Grants Management
EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability Gao ID: GAO-06-625 May 12, 2006The Environmental Protection Agency (EPA) has faced challenges for many years in managing its grants, which constitute over one-half of the agency's budget, or about $4 billion annually. EPA awards grants through 93 programs to such recipients as state and local governments, tribes, universities, and nonprofit organizations. In response to concerns about its ability to manage grants effectively, EPA issued its 5-year Grants Management Plan in 2003, with performance measures and targets. GAO was asked to assess EPA's progress in implementing its grant reforms in four key areas: (1) awarding grants, (2) monitoring grantees, (3) obtaining results from grants, and (4) managing grant staff and resources. To conduct this work, GAO, among other things, examined the implementation of the reforms at the regional level for two Clean Water Act programs in 3 of EPA's 10 regional offices.
EPA has made important strides in achieving the grant reforms laid out in its 2003 Grants Management Plan, but weaknesses in implementation and accountability continue to hamper effective grants management in four areas. First, EPA has strengthened its award process by, among other things, (1) expanding the use of competition to select the most qualified applicants and (2) issuing new policies and guidance to improve the awarding of grants. Despite this progress, EPA's reviews found that staff do not always fully document their assessments of grantees' cost proposals; GAO also identified this problem in one region. Lack of documentation may hinder EPA's ability to be accountable for the reasonableness of the grantee's proposed costs. EPA is reexamining its cost review policy to address this problem. Second, EPA has made progress in reviewing its in-depth monitoring results to identify systemic problems, but long-standing issues remain in documenting ongoing monitoring and closing out grants. EPA and GAO found that staff do not always document ongoing monitoring, which is critical for determining if a grantee is on track in meeting its agreement. Without documentation, questions arise about the adequacy of EPA's monitoring of grantee performance. This lack of documentation occurred, in part, because managers have not fulfilled their commitment to improve monitoring documentation. In addition, grant closeouts are needed to ensure that grantees have met all financial requirements, provided their final reports, and returned any unexpended balances. For fiscal year 2005, EPA closed out only 37 percent of grants within 180 days after the grant project ended, as required by its policy. EPA also did not always close out grants properly in the regional files GAO reviewed. Third, EPA has initiated actions to obtain environmental results from its grants, but these efforts are not complete. For example, EPA's 2005 environmental results policy establishes criteria grants should meet to obtain results. However, EPA has not established a performance measure that addresses these criteria. Furthermore, EPA has not yet identified better ways to integrate its grant reporting systems. Finally, the Office of Management and Budget's 2006 assessment indicates that EPA needs to continue its concerted efforts to achieve results from grants. Finally, EPA has taken steps to manage grant staff and resources more effectively by analyzing workload, providing training, assessing the reliability of its grants management computer database, and holding managers and staff accountable for successfully fulfilling their grant responsibilities. Management attention is still needed because, among other things, EPA has just begun to implement its performance appraisal system for holding managers and staff accountable for grants management.
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-06-625, Grants Management: EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability
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Report to the Chairman, Subcommittee on Water Resources and
Environment, Committee on Transportation and Infrastructure, House of
Representatives:
United States Government Accountability Office:
GAO:
May 2006:
Grants Management:
EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses
in Implementation and Accountability:
Grant Reforms:
GAO-06-625:
GAO Highlights:
Highlights of GAO-06-625, a report to the Chairman, 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 challenges for many
years in managing its grants, which constitute over one-half of the
agency‘s budget, or about $4 billion annually. EPA awards grants
through 93 programs to such recipients as state and local governments,
tribes, universities, and nonprofit organizations. In response to
concerns about its ability to manage grants effectively, EPA issued its
5-year Grants Management Plan in 2003, with performance measures and
targets.
GAO was asked to assess EPA‘s progress in implementing its grant
reforms in four key areas: (1) awarding grants, (2) monitoring
grantees, (3) obtaining results from grants, and (4) managing grant
staff and resources. To conduct this work, GAO, among other things,
examined the implementation of the reforms at the regional level for
two Clean Water Act programs in 3 of EPA‘s 10 regional offices.
What GAO Found:
EPA has made important strides in achieving the grant reforms laid out
in its 2003 Grants Management Plan, but weaknesses in implementation
and accountability continue to hamper effective grants management in
four areas. First, EPA has strengthened its award process by, among
other things, (1) expanding the use of competition to select the most
qualified applicants and (2) issuing new policies and guidance to
improve the awarding of grants. Despite this progress, EPA‘s reviews
found that staff do not always fully document their assessments of
grantees‘ cost proposals; GAO also identified this problem in one
region. Lack of documentation may hinder EPA‘s ability to be
accountable for the reasonableness of the grantee‘s proposed costs. EPA
is reexamining its cost review policy to address this problem.
