Grants Management
EPA Needs to Strengthen Efforts to Address Management Challenges Gao ID: GAO-04-510T March 3, 2004The Environmental Protection Agency (EPA) has long faced problems managing its grants, which constitute over one-half of the agency's annual budget, or about $4 billion. EPA uses grants to implement its programs to protect human health and the environment and awards grants to thousands of recipients, including state and local governments, tribes, universities, and nonprofit organizations. EPA's ability to efficiently and effectively accomplish its mission largely depends on how well it manages its grants resources. This testimony, based on GAO's August 2003 report Grants Management: EPA Needs to Strengthen Efforts to Address Persistent Challenges, GAO-03-846, focuses on the (1) major challenges EPA faces in managing its grants and how it has addressed these challenges in the past, and (2) extent to which EPA's recently issued policies and grants management plan address these challenges.
EPA continues to face four key grants management challenges, despite past efforts to address them. These challenges are (1) selecting the most qualified grants applicants, (2) effectively overseeing grantees, (3) measuring the results of grants, and (4) effectively managing grant staff and resources. In the past, EPA has taken a series of actions to address these challenges by, among other things, issuing policies on competition and oversight, conducting training for project officers and nonprofit organizations, and developing a new data system for grants management. However, these actions had mixed results because of the complexity of the problems, weaknesses in design and implementation, and insufficient management attention. EPA's recently issued policies and a 5-year grants management plan to address longstanding management problems show promise, but these policies and plan require strengthening, enhanced accountability, and sustained commitment to succeed. EPA's September 2002 competition policy should improve EPA's ability to select the most qualified applicants by requiring competition for more grants. However, effective implementation of the policy will require a major cultural shift for EPA managers and staff because the competitive process will require significant planning and take more time than awarding grants noncompetitively. EPA's December 2002 oversight policy makes important improvements in oversight, but it does not enable EPA to identify systemic problems in grants management. For example, the policy does not incorporate a statistical approach to selecting grantees for review so that EPA can project the results of the reviews to all EPA grantees. Issued in April 2003, EPA's 5-year grants management plan does offer, for the first time, a comprehensive road map with objectives, goals, and milestones for addressing grants management challenges. However, in implementing the plan, EPA faces challenges in holding all managers and staff accountable for successfully fulfilling their grants management responsibilities. Without this accountability, EPA cannot ensure the sustained commitment needed for the plan's success. While EPA has begun implementing actions in the plan, GAO believes that, given EPA's historically uneven performance in addressing its grants challenges, congressional oversight is important to ensure that EPA's Administrator, managers, and staff implement the plan in a sustained, coordinated fashion to meet the plan's ambitious targets and time frames.
GAO-04-510T, Grants Management: EPA Needs to Strengthen Efforts to Address Management Challenges
This is the accessible text file for GAO report number GAO-04-510T
entitled 'Grants Management: EPA Needs to Strengthen Efforts to
Address Management Challenges' which was released on March 3, 2004.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Testimony:
Before the Committee on Environment and Public Works, U.S. Senate:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 9:30 a.m. EST:
March 3, 2004:
Grants Management:
EPA Needs to Strengthen Efforts to Address Management Challenges:
Statement of John B. Stephenson, Director,
Natural Resources and the Environment:
GAO-04-510T:
GAO Highlights:
Highlights of GAO-04-510T, testimony before the Committee on
Environment and Public Works, U.S. Senate
Why GAO Did This Study:
The Environmental Protection Agency (EPA) has long faced problems
managing its grants, which constitute over one-half of the agency‘s
annual budget, or about $4 billion. EPA uses grants to implement its
programs to protect human health and the environment and awards grants
to thousands of recipients, including state and local governments,
tribes, universities, and nonprofit organizations. EPA‘s ability to
efficiently and effectively accomplish its mission largely depends on
how well it manages its grants resources.
This testimony, based on GAO‘s August 2003 report Grants Management:
EPA Needs to Strengthen Efforts to Address Persistent Challenges, GAO-
03-846, focuses on the (1) major challenges EPA faces in managing its
grants and how it has addressed these challenges in the past, and (2)
extent to which EPA‘s recently issued policies and grants management
plan address these challenges.
