Grants Management
EPA Continues to Have Problems Linking Grants to Environmental Results Gao ID: GAO-04-983T July 20, 2004The Environmental Protection Agency (EPA) has faced persistent challenges in managing its grants, which constitute over one-half of the agency's budget, or about $4 billion annually. These challenges include achieving and measuring environmental results from grant funding. It is easier to measure grant activities (outputs) than the environmental results of those activities (outcomes), which may occur years after the grant was completed. In 2003, EPA issued a 5-year strategic plan for managing grants that set out goals, including identifying and achieving environmental outcomes. This testimony describes persistent problems EPA has faced in addressing grants' environmental results and the extent to which EPA has made progress in addressing problems in achieving environmental results from its grants. It summarizes and updates two reports GAO issued on EPA's grant management in August 2003 and March 2004.
EPA's problems in identifying and achieving environmental results from its grants persist. The agency is still not consistently ensuring that grants awarded are clearly linked to environmental outcomes in grant workplans, according to GAO's analysis and EPA's internal reviews. For example, EPA's 2003 internal reviews found that less than one-third of grant workplans reviewed--the document that lays out how the grantee will use the funding--identified anticipated environmental outcomes. Not surprisingly, given the lack of outcomes in grant workplans, the Office of Management and Budget's recent review of 10 EPA grant programs found that 8 of the grant programs reviewed were not demonstrating results. Furthermore, not every EPA program office has yet developed environmental measures for their grant programs. EPA's progress in addressing problems in achieving environmental results from grants to this point has been slower and more limited than planned. While EPA had planned to issue an outcome policy--a critical ingredient to progress on this front--in 2003, the policy's issuance has been delayed to the fall of 2004, and will not become effective until January 2005. In the meantime, EPA has issued a limited, interim policy that requires program offices to link grants to EPA's strategic goals, but does not link grants to environmental outcomes. Furthermore, as a result of the delay in issuing an outcome policy, EPA officials do not expect to meet the 5-year plan's first-year target for the goal's performance measure. The forthcoming draft policy we reviewed appears to be moving EPA in the right direction for addressing environmental outcomes from its grants. For example, the draft policy emphasizes environmental results throughout the grant life cycle--awards, monitoring, and reporting. Consistent and effective implementation of the policy will, however, be a major challenge. Successful implementation will require extensive training of agency personnel and broad based education of literally thousands of grantees.
GAO-04-983T, Grants Management: EPA Continues to Have Problems Linking Grants to Environmental Results
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Testimony:
Before the Subcommittee on Water Resources and Environment, Committee
on Transportation and Infrastructure, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 2: 00 p.m. EDT Tuesday,
July 20, 2004:
Grants Management:
EPA Continues to Have Problems Linking Grants to Environmental Results:
Statement of John B. Stephenson:
Director:
Natural Resources and Environment:
GAO-04-983T:
GAO Highlights:
Highlights of GAO-04-983T, testimony before the Subcommittee on Water
Resources and Environment, Committee on Transportation and
Infrastructure, House of Representatives:
Why GAO Did This Study:
The Environmental Protection Agency (EPA) has faced persistent
challenges in managing its grants, which constitute over one-half of
the agency‘s budget, or about $4 billion annually. These challenges
include achieving and measuring environmental results from grant
funding. It is easier to measure grant activities (outputs) than the
environmental results of those activities (outcomes), which may occur
years after the grant was completed. In 2003, EPA issued a 5-year
strategic plan for managing grants that set out goals, including
identifying and achieving environmental outcomes.
This testimony describes persistent problems EPA has faced in
addressing grants‘ environmental results and the extent to which EPA
has made progress in addressing problems in achieving environmental
results from its grants. It summarizes and updates two reports GAO
issued on EPA‘s grant management in August 2003 and March 2004.