Second, EPA has made progress in reviewing its in-depth monitoring
results to identify systemic problems, but long-standing issues remain
in documenting ongoing monitoring and closing out grants. EPA and GAO
found that staff do not always document ongoing monitoring, which is
critical for determining if a grantee is on track in meeting its
agreement. Without documentation, questions arise about the adequacy of
EPA‘s monitoring of grantee performance. This lack of documentation
occurred, in part, because managers have not fulfilled their commitment
to improve monitoring documentation. In addition, grant closeouts are
needed to ensure that grantees have met all financial requirements,
provided their final reports, and returned any unexpended balances. For
fiscal year 2005, EPA closed out only 37 percent of grants within 180
days after the grant project ended, as required by its policy. EPA also
did not always close out grants properly in the regional files GAO
reviewed.
Third, EPA has initiated actions to obtain environmental results from
its grants, but these efforts are not complete. For example, EPA‘s 2005
environmental results policy establishes criteria grants should meet to
obtain results. However, EPA has not established a performance measure
that addresses these criteria. Furthermore, EPA has not yet identified
better ways to integrate its grant reporting systems. Finally, the
Office of Management and Budget‘s 2006 assessment indicates that EPA
needs to continue its concerted efforts to achieve results from grants.
Finally, EPA has taken steps to manage grant staff and resources more
effectively by analyzing workload, providing training, assessing the
reliability of its grants management computer database, and holding
managers and staff accountable for successfully fulfilling their grant
responsibilities. Management attention is still needed because, among
other things, EPA has just begun to implement its performance appraisal
system for holding managers and staff accountable for grants
management.
What GAO Recommends:
GAO‘s recommendations are primarily directed toward establishing new
performance measures and targets for ongoing monitoring, closeouts, and
environmental results.
In commenting on a draft of this report, EPA stated that it generally
agreed with GAO‘s recommendations and will incorporate them into its
Grants Management Plan, policies, and procedures.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-625].
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]
Contents:
Letter:
Results in Brief:
Background:
EPA Has Strengthened the Award Process, but Lack of Key Documentation
Raises Accountability Concerns:
EPA Has Improved In-depth Monitoring to Identify Agencywide Problems,
but Weaknesses Remain in Ongoing Monitoring and in Closing Out Grants:
EPA Has Initiated Actions to Obtain Results from Grants, but Its
Efforts Are Not Complete:
EPA Has Taken Steps to Manage Grants Staff and Resources More
Effectively but Still Faces Major Management Problems:
Conclusions:
Recommendations:
Agency Comments and Our Response:
Appendix I: Scope and Methodology:
Appendix II: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: EPA's Performance Targets and Measures for Promoting Grants
Competition, All New Grants and Nonprofit Grants, Fiscal Years 2002-
2005:
Table 2: Use of Ongoing Monitoring Checklist in Region 1 and 9 Grant
Files for Two Programs:
Table 3: EPA's Current Closeout Performance Target Compared with
Percent EPA Reported as Meeting That Target, Reporting Fiscal Years
2003-2005:
Table 4: Minimum and Maximum Times Allowed under EPA's Current Closeout
Performance Measure:
Table 5: Percent of Grants Closed Out Agencywide and for Program and
Regional Offices, by Length of Time to Closeout, Fiscal 2005 Reporting
Year:
Table 6: Comparison of EPA's Performance against the Current Closeout
Measure and the 180-Day Standard, Fiscal 2005 Reporting Year:
Table 7: Length of Time It Took Grantees to Deliver Final Financial and
Technical Reports for Two Grant Programs in Regions 1, 5, and 9:
Table 8: Length of Time Elapsed for Grants Management Offices to Close
Out Grants after Grantee Provides Final Reports for Two Grant Programs,
Regions 1, 5, and 9:
Table 9: Extent to Which EPA Met Its Target for the Percent of Grant
Workplans with Environmental Outcomes, 2003-2005:
Table 10: Combined OMB PART Ratings of EPA Grant Programs, 2004-2006:
Table 11: OMB PART Scores for All Components of the Combined Rating,
Fiscal Year 2006:
Table 12: Number of Active and Closed Wetland and Nonpoint Source
Grants from January 1, 2004, through June 30, 2005, in the Universe and
the Number of Grants GAO Reviewed in Three Regions:
Figures:
Figure 1: EPA's Key Offices Involved in Grant Activities:
Figure 2: States Covered by EPA's 10 Regional Offices:
Figure 3: Percentage of EPA Grant Dollars Awarded by Recipient Type,
Fiscal Year 2005:
Abbreviations:
EPA: Environmental Protection Agency:
OMB: Office of Management and Budget:
PART: Program Assessment Rating Tool:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
May 12, 2006:
The Honorable John J. Duncan, Jr.