What GAO Found:
EPA continues to face four key grants management challenges, despite
past efforts to address them. These challenges are (1) selecting the
most qualified grants applicants, (2) effectively overseeing grantees,
(3) measuring the results of grants, and (4) effectively managing
grant staff and resources. In the past, EPA has taken a series of
actions to address these challenges by, among other things, issuing
policies on competition and oversight, conducting training for project
officers and nonprofit organizations, and developing a new data system
for grants management. However, these actions had mixed results
because of the complexity of the problems, weaknesses in design and
implementation, and insufficient management attention.
EPA‘s recently issued policies and a 5-year grants management plan to
address longstanding management problems show promise, but these
policies and plan require strengthening, enhanced accountability, and
sustained commitment to succeed. EPA‘s September 2002 competition
policy should improve EPA‘s ability to select the most qualified
applicants by requiring competition for more grants. However,
effective implementation of the policy will require a major cultural
shift for EPA managers and staff because the competitive process will
require significant planning and take more time than awarding grants
noncompetitively. EPA‘s December 2002 oversight policy makes important
improvements in oversight, but it does not enable EPA to identify
systemic problems in grants management. For example, the policy does
not incorporate a statistical approach to selecting grantees for
review so that EPA can project the results of the reviews to all EPA
grantees.
Issued in April 2003, EPA‘s 5-year grants management plan does offer,
for the first time, a comprehensive road map with objectives, goals,
and milestones for addressing grants management challenges. However,
in implementing the plan, EPA faces challenges in holding all managers
and staff accountable for successfully fulfilling their grants
management responsibilities. Without this accountability, EPA cannot
ensure the sustained commitment needed for the plan‘s success. While
EPA has begun implementing actions in the plan, GAO believes that,
given EPA‘s historically uneven performance in addressing its grants
challenges, congressional oversight is important to ensure that EPA‘s
Administrator, managers, and staff implement the plan in a sustained,
coordinated fashion to meet the plan‘s ambitious targets and time
frames.
What GAO Recommends:
GAO made recommendations to the Administrator of EPA to strengthen the
agency‘s efforts to address persistent challenges in effectively
managing its grants. EPA agreed with GAO‘s recommendations and is in
the process of implementing them as part of its 5-year grants
management plan.
[End of section]
Mr. Chairman and Members of the Committee:
We are pleased to be here today to discuss the Environmental Protection
Agency's (EPA) management of its grants. My testimony is based on our
report on this topic issued last August.[Footnote 1]
EPA has faced persistent challenges for many years in managing its
grants, which constitute over one-half of the agency's budget, or about
$4 billion annually. To support its mission of protecting human health
and the environment, EPA awards grants to a variety of recipients,
including state and local governments, tribes, universities, and
nonprofit organizations. There were 4,100 EPA grant recipients when we
conducted our review.[Footnote 2] Given the size and diversity of EPA's
programs, its ability to efficiently and effectively accomplish its
mission largely depends on how well it manages its grant resources and
builds accountability into its efforts.
Congressional hearings in 1996, 1999, and 2003, have focused on EPA's
problems in effectively managing its grants. We and EPA's Inspector
General have reported on a number of weaknesses throughout the grants
management process--from awarding grants to measuring grant
results.[Footnote 3] EPA's efforts to address its grants management
problems have not fully resolved them. To highlight these problems and
hopefully focus greater attention on their resolution, we designated
EPA's grants management as a major management challenge in our January
2003 EPA performance and accountability report.[Footnote 4]
Late in 2002, EPA issued two new policies to address some of its grants
management problems--one to promote competition in awarding grants and
one to improve its oversight of grants. In April 2003, EPA issued a
comprehensive 5-year grants management plan to address its long-
standing grants management problems.
Our testimony today describes the (1) major challenges EPA faces in
managing its grants and how it has addressed these challenges in the
past, and (2) extent to which EPA's recently issued policies and grants
management plan address these challenges.