What GAO Found:
EPA‘s problems in identifying and achieving environmental results from
its grants persist. The agency is still not consistently ensuring that
grants awarded are clearly linked to environmental outcomes in grant
workplans, according to GAO‘s analysis and EPA‘s internal reviews. For
example, EPA‘s 2003 internal reviews found that less than one-third of
grant workplans reviewed”the document that lays out how the grantee
will use the funding”identified anticipated environmental outcomes. Not
surprisingly, given the lack of outcomes in grant workplans, the Office
of Management and Budget‘s recent review of 10 EPA grant programs found
that 8 of the grant programs reviewed were not demonstrating results.
Furthermore, not every EPA program office has yet developed
environmental measures for their grant programs.
EPA‘s progress in addressing problems in achieving environmental
results from grants to this point has been slower and more limited than
planned. While EPA had planned to issue an outcome policy”a critical
ingredient to progress on this front”in 2003, the policy‘s issuance has
been delayed to the fall of 2004, and will not become effective until
January 2005. In the meantime, EPA has issued a limited, interim policy
that requires program offices to link grants to EPA‘s strategic goals,
but does not link grants to environmental outcomes. Furthermore, as a
result of the delay in issuing an outcome policy, EPA officials do not
expect to meet the 5-year plan‘s first-year target for the goal‘s
performance measure. The forthcoming draft policy we reviewed appears
to be moving EPA in the right direction for addressing environmental
outcomes from its grants. For example, the draft policy emphasizes
environmental results throughout the grant life cycle”awards,
monitoring, and reporting. Consistent and effective implementation of
the policy will, however, be a major challenge. Successful
implementation will require extensive training of agency personnel and
broad based education of literally thousands of grantees.
www.gao.gov/cgi-bin/getrpt?GAO-04-983T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John B. Stephenson at
(202) 512-3841 or stephensonj@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss how the Environmental
Protection Agency (EPA) manages its grants to achieve a better
environment and improved public health. My testimony is based primarily
on our recent reports on EPA grants management issued in 2003 and 2004,
as well as additional work we conducted for this testimony.[Footnote 1]
As you know, 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. As of June 2004, EPA had
about 3,700 grant recipients. 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 grants resources and
builds accountability for results into its efforts.
Planning for grants to achieve environmental results--and measuring
results--is an important but difficult challenge. It is far easier to
measure environmental activities (outputs) than the results (outcomes)
of those activities. However, as we pointed out in an earlier
report,[Footnote 2] it is important to measure outcomes of
environmental activities rather than just the activities themselves. It
is critical that EPA be able to demonstrate the results achieved
through its $4 billion annual investment in grant programs,
particularly their impact on protecting the nation's human health and
environment.
In April 2003, EPA issued a comprehensive 5-year grants management plan
to address its long-standing grants management problems.[Footnote 3] In
the plan, EPA identifies five major goals to address major challenges,
which are similar to those we identified in our 2003 report, including
the goal of "identifying and achieving environmental
outcomes."[Footnote 4]
Our testimony today describes (1) persistent problems EPA has faced in
addressing grants' environmental results, and (2) the extent to which
EPA has made progress in addressing problems in achieving environmental
results from its grants.
As noted earlier, the work for this testimony is based primarily on two
previously issued GAO reports on grants management.[Footnote 5] To
identify persistent problems EPA has faced in addressing environmental
results from grants, we also reviewed EPA's Office of Inspector General
reports, EPA's internal reviews, and Office of Management and Budget's
(OMB) reviews using its Program Assessment Rating Tool. To determine
the extent to which EPA has made progress in addressing problems in
achieving environmental results from its grants, we interviewed
officials at EPA's Office of Grants and Debarment, reviewed EPA's
policy, guidance, and Strategic Plan. The additional work for this
testimony was based on work performed in April through June 2004 in
accordance with generally accepted government auditing standards.
In summary, we found the following:
* EPA's problems in identifying and achieving environmental results
from its grants persist. EPA is not consistently ensuring that
environmental outcomes are identified in the grant workplan--the
document that lays out how the grantee will use the funding--according
to our analysis and EPA's internal reviews. For example, EPA's 2003
internal reviews found that less than one-third of grant workplans
reviewed identified anticipated environmental outcomes. Not
surprisingly, given the lack of outcomes in grant workplans, OMB's
recent reviews of 10 EPA grant programs found that 8 of the grant
programs examined were not demonstrating results. According to program
and regional officials, it is difficult to measure outcomes, in part,
because of the time lapse between grant activities and a cleaner
environment. These concerns demonstrate the need for guidance that
addresses the complexities of measuring and achieving environmental
results. Furthermore, not every EPA program office has yet developed
environmental measures for their grant programs.