Chairman:
Subcommittee on Water Resources and Environment:
Committee on Transportation and Infrastructure:
House of Representatives:
Dear Mr. Chairman:
The Environmental Protection Agency (EPA) has faced 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
through 93 programs to a variety of recipients, including state and
local governments, tribes, universities, and nonprofit organizations.
As of September 30, 2005, EPA was administering grants through
headquarters and regional offices to 4,075 grant recipients. Given the
size and diversity of EPA's grant programs, its ability to efficiently
and effectively accomplish its mission depends to a large extent on how
well it manages its grant resources and builds accountability for
results into its efforts.
In response to concerns about its ability to manage grants effectively,
EPA issued its Grants Management Plan.[Footnote 1] In this plan, EPA
for the first time presented goals, objectives, milestones, and
performance measures with targets for tackling the agency's long-
standing grants management problems. The 5-year plan was comprehensive
in that it set forth five major goals that the agency sought to
achieve. These goals addressed major concerns we had identified in our
2003 report on grants management.[Footnote 2] EPA has also issued a
series of policies to implement the plan and other grant
reforms.[Footnote 3] The plan's goals are to (1) strengthen the award
of grants by using competition to select grantees for certain awards to
ensure that the best applicants are chosen; (2) monitor grants to
ensure that grantees are making progress toward their objectives and,
at the end of the project period, to ensure that recipients have
provided all financial and technical reports before closing out the
grants; (3) obtain results from grants by identifying and measuring
their environmental and public health outcomes; (4) enhance the skills
of EPA personnel involved in grants management; and (5) leverage
technology to improve program performance. Each of these goals is
challenging, especially measuring the outcomes of environmental
activities, but EPA needs to demonstrate the results achieved through
its $4 billion annual investment in grant programs. EPA is currently
revising this plan to reflect accomplishments achieved and to address
remaining issues.
You asked us to assess EPA's progress in implementing its grant reforms
for (1) awarding grants, (2) monitoring grantees, (3) obtaining results
from grants, and (4) managing grant staff and resources.
To address these issues, we conducted our work at EPA's headquarters
and regional offices. EPA conducts its grant activities through its
Office of Grants and Debarment--the office primarily responsible for
grant policies--and program offices, located in both headquarters and
10 regional offices--offices primarily responsible for implementing the
grant policies. At EPA headquarters, we reviewed EPA documents,
including the Grants Management Plan, policies and guidance, internal
reviews of management operations,[Footnote 4] and annual post-award
monitoring plans.[Footnote 5] We also interviewed Office of Grants and
Debarment officials. In addition, we interviewed officials and obtained
information from EPA's Office of Water, one of the program offices
involved with grants. We reviewed EPA's Office of Inspector General
reports as well as the Office of Management and Budget's (OMB) Program
Assessment Rating Tool (PART).[Footnote 6] We also reviewed prior GAO
reports.
In conducting our work, you asked us to address the implementation of
EPA's grant reforms at the regional level for two Clean Water Act
programs. We selected the Wetland Program Development Grant Program
(wetland grants) because it is a discretionary grant program--that is,
EPA decides who receives the award and its amount, and the program is
subject to competition. We selected the Nonpoint Source Pollution
Control Grant Program (nonpoint source grants) because it is a type of
formula-based grant program--grants that are often awarded on the basis
of formulas prescribed by law or agency regulation.[Footnote 7] We
reviewed EPA's progress at the regional level by selecting grants in 3
of EPA's 10 regional offices: Region 1 (Boston), Region 5 (Chicago),
and Region 9 (San Francisco). We selected these regions, in part,
because, collectively, they represent a significant share of regional
grant funding for the two programs we reviewed and geographic
dispersion. At the regional offices, for these two grant programs, we
reviewed grant files, and interviewed EPA grant specialists--who are
responsible for overseeing the grantees' administrative and financial
activities--and EPA project officers--who are responsible for
overseeing the grantees' programmatic and technical activities. Our
regional work provides insights into regional grant activities in the
two Clean Water Act programs in the three regions we visited, but it is
not generalizable to all grants in all regions because we (1) selected
only two of the programs conducted in these offices and (2)
incorporated nonprobability sampling into our grant selection process.
In conducting our review, we did not assess the implementation of some
of EPA's policies because they had been issued too recently. Finally,
we obtained EPA data used in this report from the agency's grants
computer databases (Grants Information Control System and the
Integrated Grants Management System), which have not had a complete
data reliability review. However, we determined that the data elements
we used in this report were sufficiently reliable for our purposes in
this report. (App. I provides a more detailed description of our scope
and methodology.) We performed our work between February 2005 and April
2006, in accordance with generally accepted government auditing
standards.