To identify the challenges EPA faces in managing its grants and to
examine how it has addressed these challenges in the past, we (1)
analyzed 93 reports on EPA's grants management, including our reports,
EPA's Inspector General reports, and EPA's internal management reviews
conducted from 1996 through 2003, (2) systematically reviewed and
recorded information from the 1,232 records of calendar year 2002 in-
depth reviews of grantee performance--from financial management to
progress in achieving grant objectives, and (3) interviewed EPA
officials and reviewed documents obtained from them.[Footnote 5] To
determine the extent to which EPA's recently issued policies and grants
management plan address these challenges, we (1) reviewed the new
policies and plan and interviewed EPA officials responsible for key
aspects of the plan, (2) attended EPA's grants management training
courses, and (3) observed five EPA in-depth reviews of
grantees.[Footnote 6] This testimony is based on GAO's report for which
audit work was conducted from June 2002 through June 2003 in accordance
with generally accepted government auditing standards.
In summary, we found the following:
* EPA faces four key management challenges. These challenges are (1)
selecting the most qualified grant applicants, (2) effectively
overseeing grantees, (3) measuring the results of grants, and (4)
effectively managing grant staff and resources. In the past, EPA has
taken a series of actions to address these challenges by, among other
things, issuing policies, conducting training, and developing a new
data system for grants management. However, these actions had mixed
results because of the complexity of the problems, weaknesses in design
and implementation, and insufficient management attention.
* EPA's 2002 competition and oversight policies and 2003 grants
management plan focus on the major grants management challenges we
identified but will require strengthening, enhanced accountability, and
a sustained commitment to succeed.
We made recommendations in our report to the EPA Administrator to
strengthen grants management, specifically in overseeing grantees,
measuring environmental outcomes, incorporating accountability for
grants management responsibilities, considering promising practices,
and reporting on the progress of its efforts in its annual report to
Congress. EPA agreed with our recommendations and is in the process of
implementing them as part of its 5-year grants management plan.
Background:
EPA administers and oversees grants primarily through the Office of
Grants and Debarment, 10 program offices in headquarters,[Footnote 7]
and program offices and grants management offices in EPA's 10 regional
offices. Figure 1 shows EPA's key offices involved in grants activities
for headquarters and the regions.
Figure 1: EPA's Key Offices Involved in Grant Activities:
[See PDF for image]
[End of figure]
The management of EPA's grants program is a cooperative effort
involving the Office of Administration and Resources Management's
Office of Grants and Debarment, program offices in headquarters, and
grants management and program offices in the regions. The Office of
Grants and Debarment develops grant policy and guidance. It also
carries out certain types of administrative and financial functions for
the grants approved by the headquarters program offices, such as
awarding grants and overseeing the financial management of these
grants. On the programmatic side, headquarters program offices
establish and implement national policies for their grant programs, and
set funding priorities. They are also responsible for the technical and
programmatic oversight of their grants. In the regions, grants
management offices carry out certain administrative and financial
functions for the grants, such as awarding grants approved by the
regional program offices,[Footnote 8] while the regional program staff
provide technical and programmatic oversight of their grantees.
As of June 2003, 109 grants specialists in the Office of Grants and
Debarment and the regional grants management offices were largely
responsible for administrative and financial grant functions.
Furthermore, 1,835 project officers were actively managing grants in
headquarters and regional program offices. These project officers are
responsible for the technical and programmatic management of grants.
Unlike grant specialists, however, project officers generally have
other primary responsibilities, such as using the scientific and
technical expertise for which they were hired.
In fiscal year 2002, EPA took 8,070 grant actions totaling about $4.2
billion.[Footnote 9]These awards were made to six main categories of
recipients as shown in figure 2.
Figure 2: Percentage of EPA Grant Dollars Awarded by Recipient Type,
Fiscal Year 2002:
[See PDF for image]
[End of figure]
EPA offers two types of grants--nondiscretionary and discretionary:
* Nondiscretionary grants support water infrastructure projects, such
as the drinking water and clean water state revolving fund programs,
and continuing environmental programs, such as the Clean Air Program
for monitoring and enforcing Clean Air Act regulations. For these
grants, Congress directs awards to one or more classes of prospective
recipients who meet specific eligibility criteria; the grants are often
awarded on the basis of formulas prescribed by law or agency
regulation. In fiscal year 2002, EPA awarded about $3.5 billion in
nondiscretionary grants. EPA has awarded these grants primarily to
states or other governmental entities.