* EPA's progress in addressing problems in achieving environmental
results from grants has been slower and more limited than planned.
While EPA had planned to issue an outcome policy--a critical ingredient
to progress on this front--in 2003, the policy's issuance has been
delayed to the fall of 2004 and will not become effective until January
2005. In the meantime, EPA has issued a limited, interim policy that
requires program offices to link grants to EPA's strategic
goals,[Footnote 6] but does not link grants to environmental outcomes.
Furthermore, as a result of the delay in issuing an outcome policy, EPA
officials do not expect to meet the 5-year plan's first-year target for
the goal's performance measure--increasing the percentage of grant
workplans with environmental outcomes from about 31 percent in 2003 to
70 percent in 2004. According to our review of a draft of the
forthcoming outcome policy, EPA is making progress at the policy level
in addressing outcomes.[Footnote 7] The major challenge EPA faces will
be in successfully implementing the policy throughout the agency.
Realistically, EPA has a long road ahead in educating its managers,
supervisors and staff, as well as thousands of potential grantees,
about the complexities of identifying and achieving environmental
outcomes.
Background:
EPA administers and oversees grants primarily through the Office of
Grants and Debarment, 10 program offices in headquarters,[Footnote 8]
and program offices and grants management offices in EPA's 10 regional
offices. Figure 1 shows the key EPA offices involved in grants
activities for headquarters and 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 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 headquarters program offices, such as awarding grants and
overseeing the financial management of grants. On the programmatic
side, headquarters program offices establish and implement national
policies for their grants 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, while the regional
program staff provide technical and programmatic oversight of their
grantees.
As of June 2004, 134 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, 2,089 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 responsibilities, such as using the scientific and technical
expertise for which they were hired.
In fiscal year 2003, EPA took 6,753 grant actions involving funding
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 2003:
[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 2003, EPA awarded about $3.6 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 these
grants. In fiscal year 2003, EPA awarded $656 million in discretionary
grants. EPA has awarded these grants primarily to state and local
governments, nonprofit organizations, universities, and Native
American tribes.
To highlight persistent problems and, it is hoped, to focus greater
attention on their resolution, we designated EPA's grants management,
including achieving environmental results, as a major management
challenge in our January 2003 performance and accountability
report.[Footnote 10] In August 2003, we further addressed the question
of environmental results. We reported that EPA (1) had awarded some
grants before considering how the results of the grantees' work would
contribute to achieving environment results; (2) had not developed
environmental measures and outcomes for its grants programs; and (3)
often did not require grantees to submit workplans that explain how a
project will achieve measurable environmental results. We also found
that EPA's monitoring efforts had not called for project officers to
ask grantees about their progress in using measures to achieve
environmental outcomes.
Problems Persist in Addressing Grants' Environmental Results:
For its grants programs, EPA is still not effectively linking grants to
environmental results. The problems we identified in our previous 2003
report continue. Further, in our recent report, in 2004, we identified
an additional problem. That is, we could not determine from EPA's
databases the types of goods and services provided by grants. To
identify goods and services obtained from discretionary grants, we
surveyed discretionary grant recipients.[Footnote 11] On the basis of
our survey responses, we identified a total of eight categories (see
table 1).[Footnote 12] We estimated that of all the goods and services
indicated by grant recipients, 59 percent were in three of these
categories: (1) research and development; (2) training, workshops, and
education; and (3) journals, publications, and reports.
Table 1: Types of Goods and Services Reported by Surveyed Discretionary
Grant Recipients, 2004:
Dollars in millions.
Types of goods and services: Training, workshops, and education;
Percentage of grants listing this category of goods or service: 34%;
Estimated dollars for goods or service category: $40[A].
Types of goods and services: Research and development;
Percentage of grants listing this category of goods or service: 24%;
Estimated dollars for goods or service category: $67[B].