Results in Brief:
EPA has made progress in achieving the grant reforms laid out in its
Grants Management Plan, but weaknesses in implementation and
accountability continue to hamper effective grants management in four
areas. First, EPA has strengthened its award process by, among other
things, expanding the use of competition to select the most qualified
applicants. EPA also issued new policies and guidance to improve the
awarding of grants. For example, EPA now requires that certain
nonprofit organizations document that they have administrative and
financial systems to manage grants. While EPA has made notable
progress, its internal reviews in program and regional offices have
found that staff do not always fully document their reviews of
grantees' cost proposals. We also found this problem in one of the
three regions we visited. This documentation problem may hinder EPA's
ability to be accountable for the reasonableness of the grantee's
estimated costs for performing the proposed work. Because of the
continuing problems with documenting cost reviews, EPA is reexamining
its cost review policy for grants.
Second, EPA has improved some aspects of monitoring, but long-standing
problems in documentation and grant closeouts remain. Specifically, EPA
has begun to review the results of its in-depth monitoring to identify
systemic grantee problems, but staff do not always document whether
grantees have taken corrective actions. Similarly, EPA and we found
that grant specialists and project officers do not always document
ongoing monitoring. Ongoing monitoring is critical because, at a
minimum, EPA conducts it on every grant at least once a year throughout
the life of the grant and uses the results to determine whether the
grantee is on track in meeting the terms and conditions of the grant. A
lack of documentation raises questions about the adequacy of the
project officers' and grant specialists' ongoing monitoring of grantee
performance. This lack of documentation occurred, in part, because
managers have not fulfilled their commitment to ensure adequate
documentation. Concerning grant closeouts, EPA uses closeouts to ensure
that (1) grant recipients have met all financial requirements and have
provided final reports and (2) any unexpended balances are returned to
the agency. EPA's policy states that closeouts should occur within 180
days after the grant's project end date. However, agency officials do
not always comply with this policy. Specifically, for fiscal year 2005,
EPA (1) closed out only 37 percent of the grants within the 180 days
and (2) did not always properly close out grants in the regional files
we reviewed. EPA has formed a work group to review its monitoring and
closeout polices and plans to revise these policies in 2006.
Third, EPA has initiated actions to obtain environmental results from
its grants, but its efforts are not complete. EPA has included a
performance measure in its Grants Management Plan for identifying
expected environmental results from grants. In addition, EPA issued an
environmental results policy, effective in January 2005. This policy,
for the first time, requires EPA staff to ensure that grant workplans
specify well-defined environmental results, which enables EPA to hold
grantees accountable for achieving them. To assess the agency's
effectiveness in implementing its environmental results policy, EPA
identified seven criteria that grant agreements should meet. However,
EPA's current performance measure does not take into account the new
criteria for identifying and measuring results from grants established
by the policy. Furthermore, EPA acknowledges that it has not identified
better ways to integrate its systems for reporting on the results of
grants. While EPA has taken positive steps, OMB's evaluation of EPA
grant programs in 2006 indicate that EPA must continue its concerted
efforts to achieve results from its grants.
Finally, EPA has taken steps to manage grants staff and resources more
effectively by analyzing workload, providing training, assessing the
reliability of data from the agency's grants management computer
database, and holding managers and staff accountable for successfully
fulfilling their grant responsibilities. Nevertheless, management
attention to these issues is still needed because, among other things,
EPA has not completed its data reliability assessment of the database
and has just begun to implement its performance appraisal system for
holding managers, supervisors, and staff accountable for grants
management.
EPA is currently revising its Grants Management Plan. In doing so, the
agency now has an opportunity to address the problems in documentation,
grants closeout, and environmental results presented in this report. We
are making recommendations in these areas.
Background:
EPA administers and oversees grants primarily through the Office of
Grants and Debarment in the Office of Administration and Resources
Management, 10 program offices in headquarters, and program offices and
grants management offices in EPA's 10 regional offices.[Footnote 8]
Figure 1 shows the key EPA offices involved in grants activities for
headquarters and regions, and figure 2 shows the states covered by the
10 regional offices.