* Discretionary grants fund a variety of activities, such as
environmental research and training. EPA has the discretion to
independently determine the recipients and funding levels for grants.
In fiscal year 2002, EPA awarded about $719 million in discretionary
grants. EPA has awarded these grants primarily to nonprofit
organizations, universities, and government entities.
The grant process has the following four phases:
* Preaward. EPA reviews the application paperwork and makes an award
decision.
* Award. EPA prepares the grant documents and instructs the grantee on
technical requirements, and the grantee signs an agreement to comply
with all requirements.
* Postaward. After awarding the grant, EPA provides technical
assistance, oversees the work, and provides payments to the grantee;
the grantee completes the work, and the project ends.
* Closeout of the award. EPA ensures that all technical work and
administrative requirements have been completed; EPA prepares closeout
documents and notifies the grantee that the grant is completed.
EPA's grantees are subject to the same type of financial management
oversight as the recipients of other federal assistance. Specifically,
the Single Audit Act requires grantees to have an audit of their
financial statements and federal awards or program-specific audit if
they spend $300,000 or more in federal awards in a fiscal
year.[Footnote 10],, Grantees submit these audits to a central
clearinghouse operated by the Bureau of the Census, which then forwards
the audit findings to the appropriate agency for any necessary action.
However, the act does not cover all grants and all aspects of grants
management and, therefore, agencies must take additional steps to
ensure that federal funds are spent appropriately. In addition, EPA
conducts in-depth reviews to analyze grantees' compliance with grant
regulations and specific grant requirements.[Footnote 11] Furthermore,
to determine how well offices and regions oversee grantees, EPA
conducts internal management reviews that address grants management.
EPA's Inspector General testified before Congress in 1996 and again in
1999 that EPA did not fulfill its obligation to properly monitor
grants. Acknowledging these problems, EPA identified oversight,
including grant closeouts, as a material weakness--an accounting and
internal control system weakness that the EPA Administrator must report
to the President and Congress.[Footnote 12] EPA's fiscal year 1999
Federal Managers' Financial Integrity Act report indicated that this
oversight material weakness had been corrected, but the Inspector
General testified that the weakness continued. In 2002, the Inspector
General again recommended that EPA designate grants management as a
material weakness. The Office of Management and Budget (OMB) also
recommended in 2002 that EPA designate grants management as a material
weakness. In its fiscal year 2002 Annual Report,[Footnote 13] EPA
ultimately decided to maintain this issue as an agency-level weakness,
which is a lower level of risk than a material weakness. EPA reached
this decision because it believes its ongoing corrective action efforts
will help to resolve outstanding grants management challenges. However,
in adding EPA's grants management to our list of EPA's major management
challenges in January 2003, we signaled our concern that EPA has not
yet taken sufficient action to ensure that it can manage its grants
effectively.
EPA Faces Four Key Grants Management Challenges, Despite Past Efforts
to Address Them:
We identified four key challenges that EPA continues to face in
managing its grants. These challenges are (1) selecting the most
qualified grant applicants, (2) effectively overseeing grantees, (3)
measuring the results of grants, and (4) effectively managing grant
staff and resources. In the past,[Footnote 14] EPA has taken a series
of actions to address these challenges by, among other things, issuing
policies on competition and oversight, conducting training for project
officers and nonprofit organizations, and developing a new data system
for grants management. However, these actions had mixed results because
of the complexity of the problems, weaknesses in design and
implementation, and insufficient management attention.
EPA has not selected the most qualified applicants despite issuing a
competition policy. The Federal Grant and Cooperative Agreement Act of
1977[Footnote 15] encourages agencies to use competition in awarding
grants. To encourage competition, EPA issued a grants competition
policy in 1995. However, EPA's policy did not result in meaningful
competition throughout the agency, according to EPA officials.
Furthermore, EPA's own internal management reviews and a 2001 Inspector
General report found that EPA has not always encouraged
competition.[Footnote 16] Finally, EPA has not always engaged in
widespread solicitation of its grants, which would provide greater
assurance that EPA receives proposals from a variety of eligible and
highly qualified applicants who otherwise may not have known about
grant opportunities.