Types of goods and services: Journals, publications, and reports;
Percentage of grants listing this category of goods or service: 20%;
Estimated dollars for goods or service category: $54[B].
Types of goods and services: Cleanup, monitoring, and site assessment;
Percentage of grants listing this category of goods or service: 15%;
Estimated dollars for goods or service category: $56[B].
Types of goods and services: Meetings, conferences, and presentations;
Percentage of grants listing this category of goods or service: 15%;
Estimated dollars for goods or service category: $27[A].
Types of goods and services: Project support and assistance;
Percentage of grants listing this category of goods or service: 10%;
Estimated dollars for goods or service category: $19[C].
Types of goods and services: Web sites;
Percentage of grants listing this category of goods or service: 7%;
Estimated dollars for goods or service category: $14[C].
Types of goods and services: Other;
Percentage of grants listing this category of goods or service: 8%;
Estimated dollars for goods or service category: $18[A].
Source: GAO analysis of survey responses.
Note: Percentage totals are greater than 100 because many grants
provided more than one good or service.
[A] Sampling error is between one-third and one-half of the value of
this estimate.
[B] Sampling error is between one-fourth and one-third the value of
this estimate.
[C] Sampling error is between 60 and 70 percent of the values of this
estimate.
[End of table]
While we were able to identify goods and services from survey
responses, we could not link them to results. We reviewed the files of
67 grantees to identify if there was any link between goods and
services and program measures or outcomes in grant workplans.[Footnote
13] We found that none of the 67 grants identified measures and only 9
of the 67 grants identified anticipated outcomes in their workplans.
EPA has also found that grantee workplans often do not identify
environmental outcomes. In 2003, EPA began conducting internal reviews
that--for the first time--quantified the extent to which its grant-
issuing offices, including program and regional offices, ensured that
environmental outcomes are identified in grant workplans.[Footnote 14]
EPA reported that, overall, less than one-third of the 93 grant
workplans reviewed identified environmental outcomes. (See table 2.)
Among EPA's offices, the percent of workplans that identify
environmental outcomes ranged from 0 to 50.
Table 2: Results of EPA's 2003 Review of EPA Grant Workplans:
EPA office: Office of the Administrator;
Number of workplans reviewed: 15;
Number of workplans with outcomes: 7;
Percent: 46.7%.
EPA office: Office of Air and Radiation;
Number of workplans reviewed: 12;
Number of workplans with outcomes: 6;
Percent: 50.0%.
EPA office: Office of Environmental Information;
Number of workplans reviewed: 8;
Number of workplans with outcomes: 2;
Percent: 25.0%.
EPA office: Office of Solid Waste and Emergency Response;
Number of workplans reviewed: 10;
Number of workplans with outcomes: 3;
Percent: 30.0%.
EPA office: Region 4;
Number of workplans reviewed: 15;
Number of workplans with outcomes: 4;
Percent: 26.7%.
EPA office: Region 5;
Number of workplans reviewed: 16;
Number of workplans with outcomes: 7;
Percent: 43.8%.
EPA office: Region 9;
Number of workplans reviewed: 17;
Number of workplans with outcomes: 0;
Percent: 0%.
Total;
Number of workplans reviewed: 93;
Number of workplans with outcomes: 29;
Percent: 31.2%.
Source: GAO analysis of EPA data.
[End of table]
In 2004, EPA plans to review seven other offices. As of July 2004, EPA
had completed reviews of three offices. Among these three offices, EPA
found environmental outcomes in a little less than half of grant
workplans. Final agencywide data will not be available until the end of
2004, when EPA completes its internal reviews.
Not surprisingly, given the lack of outcomes in the workplans, OMB
found that EPA grant programs are not demonstrating results. In
February 2004, OMB found that 8 of the 10 EPA grant programs it
reviewed were "not demonstrating results."[Footnote 15] These programs
total about $2.8 billion. (See table 3.) OMB rated the two remaining
grant programs--Brownfields and Tribal Assistance Programs--totaling
$224 million as "adequate" in demonstrating results.