Figure 1: EPA's Key Offices Involved in Grant Activities:
[See PDF for image]
[End of figure]
Figure 2: States Covered by EPA's 10 Regional Offices:
[See PDF for image]
[End of figure]
The Office of Grants and Debarment develops national grant policy and
guidance. This office also carries out certain types of administrative
and financial functions for the grants approved by program offices,
such as awarding headquarter grants and overseeing the financial
management of program office and regional grants. On the programmatic
side, national program managers are responsible for establishing and
implementing national policies for their grant programs, for setting
funding priorities, and for identifying specific environmental results
from grant programs. They are also responsible for technical and
programmatic oversight of headquarter grants. Regional grants
management offices provide administrative management for regional
grants, while regional program offices provide technical and
programmatic oversight. Both headquarters and regional program offices
conduct grant competitions. EPA has designated officials--referred to
as senior resource officials--who are typically deputy assistant
administrators in program offices and assistant regional
administrators. These senior resource officials are in charge of
strengthening agencywide fiscal resource management while also ensuring
compliance with laws and regulations and are responsible for effective
grants management within their units.
As of September 30, 2005, 119 grant specialists in the Office of Grants
and Debarment, and the regional grants management offices, were largely
responsible for administrative and financial grant functions.
Furthermore, 2,064 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 also have nongrant
responsibilities, such as using the scientific and technical expertise
for which they were hired.
In fiscal year 2005, EPA took 6,728 grant actions involving funds
totaling about $4 billion.[Footnote 9] These awards were made to six
main categories of recipients, as shown in figure 3.
Figure 3: Percentage of EPA Grant Dollars Awarded by Recipient Type,
Fiscal Year 2005:
[See PDF for image]
Note: Percentages may not add up to 100 due to rounding.
[End of figure]
EPA offers three types of grants--discretionary, nondiscretionary, and
continuing environmental grants:
* 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. EPA has awarded these grants primarily to state and local
governments, nonprofit organizations, universities, and Native American
tribes. In fiscal year 2005, EPA awarded about $644 million in
discretionary grants.
* Nondiscretionary grants are awarded primarily to state and local
governments and support water infrastructure projects, such as the
drinking water and clean water state revolving fund programs. For these
grants, Congress directs awards to one or more classes of prospective
recipients who meet specific eligibility criteria, or the grants are
often awarded on the basis of formulas prescribed by law or agency
regulation. In fiscal year 2005, EPA awarded about $2.4 billion in
nondiscretionary grants.
* Continuing environmental program grants contain both nondiscretionary
(formula) and discretionary features. These grants are nondiscretionary
in the sense that (1) they are awarded noncompetitively to the same
government units to support ongoing state, tribal, and local programs
that do not change substantially over time, and (2) allotments of funds
are initially made on the basis of factors contained in statute,
regulation, or agency guidance. These grants are also discretionary in
the sense that allotments are not entitlements, and EPA exercises
judgment in determining what the final award amount should be. In
fiscal year 2005, EPA awarded about $1 billion in grants for continuing
environmental programs.
In this report, we focused on two EPA programs under the Clean Water
Act:
* Wetland Program Development Grants (Wetland grants) Wetlands are
areas where water covers the soil, or is present either at or near the
surface of the soil throughout the year or for various portions of the
year, including during the growing season. Wetlands, such as bogs,
swamps, and marshes, support a number of valuable functions--
controlling floods, improving water quality, and providing wildlife
habitat, among other things. The wetland grants provide applicants with
an opportunity to carry out projects to develop and refine
comprehensive wetland programs. The authority for the program is under
section 104(b) (3) of the Clean Water Act.[Footnote 10] Grant funding
must be used to improve the wetlands program by conducting or promoting
the acceleration of research and studies relating to the causes,
effects, and other aspects of water pollution. Wetland grants provide
states, tribes, local governments, interstate agencies, intertribal
consortia, nonprofits, and nongovernmental organizations an opportunity
to carry out wetland projects and programs. Wetland grants are
discretionary grants.
* Nonpoint Source Management Program (Nonpoint source grants). Nonpoint
source pollution is pollution that does not have a well-defined source
but instead originates from a number of sources, such as acid mine
drainage, agricultural runoff, and roads and highways. Under section
319(h) of the Clean Water Act, EPA makes grants to states, territories,
and Indian tribes to support a wide variety of activities, including
technical and financial assistance, education, training, technology
transfer, demonstration projects, and monitoring.[Footnote 11] Nonpoint
source grants are continuing environmental program grants.
Grants from these two programs can be incorporated into the National
Environmental Performance Partnership System, which was established in
response to state needs for greater flexibility in using and managing
their continuing grant funds.[Footnote 12] Under this system, states
may enter Performance Partnership Agreements with EPA and into
Performance Partnership Grants. The agreements set out jointly
developed priorities and protection strategies, including innovative
solutions for addressing water, air, and waste problems. The
partnership grants allow states to combine continuing environmental
program grant funds to implement those solutions. States can also enter
into Performance Partnership Grants without a Performance Partnership
Agreement. Under traditional continuing environmental program grants,
states received funds to implement particular waste, air, water or
other program--such funding can only be spent on activities that fall
within the statutory and regulatory parameters of that program. Under
Performance Partnership Grants, states can combine up to 21 separate
grant programs into one award, and move funds from one media, such as
air, to another.