EPA has not always effectively overseen grant recipients despite past
actions to improve oversight. To address oversight problems, EPA issued
a series of policies starting in 1998. However, these oversight
policies have had mixed results in addressing this challenge. For
example, EPA's efforts to improve oversight included in-depth reviews
of grantees but did not include a statistical approach to identifying
grantees for reviews, collecting standard information from the reviews,
and a plan for analyzing the results to identify and act on systemic
grants management problems. EPA, therefore, could not be assured that
it was identifying and resolving grantee problems and using its
resources more effectively to target its oversight efforts.
EPA's efforts to measure environmental results have not consistently
ensured that grantees achieve them. Planning for grants to achieve
environmental results--and measuring results--is a difficult, complex
challenge. However, as we pointed out in an earlier report,[Footnote
17] it is important to measure outcomes of environmental activities
rather than just the activities themselves. Identifying and measuring
the outcomes of EPA's grants will help EPA better manage for results.
EPA has awarded some discretionary grants before considering how the
results of the grantees' work would contribute to achieving
environmental results.[Footnote 18] EPA has also not developed
environmental measures and outcomes for all of its grant
programs.[Footnote 19] OMB found that four EPA grant programs lacked
outcome-based measures--measures that demonstrated the impact of the
programs on improving human health and the environment--and concluded
that one of EPA's major challenges was demonstrating program
effectiveness in achieving public health and environmental
results.[Footnote 20] Finally, EPA has not always required grantees to
submit work plans that explain how a project will achieve measurable
environmental results. In 2002, EPA's Inspector General reported that
EPA approved some grantees' work plans without determining the
projects' human health and environmental outcomes.[Footnote 21] In
fact, for almost half of the 42 discretionary grants the Inspector
General reviewed, EPA did not even attempt to measure the projects'
outcomes. Instead, EPA funded grants on the basis of work plans that
focused on short-term procedural results, such as meetings or
conferences. In some cases, it was unclear what the grant had
accomplished. In 2003, the Inspector General again found the project
officers had not negotiated environmental outcomes in work plans. The
Inspector General found that 42 percent of the grant work plans
reviewed--both discretionary and nondiscretionary grants--lacked
negotiated environmental outcomes.[Footnote 22]
EPA has not always effectively managed its grants staff and resources
despite some past efforts. EPA has not always appropriately allocated
the workload for staff managing grants, provided them with adequate
training, or held them accountable. Additionally, EPA has not always
provided staff with the resources, support, and information necessary
to manage the agency's grants. To address these problems, EPA has taken
a number of actions, such as conducting additional training and
developing a new electronic grants management system. However,
implementation weaknesses have precluded EPA from fully resolving its
resource management problems. For example, EPA has not always held its
staff--such as project officers--accountable for fulfilling their
grants management responsibilities. According to the Inspector General
and internal management reviews, EPA has not clearly defined project
officers' grants management responsibilities in their position
descriptions and performance agreements. Without specific standards for
grants management in performance agreements, it is difficult for EPA to
hold staff accountable. It is therefore not surprising that, according
to the Inspector General, project officers faced no consequences for
failing to effectively perform grants management duties. Compounding
the accountability problem, agency leadership has not always emphasized
the importance of project officers' grants management duties.[Footnote
23]
New Policies and Plan Show Promise but Require Strengthening, Enhanced
Accountability, and Sustained Commitment to Succeed:
EPA's recently issued policies on competition and oversight and a 5-
year grants management plan to address its long-standing grants
management problems are promising and focus on the major management
challenges, but these policies and plan require strengthening, enhanced
accountability, and sustained commitment to succeed.
EPA's competition policy shows promise but requires a major cultural
shift. In September 2002, EPA issued a policy to promote competition in
grant awards by requiring that most discretionary grants be
competed.[Footnote 24] The policy also promotes widespread solicitation
for competed grants by establishing specific requirements for
announcing funding opportunities in, for example, the Federal Register
and on Web sites.
This policy should encourage selection of the most qualified
applicants. However, the competition policy faces implementation
barriers because it represents a major cultural shift for EPA staff and
managers, who have had limited experience with competition, according
to EPA's Office of Grants and Debarment. The policy requires EPA
officials to take a more planned, rigorous approach to awarding grants.