Table 3: EPA Grant Programs OMB Rated As "Not Demonstrating Results":
Dollars in billions.
Grant program: Clean Water State Revolving Fund;
Fiscal year 2003 funding: $1.341.
Grant program: Drinking Water State Revolving Fund;
Fiscal year 2003 funding: $0.850.
Grant program: Nonpoint Source;
Fiscal year 2003 funding: $0.237.
Grant program: Leaking Underground Storage Tanks;
Fiscal year 2003 funding: $0.072.
Grant program: Ecological Research;
Fiscal year 2003 funding: $0.132.
Grant program: Environmental Education;
Fiscal year 2003 funding: $0.009.
Grant program: Particulate Matter Research;
Fiscal year 2003 funding: $0.061.
Grant program: Pollution Prevention and New Technologies;
Fiscal year 2003 funding: $0.049.
Total; Fiscal year 2003 funding: $2.751.
Source: GAO analysis of OMB data.
[End of table]
According to EPA's Inspector General, EPA's failure to consistently
identify environmental measures and outcomes can weaken grant
oversight. For example, the Inspector General recently reported that
EPA Region 6 could not determine whether its oversight of water,
hazardous waste, and air programs in Louisiana was effective because,
in part, Region 6 had not linked these programs to environmental
outcomes.[Footnote 16] Region 6 had focused only on program outputs; it
therefore could not determine whether it was using its resources wisely
and achieving program results.
EPA's program and regional grants officials have identified
difficulties in measuring and achieving environmental outcomes. For
example:
* In response to EPA's internal reviews, Region 9 officials noted that
it is costly and difficult to measure outcomes when there is a
substantial time lag between implementing the grant and achieving
environmental outcomes. Moreover, it is difficult to attribute
environmental outcomes to one specific grant when dealing with complex
ecosystems. In addition, Office of Environmental Information project
officers stated that environmental outcome requirements should not
apply to support functions like information management.
* Responding to the recent Inspector General report faulting Region 6
for its oversight of Louisiana's environmental programs, Region 6
officials indicated that they had been unfairly criticized for not
implementing environmental measures since the agency, as a whole, had
been unable to do so.
These concerns demonstrate the need for guidance that addresses the
complexities of measuring and achieving environmental results.
Furthermore, not every EPA program office has yet developed
environmental measures for their grant programs. For example, in June
2004, the Inspector General found that EPA has been working on
developing environmental measures for the Clean Water State Revolving
Fund program since 1998.[Footnote 17] However, EPA has not yet
developed these measures or a comprehensive plan on how it plans to
develop these measures, although it plans to develop these measures by
February 2005.
EPA's Plan Focuses on Results, but Initial Implementation Has Been Slow
and Limited:
In 2003, we reported that EPA's new 5-year grants management plan was
promising. In the plan, EPA had established the goal of "identifying
and achieving environmental outcomes" with the objectives and
associated milestones shown in table 4. As table 4 shows, EPA's
progress in implementing the plan's environmental outcomes objectives
is behind schedule.[Footnote 18]
Table 4: EPA Progress in Meeting Grants Management Plan's Objectives
for Environmental Outcomes:
Objectives[A]: Objective 1: Ensuring that grantees include expected environmental outcomes and performance measures in grant workplans:
* Issue grants policy guidance to ensure that all grant workplans,
decision memoranda, and/or terms of condition include environmental
outcomes and measurements for them;
Original plan date: 2003;
Revised date: 2004[B].
* Develop a tutorial for grantees on how to develop performance
measures for workplans;
Original plan date: 2003;
Revised date: 2005.
* Require a discussion of expected environmental outcomes and
performance measures in grant solicitations;
Original plan date: 2004;
Revised date: 2005.
Objectives[A]: Objective 2: Improving reporting on grantee progress
made in achieving outcomes:
* Establish reporting on environmental outcomes as a criterion for
approval of grantee interim and final reports;
Original plan date: 2005;
Revised date: 2005.
* Incorporate success in reporting on outcomes into the criteria for
awarding new grants;
Original plan date: 2005;
Revised date: 2006.