Both the wetland and nonpoint source grants are under the auspices of
EPA's Office of Water in headquarters, but grants under these programs
are carried out by water program staff in regional offices. Moreover,
in its national guidance, the Office of Water states that it is
committed to accomplishing the goals that the Office of Grants and
Debarment has identified in its Grants Management Plan. To do this, for
example, the Office of Water provided regions with information on
revised competition and environmental results policies.
EPA Has Strengthened the Award Process, but Lack of Key Documentation
Raises Accountability Concerns:
EPA has strengthened its award process by, among other things, (1)
expanding the use of competition to select the most qualified
applicants and (2) issuing new policies and guidance to improve the
awarding of grants. However, EPA's internal reviews of program and
regional offices have found weaknesses in documenting the review of
grantees' cost proposals. We also found this weakness in one of the
three regions we visited. This documentation weakness may hinder EPA's
ability to be accountable for the reasonableness of its expenditure of
federal funds. Because of the continuing problems with documenting cost
reviews, EPA is reexamining its cost review policy for grants.
EPA Has Expanded the Use of Competition to Select the Most Qualified
Applicants:
To promote widespread competition for grants, in September 2002, EPA
issued a policy that for the first time required competition for many
discretionary grants.[Footnote 13] Before 2002, even though EPA had a
competition policy, it did not compete grants extensively or provide
widespread notification of upcoming grant opportunities.
EPA's 2002 policy was designed to promote competition in awarding
grants to the "maximum extent practicable" and to ensure that the
competitive process was "fair and open." This policy represented a
major cultural shift for EPA managers and staff, requiring EPA staff to
take a more planned, rigorous approach to awarding grants.
Specifically, the policy:
* was binding on managers and staff throughout the agency;
* required EPA staff to determine evaluation criteria for grant
solicitations and publish a grant announcement at least 60 days before
the application deadline; and:
* created the position of a senior-level competition advocate for
grants. The advocate oversees the policy's implementation and
compliance and evaluates its effectiveness.
According to EPA's Inspector General, the 2002 policy was a "positive
step" toward promoting competition, and competitions under the policy
were generally fair and open.[Footnote 14]
Specifically, for the 38 grants that the Inspector General reviewed,
EPA had (1) published an announcement soliciting proposals, (2) written
procedures to ensure an objective and unbiased process for reviewing
and evaluating applications, and (3) selected recipients according to
reviewers' recommendations.
In 2004, EPA's grants competition advocate reviewed the policy, as
required, and reported, among other things, that steps should be taken
to improve justifications for not competing certain grants by (1)
increasing review and approval requirements for exceptions to
competition and (2) clarifying the language in the policy to ensure
appropriate use of exceptions. The advocate also found that the
threshold for requiring competition for grants of $75,000 or more in
the 2002 policy was too high.
In response, EPA issued a revised competition policy, effective January
2005.[Footnote 15] It enhanced competition by, among other things,
* increasing review and approval requirements for justifying exceptions
and clarifying the language to ensure appropriate use of these
justifications;
* reducing the threshold for competition from $75,000 to $15,000; and:
* Strengthening requirements for documenting the competition process
and results.
In addition, EPA added (1) conflict-of-interest provisions to increase
awareness of situations that could arise for applicants, reviewers, and
others involved in competition matters; and (2) dispute procedures.
In commenting on both the 2002 and 2005 policies, the Inspector General
stated that the policies did not fully promote competition and
recommended that EPA could further expand competition in the 2005
policy by eliminating certain remaining exemptions and exceptions for
which the Inspector General believed competition is practicable. EPA
responded, however, that further expansion was not practicable for
reasons of congressional intent, regulatory limitations, and program
effectiveness.
EPA's Grants Management Plan lays out goals, objectives, milestones,
and performance measures with targets for promoting competition. For
one of these objectives, EPA planned to improve the accuracy and
specificity of information available to the public on the agency's
grant opportunities in the federal government's Catalog of Federal
Domestic Assistance--a listing of available grants and other federal
funding opportunities (available at www.CFDA.gov).[Footnote 16]
However, as we reported in 2005, EPA was not consistently providing
this information.[Footnote 17] Without such information, potential
applicants might not apply, and EPA would not have the broadest
applicant pool from which to select grantees. EPA officials were
unaware of continuing problems with funding priorities and funding
levels in the Catalog of Federal Domestic Assistance until we brought
them to their attention during our review. In response to our
recommendations, in April 2005, EPA implemented revised guidance for
providing complete and accurate information in the Catalog of Federal
Domestic Assistance. For example, EPA now strongly encourages its
offices to provide information on the funding priorities on an ongoing
basis, instead of annually, so that the public has up-to-date
information in the Catalog of Federal Domestic Assistance.