That is, EPA staff must determine the evaluation criteria and ranking
of these criteria for a grant, develop the grant announcement, and
generally publish it at least 60 days before the application deadline.
Staff must also evaluate applications--potentially from a larger number
of applicants than in the past--and notify applicants of their
decisions. These activities will require significant planning and take
more time than awarding grants noncompetitively.
Oversight policy makes important improvements but requires
strengthening to identify systemic problems. EPA's December 2002 policy
makes important improvements in oversight, but it still does not enable
EPA to identify systemic problems in grants management. Specifically,
the policy does not (1) incorporate a statistical approach to selecting
grantees for review so EPA can project the results of the reviews to
all EPA grantees, (2) require a standard reporting format for in-depth
reviews so that EPA can use the information to guide its grants
oversight efforts agencywide, and (3) maximize use of information in
its grantee compliance database to fully identify systemic problems and
then inform grants management officials about oversight areas that need
to be addressed.[Footnote 25]
Grants management plan will require strengthening, sustained
commitment, and enhanced accountability. We believe that EPA's grants
management plan[Footnote 26] is comprehensive in that it focuses on the
four major management challenges--grantee selection, oversight,
environmental results, and resources--that we identified in our work.
For the first time, EPA plans a coordinated, integrated approach to
improving grants management. The plan is also a positive step because
it (1) identifies goals, objectives, milestones, and resources to
achieve the plan's goals; (2) provides an accompanying annual tactical
plan that outlines specific tasks for each goal and objective,
identifies the person accountable for completing the task, and sets an
expected completion date; (3) attempts to build accountability into
grants management by establishing performance measures for each of the
plan's five goals;[Footnote 27] (4) recognizes the need for greater
involvement of high-level officials in coordinating grants management
throughout the agency by establishing a high-level grants management
council to coordinate, plan, and set priorities for grants management;
and (5) establishes best practices for grants management offices.
According to EPA's Assistant Administrator for Administration and
Resources Management, the agency's April 2003 5-year grants management
plan is the most critical component of EPA's efforts to improve its
grants management.
In addition to the goals and objectives, the plan establishes
performance measures, targets, and action steps with completion dates
for 2003 through 2006. EPA has already begun implementing several of
the actions in the plan or meant to support the plan; these actions
address previously identified problems. For example, EPA now posts its
available grants on the federal grants Web site http://
www.fedgrants.gov. In January 2004, EPA issued an interim policy to
require that grant funding packages describe how the proposed project
supports the goals of EPA's strategic plan.
Successful implementation of the new plan requires all staff--senior
management, project officers, and grants specialists--to be fully
committed to, and accountable for, grants management. Recognizing the
importance of commitment and accountability, EPA's 5-year grants
management plan has as one of its objectives the establishment of clear
lines of accountability for grants oversight. The plan, among other
things, calls for (1) ensuring that performance standards established
for grants specialists and project officers adequately address grants
management responsibilities in 2004; (2) clarifying and defining the
roles and responsibilities of senior resource officials, grant
specialists, project officers, and others in 2003; and (3) analyzing
project officers' and grants specialists' workload in 2004.
In implementing this plan, however, EPA faces challenges to enhancing
accountability. Although the plan calls for ensuring that project
officers' performance standards adequately address their grants
management responsibilities, agencywide implementation may be
difficult. Currently, project officers do not have uniform performance
standards, according to officials in EPA's Office of Human Resources
and Organizational Services. Instead, each supervisor sets standards
for each project officer, and these standards may not include grants
management responsibilities. Once individual project officers'
performance standards are established for the approximately 1,800
project officers, strong support by managers at all levels, as well as
regular communication on performance expectations and feedback, will be
key to ensuring that staff with grants management duties successfully
meet their responsibilities. Furthermore, it is difficult to implement
performance standards that will hold project officers accountable for
grants management because these officers have a variety of
responsibilities and some project officers manage few grants, and
because grants management responsibilities often fall into the category
of "other duties as assigned.":
Although EPA's current performance management system can accommodate
development of performance standards tailored to each project officer's
specific grants management responsibilities, the current system
provides only two choices for measuring performance--satisfactory or
unsatisfactory--which may make it difficult to make meaningful
distinctions in performance. Such an approach may not provide enough
meaningful information and dispersion in ratings to recognize and
reward top performers, help everyone attain their maximum potential,
and deal with poor performers.