* Address Paperwork Reduction Act requirements to enable cooperative
agreement recipients to easily collect information on environmental
results and outcomes[C];
Original plan date: 2004;
Revised date: 2004.
Source: GAO analysis of EPA data.
[A] EPA also plans to incorporate into its grants management plan our
August 2003 report recommendation that the agency modify the suggested
protocols it uses to monitor grantees to include questions about their
progress in measuring and achieving environmental outcomes.
[B] EPA expects the policy to become effective January 2005.
[C] According to EPA officials, OMB's implementation of its rules under
the Paperwork Reduction Act can be an impediment to identifying results
in cooperative agreements because cooperative agreement recipients must
obtain the approval of OMB to survey nine or more parties.
[End of table]
EPA plans to issue its environmental outcomes policy--a key objective
originally scheduled for 2003--in fall 2004, but the policy will not
become effective until January 2005. EPA officials stated that the
policy was delayed because of the difficulty in addressing
environmental outcomes. Furthermore, as a result of this delay, EPA has
delayed meeting the objectives of developing a tutorial for grantees,
requiring outcomes in solicitations, and incorporating success on
achieving outcomes into the criteria for awarding grants--objectives
that are contingent on the issuance of the policy. EPA is also delaying
the objective of incorporating grantee's previous success in
identifying outcomes into the criteria for awarding new grants in order
to give grantees a year to understand the new policy.
In the absence of a final outcomes policy, EPA issued an interim policy
in January 2004.[Footnote 19] The interim policy is a positive step in
that for the first time EPA is requiring project officers to identify-
-at the pre-award stage--how proposed grants contribute to achieving
the agency's strategic goals under the Government Performance and
Results Act of 1993 (GPRA).[Footnote 20] (See fig. 3, example 1.) As we
reported, project officers were linking the grant to the agency's goal
after the award decision, so that the linkage was a recordkeeping
activity rather than a strategic decision.[Footnote 21]
Figure 3: EPA's Interim Policy Requires Linking Grants to Strategic
Goals, but It Does Not Require Linking Grants to Environmental
Outcomes:
[See PDF for image]
[End of figure]
While the interim policy is a positive first step, it does not require
project officers to link grant funding to environmental outcomes.
Instead, it "encourages" project officers to link grant funding to
outputs, outcomes, and performance goals, as illustrated in figure 3,
example 2. EPA officials explained that the interim policy did not
require the full strategic plan/GPRA "architecture"--goals,
objectives, subobjectives, program/project, outputs, outcomes, and
annual performance goals--because not all EPA staff are trained on how
to implement the strategic plan/GPRA architecture. However, when EPA's
outcome policy becomes effective, it will require every grant workplan
to address the full strategic plan/GPRA architecture, including
outcomes.
Finally, EPA will not meet the grant management's plan first-year
(2004) target for the performance measure of the environmental outcomes
goal--the percentage of grant workplans, decision memoranda, and terms
of conditions that discuss how grantees plan to measure and report on
environmental outcomes. For this performance measure, using 2003 as its
baseline year, EPA determined that, as previously discussed, less than
one-third of its grant workplans had environmental outcomes. EPA
established targets that progressively increase from this baseline to
70 percent in 2004, to 80 percent in 2005, to 100 percent in 2006. EPA
officials do not expect that EPA will meet its target for 2004 because
its outcome policy is not yet in place.
EPA has drafted a policy and guidance on environmental outcomes in
grants. As drafted, this policy appears to have EPA moving in the right
direction for addressing environmental outcomes. The policy:
* Is binding on managers and staff throughout the agency, according to
EPA officials. Previously, the Office of Grants and Debarment targeted
only project officers through brief guidance on outcomes in their
training manual.[Footnote 22]
* Emphasizes environmental results throughout the grant life cycle--
awards, monitoring, and reporting. In terms of awards, the draft policy
applies to both competitive and noncompetitive grants. For example,
program offices and their managers must assure that competitive funding
announcements discuss expected outputs and outcomes. In terms of grant
monitoring, the policy requires program offices to assure that grantees
submit interim and final grantee reports that address outcomes.