For the competition goal, the agency developed a performance measure
for increasing the percentage of new grants subject to the competition
policy that are actually competed and set increasing targets for
achieving this measure. According to EPA, about $249 million of the
approximately $3.1 billion it awarded in new grants in fiscal year 2005
were eligible for competition. EPA exempts certain grant categories
from competition, including all nondiscretionary grants, certain
discretionary grants, and most continuing environmental programs
grants. EPA also established a separate measure for nonprofit grantees.
The first performance measure is for all new eligible grants, including
new grants to nonprofit recipients, and the second is only for new
eligible grants to nonprofit recipients, as table 1 shows. EPA
established a separate measure for competing grants to nonprofit
organizations because it believes that selecting the most qualified
nonprofit applicants through a competitive process could address
concerns about the effectiveness of nonprofit grantees in managing
grants.
Table 1: Table 1: EPA's Performance Targets and Measures for Promoting
Grants Competition, All New Grants and Nonprofit Grants, Fiscal Years
2002-2005:
Fiscal year: 2002 baseline;
All new grants: Performance target: Percent of new grants competed: Not
applicable;
All new grants: Performance measure: Reported percent of new grants
competed: 27;
New grants to nonprofit grantees: Performance target: Percent of new
grants competed: Not applicable;
New grants to nonprofit grantees: Performance measure: Reported percent
of new grants competed: 24.
Fiscal year: 2003;
All new grants: Performance target: Percent of new grants competed: 30;
All new grants: Performance measure: Reported percent of new grants
competed: 86;
New grants to nonprofit grantees: Performance target: Percent of new
grants competed: 30;
New grants to nonprofit grantees: Performance measure: Reported percent
of new grants competed: 76.
Fiscal year: 2004;
All new grants: Performance target: Percent of new grants competed: 60;
All new grants: Performance measure: Reported percent of new grants
competed: 91;
New grants to nonprofit grantees: Performance target: Percent of new
grants competed: 55;
New grants to nonprofit grantees: Performance measure: Reported percent
of new grants competed: 85.
Fiscal year: 2005;
All new grants: Performance target: Percent of new grants competed: 85;
All new grants: Performance measure: Reported percent of new grants
competed: 93;
New grants to nonprofit grantees: Performance target: Percent of new
grants competed: 75;
New grants to nonprofit grantees: Performance measure: Reported percent
of new grants competed: 88.
Source: EPA documents.
[End of table]
As the table shows, EPA reports it now competes a higher percentage of
eligible grants, up from 27 percent in fiscal year 2002 to 93 percent
in fiscal year 2005, exceeding its targets for fiscal years 2003
through 2005.[Footnote 18] The 7 percent of new grants that EPA
reported it did not compete--which totaled about $10 million of the
$249 million eligible for competition in fiscal year 2005--resulted
from exceptions to the policy. EPA's competition policy provides for
exceptions that meet criteria specified in the policy, if supported by
a written justification and approved by an appropriate official. Even
after taking the exceptions into account, EPA exceeded the 85 percent
target it set for new grants in 2005. It has also exceeded its target
for new grants to nonprofit recipients in 2005.
EPA Has Issued New Policies and Guidance to Improve Grant Awards:
To improve the award of grants, EPA issued additional policies and
guidance. Specifically:
* In January 2005, EPA issued a policy to improve the description of
the grant in its grants database so that the description would be
understandable to the public.[Footnote 19] EPA now presents this
information on the Office of Grants and Debarment's Web site--
www.epa.gov/ogd--so that the public has improved access to grant
information.
* In March 2005, EPA issued a policy establishing additional internal
controls for awarding grants to nonprofit organizations.[Footnote 20]
The policy addresses both the programmatic capability of a nonprofit
applicant to carry out a project and its administrative capability to
properly manage EPA grant funds--problems EPA and the Inspector General
have identified. Under the policy, EPA assesses programmatic capability
for both competitive and noncompetitive grants. The policy also
requires the agency to conduct different types of administrative
capability reviews based on the amount of the grant to the nonprofit
organization. For grants of $200,000 or more, applicants must complete
a questionnaire and provide documents to show that they have
administrative and financial systems to manage grants. For grants below
the $200,000 threshold, EPA staff must query the agency's grants
management database for any findings of problems in the applicant's
administrative capability. If problems are identified in any of these
reviews, the applicant must take corrective actions before receiving
the grant. In 2005, EPA approved 75 of the 87 nonprofit organizations
it reviewed; the remaining 12 nonprofit organizations are taking steps
to address problems identified.