EPA will also have difficulty achieving the plan's goals if all
managers and staff are not held accountable for grants management. The
plan does not call for including grants management standards in
managers' and supervisors' agreements. In contrast, senior grants
managers in the Office of Grants and Debarment as well as other Senior
Executive Service managers have performance standards that address
grants management responsibilities.[Footnote 28] However, middle-level
managers and supervisors also need to be held accountable for grants
management because they oversee many of the staff that have important
grants management responsibilities. According to Office of Grants and
Debarment officials, they are working on developing performance
standards for all managers and supervisors with grants
responsibilities. In November 2003, EPA asked key grants managers to
review all performance standards and job descriptions for employees
involved in grants management, including grants specialists, project
officers, supervisors, and managers, to ensure that the complexity and
extent of their grant management duties are accurately reflected.
Further complicating the establishment of clear lines of
accountability, the Office of Grants and Debarment does not have direct
control over many of the managers and staff who perform grants
management duties--particularly the approximately 1,800 project
officers in headquarters and regional program offices. The division of
responsibilities between the Office of Grants and Debarment and program
and regional offices will continue to present a challenge to holding
staff accountable and improving grants management, and will require the
sustained commitment of EPA's senior managers.
If EPA is to better achieve its environmental mission, it must more
effectively manage its grants--which account for more than half of its
annual budget. While EPA's new 5-year grants management plan shows
promise, given EPA's historically uneven performance in addressing its
grants management challenges, congressional oversight is important to
ensure that the Administrator of EPA, managers, and staff implement the
plan in a sustained, coordinated fashion to meet the plan's ambitious
targets and time frames.
To ensure that EPA's recent efforts to address its grants management
challenges are successful, in our August 2003 report, we recommended
that the Administrator of EPA provide sufficient resources and
commitment to meeting the agency's grants management plan's goals,
objectives, and performance targets within the specified timeframes.
Furthermore, to strengthen EPA's efforts we recommended:
* incorporating appropriate statistical techniques in selecting
grantees for in-depth reviews;
* requiring EPA staff to use a standard reporting format for in-depth
reviews so that the results can be entered into the grant databases and
analyzed agencywide;
* developing a plan, including modifications to the grantee compliance
database, to use data from its various oversight efforts--in-depth
reviews, significant actions, corrective actions taken, and other
compliance information--to fully identify systemic problems, inform
grants management officials of areas that need to be addressed, and
take corrective action as needed;
* modifying its in-depth review protocols to include questions on the
status of grantees' progress in measuring and achieving environmental
outcomes;
* incorporating accountability for grants management responsibilities
through performance standards that address grants management for all
managers and staff in headquarters and the regions responsible for
grants management and holding managers and staff accountable for
meeting these standards; and:
* evaluating the promising practices identified in the report and
implementing those that could potentially improve EPA grants
management.
To better inform Congress about EPA's achievements in improving grants
management, we recommended that the Administrator of EPA report on the
agency's accomplishments in meeting the goals and objectives developed
in the grants management plan and other actions to improve grants
management, beginning with its 2003 annual report to Congress.
EPA agreed with our recommendations and is in the process of
implementing them as part of its 5-year grants management plan.
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions that you or Members of the Committee may have.
Contacts and Acknowledgments:
For further information, please contact John B. Stephenson at (202)
512-3841. Individuals making key contributions to this testimony were
Carl Barden, Andrea W. Brown, Christopher Murray, Paul Schearf, Rebecca
Shea, Carol Herrnstadt Shulman, Bruce Skud, and Amy Webbink.
FOOTNOTES
[1] U.S. General Accounting Office, Grants Management: EPA Needs to
Strengthen Efforts to Address Persistent Challenges, GAO-03-846
(Washington, D.C.: Aug. 29, 2003).
[2] As of September 30, 2002.
[3] See U.S. General Accounting Office, Environmental Protection
Agency: Problems Persist in Effectively Managing Grants, GAO-03-628T
(Washington, D.C.: June 11, 2003).
[4] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Environmental Protection Agency, GAO-03-112
(Washington, D.C.: January 2003).
[5] Federal financial assistance includes grants, cooperative
agreements, loans, loan guarantees, scholarships, and other forms of
assistance. For this report, we focused on both grants and cooperative
agreements, and for simplicity, refer to both as "grants."
[6] For detailed methodology, see GAO-03-846, app.I.
[7] According to EPA officials, two headquarters' offices, EPA's Office
of General Counsel and the Office of the Chief Financial Officer
conduct limited grant activity.
[8] Program offices in regions 4, 5, 6, 9, and 10 award grants
directly.
[9] Grant actions include new awards, increase and decrease amendments.
The 8,070 grant actions involving funding were composed of 4,374 new
grants, 2,772 increase amendments, and 924 decrease amendments. In
addition, EPA awarded 1,620 no cost extensions, which did not involve
funding, in fiscal 2002.
[10] The Single Audit Act Amendments of 1996, Pub. L. No. 104-156, 110
Stat. 1396 (codified at 31 U.S.C. §§ 7501-7507).
[11] EPA refers to these in-depth reviews as advance monitoring.
[12] See 31 U.S.C. §3512.
[13] U.S. Environmental Protection Agency, Fiscal Year 2002 Annual
Report, EPA-190-R-03-001 (Washington, D.C.: Jan. 31, 2003).
[14] EPA took these actions through early 2002.
[15] Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No.
95-224, 92 Stat. 3 (codified as amended at 31 U.S.C. §§ 6301-6308).
[16] EPA Office of the Inspector General, EPA's Competitive Practices
for Assistance Awards, Report No. 2001-P-00008 (Philadelphia, PA: May
21, 2001).
[17] U.S. General Accounting Office, Managing for Results: EPA Faces
Challenges in Developing Results-Oriented Performance Goals and
Measures, GAO/RCED-00-77 (Washington, D.C.: Apr. 28, 2000).
[18] U.S. General Accounting Office, Environmental Protection:
Information on EPA Project Grants and Use of Waiver Authority,
GAO-01-359 (Washington, D.C.: Mar. 9, 2001).
[19] U.S. General Accounting Office, Environmental Research: STAR
Grants Focus on Agency Priorities, but Management Enhancements Are
Possible, GAO/RCED-00-170 (Washington, D.C.: Sept. 11, 2000).
[20] The four EPA programs assessed were the Drinking Water State
Revolving Fund, Leaking Underground Storage Tanks, Nonpoint Source
Grants, and Tribal General Assistance programs. OMB evaluated these
programs using its Program Assessment Rating Tool, a questionnaire that
evaluated four critical areas of performance: purpose and design,
strategic planning, management, results and accountability. These
assessments were included in the President's 2004 budget submission.
[21] EPA Office of Inspector General, Surveys, Studies, Investigations,
and Special Purpose Grants, Report No. 2002-P-00005 (Philadelphia, PA:
Mar. 21, 2002).
[22] EPA Office of Inspector General, EPA Must Emphasize Importance of
Pre-Award Reviews for Assistance Agreements, Report No. 2003-P-00007
(Washington, D.C.: Mar. 31, 2003).
[23] EPA Office of Inspector General, Report No. 2003-P-00007.
[24] The policy applies to most discretionary grant programs or
individual grants of more than $75,000.
[25] The grantee compliance database, developed by the Office of Grants
and Debarment, is used to store EPA's in-depth reviews of grant
recipients.
[26] For further details, see EPA Office of Grants and Debarment,
Grants Management Plan 2003 - 2008, Report No. EPA-216-R-03-001
(Washington, D.C.: April 2003).
[27] The plan's five goals are: (1) promote competition in awarding
grants, (2) strengthen EPA's grants oversight, (3) support the
identification and achievement of environmental outcomes, (4) enhance
the skills of EPA personnel involved in grants management, and (5)
leverage technology to improve program performance.
[28] The senior managers include the Director of the Office of Grants
and Debarment, the Director of the Grants Administration Division, and
the Grants Competition Advocate.