* Requires that grants are both aligned with the agency's strategic
goals and linked to environmental results. Specifically, the draft
policy requires that EPA program offices (1) ensure that each grant
funding package includes a description of the EPA strategic goals and
objectives the grant is intended to address and (2) provide assurance
that the grant workplan contains well-defined outputs, and to the
"maximum extent practicable," well-defined outcome measures. According
to an EPA official, while the policy requires that program offices
assure that there are well-defined outputs and outcomes, the grant
funding package--an internal EPA document--will not identify each
output and anticipated outcome. EPA is concerned that certain types of
grants have too many outputs and outcomes to enumerate. Potential grant
recipients also will not be required to submit workplans that mirror
the strategic plan/GPRA architecture, owing to EPA's concern that such
a requirement would cause the grant to be for EPA's benefit, and thus,
more like a contract. EPA included the provision to "the maximum extent
practicable" because it recognized that some types of grants do not
directly result in environmental outcomes. For example, EPA might fund
a research grant to improve the science of pollution control, but the
grant would not directly result in an environmental or public health
benefit.
EPA's forthcoming policy and guidance faces implementation challenges.
First, while the guidance recognizes some of the known complexities of
measuring outcomes, it does not yet provide staff with information on
how to address them. For example, it does not address how recipients
will demonstrate outcomes when there is a long time lag before results
become apparent. Second, although the policy is to become effective in
January 2005, all staff will not be trained by that time. EPA has
planned some training before issuing the policy and has issued a long-
term training plan that maps out further enhancements for training
grant specialists and project officers on environmental
results.[Footnote 23] Finally, EPA has not yet determined how
environmental results from its programs will be reported in the
aggregate at the agency level. EPA's forthcoming order establishes that
program offices must report on "significant results" from completed
grants through existing reporting processes and systems, which each
program has developed. EPA plans to convene an agencywide work group in
fiscal year 2005 to identify ways to better integrate those systems.
In conclusion, we believe that if fully implemented, EPA's forthcoming
outcome policy should help the agency and the Congress ensure that
grant funding is linked to EPA's strategic plan and to anticipated
environmental and public health outcomes. We believe that the major
challenge to meeting EPA's goal of identifying and achieving outcomes
continues to be in implementation throughout the agency. Realistically,
EPA has a long road ahead in ensuring that its workforce is fully
trained to implement the forthcoming policy and in educating thousands
of potential grantees about the complexities of identifying and
achieving environmental results.
Given EPA's uneven performance in addressing its grants management
problems to this point, congressional oversight is important to
ensuring that EPA's Administrator, managers, and staff implement its
grants management plan, including the critical goal of identifying and
achieving environmental results from the agency's $4 billion annual
investment in grants.
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions that you or Members of the Subcommittee may
have.
Contacts and Acknowledgments:
For further information, please contact John B. Stephenson at (202)
512-3841. Individuals making key contributions to this testimony were
Avrum I. Ashery, Andrea W. Brown, Tim Minelli, Carol Herrnstadt
Shulman, Rebecca Shea, Bruce Skud, and Amy Webbink.
FOOTNOTES
[1] See 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) and U.S. General Accounting Office,
Grants Management: EPA Needs to Better Document Its Decisions for
Choosing between Grants and Contracts, GAO-04-459 (Washington, D.C.:
Mar. 31, 2004).
[2] 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).
[3] U.S. Environmental Protection Agency, Grants Management Plan, 2003-
2008, EPA-216-R-03-001 (Washington, D.C.: Apr. 2003).
[4] The plan's other goals are (1) enhancing the skills of EPA
personnel involved in grants management, (2) promoting competition in
the award of grants, (3) leveraging technology to improve program
performance, and (4) strengthening EPA oversight of grants.
[5] For these reports and a description of their methodologies see
GAO-03-846 and GAO-04-459.
[6] EPA's strategic plan has five goals that address (1) clean air and
global climate change; (2) clean and safe water; (3) land preservation
and restoration; (4) healthy communities and ecosystems; and (5)
compliance and environmental stewardship. See U.S. Environmental
Protection Agency, 2003-2008 EPA Strategic Plan: Direction for the
Future, EPA-190-R-03-003 (Washington D.C.: Sept. 2003).