* Also in March 2005, EPA issued a memorandum clarifying the criteria
that must be documented to justify the use of a grant or a contract as
the award mechanism.[Footnote 21] EPA issued this guidance in response
to a recommendation in our 2004 report to better document the
justification for using grants rather than contracts.[Footnote 22]
* In April 2005, EPA issued a policy memorandum and interim guidance
establishing a certification process that applies to certain
discretionary grant programs (currently 58).[Footnote 23] The new
policy and guidance instruct senior EPA officials--assistant
administrators and regional administrators--to certify, among other
things, that (1) certain grant awards and amendments identify
environmental outcomes that further the goals and objectives in the
agency's strategic plan and (2) there is no questionable pattern of
repeat awards to the same grantee. For competitive announcements, these
officials must certify that the (1) expected outcomes from the awards
under the proposed competitive announcement are appropriate and in
support of program goals and (2) proposed competitive announcement is
written in a manner to promote competition to the maximum extent
practicable.[Footnote 24] The Office of Grants and Debarment has
assigned a grant specialist to conduct random spot checks of these
certifications and provide assistance to program offices in
implementing this new policy.
Lack of Cost Review Documentation Could Compromise Accountability:
While EPA has improved its award process, both EPA and we found
weaknesses in the agency's documentation of its cost reviews before
awarding grants. EPA policy requires both the grants management and
program offices to conduct a cost review for every grant before
awarding it to ensure that the grantee's proposed costs are necessary,
reasonable, allowable, allocable, and adequately supported. These
reviews are central to ensuring that EPA carries out its fiduciary
responsibilities. However, in 2004 and 2005, in six of the seven
program and regional offices it reviewed, the Office of Grants and
Debarment either found no documentation of cost reviews or found that
documentation was not sufficient.[Footnote 25] As a result of these
continuing documentation problems, EPA is reexamining its cost review
policy for grants.
We also found problems with cost review documentation in one of the
three regions we visited--Region 5. This region has a checklist to
ensure that staff members who are responsible for each aspect of the
cost review had completed and documented their review before awarding a
grant. The checklist requires approval from both the grant specialist
and the project officer on certain items and requires supervisors to
review the checklist to ensure that any concerns raised by the project
officer or grant specialist were addressed.[Footnote 26] While a
project officer and grant specialist could initially disagree on some
aspects of the checklist, the regional office expects them to resolve
their differences and document the final resolution on the checklist.
However, for most of the 12 approved award files we reviewed, we found
instances in which the resolution of the issues was not documented.
Specifically,
* the grant specialist and the project officer had both neglected to
answer the same two questions on the cost review checklist, or:
* the grant specialist and the project officer did not agree on the
answers to multiple questions on the checklist and did not document any
resolution of their disagreements.
According to regional staff, these problems occurred because of
workload and errors. Nevertheless, the lack of documentation for
awarded grants raises concerns about the appropriateness of the award.
More effective supervisory review might have resulted in a documented
resolution of these differences.
EPA Has Improved In-depth Monitoring to Identify Agencywide Problems,
but Weaknesses Remain in Ongoing Monitoring and in Closing Out Grants:
EPA has improved some aspects of monitoring, but long-standing problems
in documentation and grant closeouts continue. EPA has made progress in
using in-depth monitoring to identify grantee problems agencywide, but
it does not always document whether corrective actions have been
taken.[Footnote 27] Furthermore, for ongoing monitoring, the agency
found, as we did in the regional offices, that in some cases agency
staff do not consistently document their monitoring of grantees, which
hinders accountability for effective grants management.[Footnote 28]
Finally, we found that grant closeouts were often delayed and sometimes
improperly carried out, which diminishes EPA's ability to ensure that
grantees met the terms and conditions of their award and that grant
funds were spent appropriately. EPA has formed a work group to review
its monitoring and closeout polices and plans to revise these policies
in 2006.
In-depth Monitoring Results Can Be Analyzed Nationwide to Identify
Problems, but Staff Do Not Always Document Whether Corrective Actions
Have Been Taken:
EPA has made progress in conducting in-depth monitoring since it issued
a new monitoring policy in December 2002, which it revised in 2004 and
2005.[Footnote 29] Under its monitoring policy, grants management
offices and program offices in headquarters and the regions conduct in-
depth monitoring either (1) at the grantee's location (on-site) or (2)
at an EPA office or at another location (off-site)--referred to as desk
reviews. EPA's policy for these reviews requires the following, among
other things:
* