direct you to
make specific purchases of goods or services?
Answer: Yes;
Percent: 1.49.
Answer: No;
Percent: 94.46.
Answer: Don't know;
Percent: 1.49.
Answer: Not checked;
Percent: 2.56.
Answer: Total;
Percent: 100.00.
[End of table]
Q18. During the postaward phase, did EPA direct you to conduct
activities outside the original scope of work?
Answer: Yes;
Percent: 1.03.
Answer: No;
Percent: 95.96.
Answer: Don't know;
Percent: 1.12.
Answer: Not checked;
Percent: 1.89.
Answer: Total;
Percent: 100.00.
[End of table]
Q21. Did EPA direct that you contract with a specific entity
(organization or individual) under this grant/cooperative agreement?
Answer: Yes;
Percent: 1.77.
Answer: No;
Percent: 68.60.
Answer: Don't know;
Percent: 2.99.
Answer: Not checked/Skipped;
Percent: 26.65.
Answer: Total;
Percent: 100.00.
[End of table]
Q22. Did EPA direct that you issue a subgrant to a specific entity
under this grant/cooperative agreement?
Answer: Yes;
Percent: 0.33.
Answer: No;
Percent: 69.71.
Answer: Don't know;
Percent: 2.20.
Answer: Not checked/Skipped;
Percent: 27.76.
Answer: Total;
Percent: 100.00.
[End of table]
Q23. Did EPA direct that contracts be awarded by you on a sole-source
or noncompetitive basis under this grant/cooperative agreement?
Answer: Yes;
Percent: 2.02.
Answer: No;
Percent: 65.79.
Answer: Don't know;
Percent: 4.43.
Answer: Not checked/Skipped;
Percent: 27.76.
Answer: Total;
Percent: 100.00.
[End of table]
Q25. Survey completion status by grant award dollars.
Answer: Completed;
Percent: 81.69;
Median: $81,500;
Mean: $338,449;
Minimum: $2,395;
Maximum: $3,035,000.
Answer: Not completed;
Percent: 18.31;
Median: 50,017;
Mean: 171,925;
Minimum: 2,733;
Maximum: 905,529.
[End of section]
Appendix IV: Agency Policy Comparison:
Table 13: Top 10 Federal Grant-Awarding Agencies in Fiscal Year 2002:
Dollars in millions.
Agency: Department of Health and Human Services;
Total grant funding: $225,901;
Discretionary grant funding: $36,516.
Agency: Department of Education;
Total grant funding: 37,421;
Discretionary grant funding: 5,582.
Agency: Department of Transportation;
Total grant funding: 34,991;
Discretionary grant funding: 679.
Agency: Department of Housing and Urban Development;
Total grant funding: 28,459;
Discretionary grant funding: 2,780.
Agency: Department of Agriculture;
Total grant funding: 20,104;
Discretionary grant funding: 2,136.
Agency: Department of Labor;
Total grant funding: 9,356;
Discretionary grant funding: 7,324.
Agency: Environmental Protection Agency;
Total grant funding: 4,215;
Discretionary grant funding: 719.
Agency: National Science Foundation;
Total grant funding: 4,100;
Discretionary grant funding: 4,100.
Agency: Department of Justice[A];
Total grant funding: 3,019;
Discretionary grant funding: 2,906.
Agency: Federal Emergency Management Agency[B];
Total grant funding: 2,584;
Discretionary grant funding: unavailable.
Legend:
DOED: Department of Education:
DOJ: Department of Justice:
DOL: Department of Labor:
DOT: Department of Transportation:
EPA: Environmental Protection Agency:
FEMA: Federal Emergency Management Agency:
HHS: Department of Health and Human Services:
HUD: Department of Housing and Urban Development:
NSF: National Science Foundation:
USDA: Department of Agriculture:
Sources: HHS, DOT, DOED, HUD, USDA, DOL, DOJ, EPA, NSF, and FEMA and verified fiscal year 2002 agency data from the Consolidated Federal Funds Report.
[A] DOJ totals are from the Office of Justice Programs and the Office of Community Oriented Policing Services, the primary grant-making components of the department.
[B] FEMA is now part of the Department of Homeland Security.
[End of table]
Table 14: Information on Agency Grant Policies and Guidance:
Policy/Guidance feature: Guidance to clarify selection of award
instrument.
Policy/Guidance feature: Examples of when to award assistance (grant
and cooperative agreement) versus contract award;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: Yes;
Feature is included in agency policy? DOT: Yes;
Feature is included in agency policy? HUD: Yes;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: Yes;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: Yes;
Feature is included in agency policy? DOJ[A]: Yes;
Feature is included in agency policy? FEMA: Yes.
Policy/Guidance feature: Examples of when to award a cooperative
agreement or examples of substantial federal involvement;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: Yes;
Feature is included in agency policy? DOT: No;
Feature is included in agency policy? HUD: Yes;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: Yes;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: Yes;
Feature is included in agency policy? DOJ[A]: Yes;
Feature is included in agency policy? FEMA: Yes.
Policy/Guidance feature: Guidance for using intermediaries who will, in
turn, use the funding to award subgrants and subcontracts;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: Yes;
Feature is included in agency policy? DOT: Yes;
Feature is included in agency policy? HUD: Yes;
Feature is included in agency policy? USDA: Yes;
Feature is included in agency policy? DOL: No;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: Yes;
Feature is included in agency policy? DOJ[A]: Yes;
Feature is included in agency policy? FEMA: No.
Policy/Guidance feature: Guidance for awards for conferences;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: Yes;
Feature is included in agency policy? DOT: No;
Feature is included in agency policy? HUD: No;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: No;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: Yes;
Feature is included in agency policy? DOJ[A]: No;
Feature is included in agency policy? FEMA: Yes.
Policy/Guidance feature: Guidance about funding of evaluations and
studies;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: Yes;
Feature is included in agency policy? DOT: No;
Feature is included in agency policy? HUD: No;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: No;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: No;
Feature is included in agency policy? DOJ[A]: No;
Feature is included in agency policy? FEMA: Yes.
Policy/Guidance feature: Guidance for in-kind, instead of monetary,
assistance;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: Yes;
Feature is included in agency policy? DOT: No;
Feature is included in agency policy? HUD: No;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: No;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: Yes;
Feature is included in agency policy? DOJ[A]: No;
Feature is included in agency policy? FEMA: No.
Policy/Guidance feature: Descriptions of roles and responsibilities:
Policy/Guidance feature: Outlines roles and responsibilities of grants
management and program staff specifically relating to selection of the
award instrument;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: No;
Feature is included in agency policy? DOT: Yes;
Feature is included in agency policy? HUD: No;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: No;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: Yes;
Feature is included in agency policy? DOJ[A]: No;
Feature is included in agency policy? FEMA: Yes.
Policy/Guidance feature: Internal control documentation requirements:
Policy/Guidance feature: Internal control documentation requires
statement of substantial involvement to justify the use of cooperative
agreements;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: No;
Feature is included in agency policy? DOT: No;
Feature is included in agency policy? HUD: Yes;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: Yes;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: No;
Feature is included in agency policy? DOJ[A]: No;
Feature is included in agency policy? FEMA: No.
Policy/Guidance feature: Internal control documentation requires
documentation to justify the selection of the award instrument;
Feature is included in agency policy? HHS: Yes;
Feature is included in agency policy? DOED: No;
Feature is included in agency policy? DOT: No;
Feature is included in agency policy? HUD: No;
Feature is included in agency policy? USDA: No;
Feature is included in agency policy? DOL: Yes;
Feature is included in agency policy? EPA: Yes;
Feature is included in agency policy? NSF: No;
Feature is included in agency policy? DOJ[A]: No;
Feature is included in agency policy? FEMA: No.
Legend:
DOED: Department of Education:
DOJ: Department of Justice:
DOL: Department of Labor:
DOT: Department of Transportation:
EPA: Environmental Protection Agency:
(Legend continued from previous page):
FEMA: Federal Emergency Management Agency:
HHS: Department of Health and Human Services:
HUD: Department of Housing and Urban Development:
NSF: National Science Foundation:
USDA: Department of Agriculture:
Sources: Award instrument selection policies of HHS, HUD, USDA, DOL,
DOJ, DOT, DOED, NSF, EPA, and FEMA.