[7] As of July 12, 2004, the draft policy, EPA Order: Environmental
Results under EPA Assistance Agreements, has not undergone the agency's
directives clearance process--a review for comment and approval by
EPA's high-level management, and therefore it is still subject to
change.
[8] 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.
[9] Grant actions involving funding include new awards, increase and
decrease amendments. The 6,753 grant actions involving funding were
composed of 3,512 new grants, 2,416 increase amendments, and 825
decrease amendments. In addition, EPA awarded 3,344 no cost extensions,
which did not involve funding, in fiscal 2003.
[10] See U.S. General Accounting Office, Major Management Challenges
and Program Risks: Environmental Protection Agency, GAO-03-112
(Washington, D.C.: Jan. 2003).
[11] EPA uses two databases for grant management purposes--the Grants
Information and Control System and the Integrated Grants Management
System. In 2004, we reported that these databases are useful for
retrieving information about specific grants but that neither is useful
in analyzing the kinds of goods and services funded by discretionary
grants.
[12] These results apply to discretionary grants closed out in fiscal
years 2001 and 2002 that had projects starting after October 1, 1997.
[13] These files were not a statistical sample. They were the universe
of grant files where survey respondents had identified that their
grants were beneficial to EPA.
[14] In 2003, EPA's Office of Grants and Debarment began to conduct
"comprehensive grant management reviews" on the 21 EPA offices that
award grants--one-third of these offices will be reviewed annually. As
part of this review, reviewers select a judgmental sample of grant
files to identify the extent to which grants workplans identify
environmental outcomes, among other things.
[15] OMB evaluated these programs using its Program Assessment Rating
Tool (PART), a questionnaire that evaluated four critical areas of
performance: purpose and design, strategic planning, management and
results and accountability. These assessments, which were part of the
President's fiscal year 2005 budget submission, were published in
February 2004. Although we are using OMB data, GAO has identified
concerns about OMB's PART. See U.S. General Accounting Office,
Performance Budgeting: OMB's Performance Rating Tool Presents
Opportunities and Challenges for Evaluating Program Performance,
GAO-04-550T (Washington D.C.: Mar. 11, 2004).
[16] These programs are the National Pollutant Discharge Elimination
System, the Resource Conservation and Recovery Act, and the Title V
programs. See EPA Office of Inspector General, EPA Region 6 Needs to
Improve Oversight of Louisiana's Environmental Programs, Report No.
2003-P-00005 (Washington, D.C.: Feb. 3, 2003).
[17] According to the Inspector General, as of 2003, the Clean Water
State Revolving Fund had about $47 billion dollars available for
projects since 1988. Through the program, all 50 states have a
revolving loan fund that provides sources of low-cost financing for a
range of water quality projects. Initially, EPA provides grants to
states to establish and further fund the states' Clean Water State
Revolving Fund programs; states are required to provide matching funds.
The states run their programs and make loans to communities. Loan
repayments are recycled back into each individual state's program to
fund new water quality projects. See EPA Office of Inspector General,
Stronger Leadership Needed to Develop Environmental Measures for Clean
Water State Revolving Fund, Report No. 2004-P-00022 (Washington, D.C.:
June 23, 2004).
[18] EPA's Office of Grants and Debarment formed an agency-wide
Environmental Results Workgroup to develop policies, guidance, and
other steps to achieve these objectives, which includes representatives
from headquarter and regional offices and representatives from grants
administration as well as program offices.
[19] The policy went into effect on funding packages submitted on or
after February 9, 2004.
[20] Pub. L. No. 103-62, 107 Stat. 285 (1993).
[21] 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) and GAO-03-846.
[22] U.S. Environmental Protection Agency, Managing Your Financial
Assistance Agreements: Project Officer Responsibilities, Fifth
Edition, EPA 202-B-96-002 (Washington, D.C.: Feb. 2003).
[23] U.S. Environmental Protection Agency, Long-Term Grants Management
Training Plan, 2004-2008, EPA-216-R-04-001 (Washington, D.C.: Feb.
2004).
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