Note: At a minimum, each policy defines assistance (grants and
cooperative agreements) versus contract awards in accordance with the
Federal Grant and Cooperative Agreement Act of 1977.
[A] DOJ totals are from the Office of Justice Programs and the Office
of Community Oriented Policing Services, the primary grant-making
components of the department.
[End of table]
[End of section]
Appendix V GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Andrea Wamstad Brown (202) 512-3319 Tim Minelli (202) 512-8443:
Staff Acknowledgments:
In addition to those individuals named above, Scott Heacock, Andria
Key, Mike Rahl, Sid Schwartz, Rebecca Shea, Carol Herrnstadt Shulman,
and Amy Webbink made key contributions to this report.
(360294):
FOOTNOTES
[1] For the purpose of this report, the term grants includes both
grants and cooperative agreements.
[2] Pub. L. No. 95-224, 92 Stat. 3 (1978) now codified, as amended, at
31 U.S.C. §§ 6301-6308.
[3] See S. Rep. 95-449 (1977).
[4] The agency may also award a contract if it determines in a specific
instance that the use of a procurement contract is appropriate.
[5] EPA Office of Inspector General, Audit of Cooperative T007356-01
Awarded to the University of Kansas (Report Number: E1FMF4-19-0618-
4100407, June 17, 1994); Audit Report on the National Association of
Minority Contractors (Report Number: 1999-00213, Aug. 23, 1999); and
America's Clean Water Foundation Grant Allegation (Memorandum Report
No. 101386-2002-M-000005, Feb. 13, 2002).
[6] This information is the most current data available. The grant
actions include new awards and increase and decrease amendments. The
8,070 grant actions for fiscal year 2002 involve funding comprised 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 year 2002.
[7] Actions include new awards and modifications to existing awards.
[8] EPA Order 5700.1, Policy for Distinguishing Between Assistance and
Acquisition (Mar. 22, 1994).
[9] These officials include the approval official who has the
responsibility and authority for determining whether to fund or reject
an application for technical or programmatic reasons, and the award
official who signs the assistance agreement ensuring that all
technical, legal, and administrative evaluations have been made and
that the proposed agreement is awardable.
[10] Section 6 of EPA Order 5700.1.
[11] The Catalog of Federal Domestic Assistance is a governmentwide
compilation of federal programs, projects, services, and activities
that provide assistance or benefits to the American public.
[12] EPA Office of Inspector General, Surveys, Studies, Investigations,
and Special Purpose Grants (Report Number: 2002-P-00005, Mar. 21,
2002).
[13] SIC codes were established in the 1930s and categorized businesses
by the products or services they made available. The four-digit SIC
codes included 1,004 industries and were updated over the years, with
the last update occurring in 1987. Beginning in 1997, SIC codes were
replaced by NAICS codes. The six-digit NAICS codes include 1,170
industries and classify businesses based on the production or process
they use. NAICS codes allow for comparison between the United States,
Canada, and Mexico.
[14] The largest SIC code, 87, had 13 subcodes under it, while the
largest NAICS code, 541, has 46 subcodes under it.
[15] The sampling error associated with the $209 estimate is plus or
minus $26 million.
[16] The 10 largest granting agencies in fiscal year 2002 were the
Department of Health and Human Services, the Department of
Transportation, the Department of Education, the Department of Housing
and Urban Development, the Department of Agriculture, the Department of
Labor, the Department of Justice, EPA, the National Science Foundation,
and the Federal Emergency Management Agency. Table 13 in appendix IV
lists the total grant and discretionary grant dollars for these
agencies for fiscal year 2002.
[17] Office of Grants and Debarment officials told us that the
programmatic conditions section of the assistance agreement provides
documentation that details the level of EPA involvement in the
cooperative agreement.
[18] We did not review grant and project officer files or conduct grant
recipient interviews for 3 of the respondents that identified EPA as a
grant's primary beneficiary because they identified parties other than
EPA as the grant's direct beneficiary.
[19] The Resource Conservation and Recovery Act provides legislative
authority for EPA's solid and hazardous waste management programs.
[20] This term refers to EPA's Office of Solid Waste and Emergency
Response.
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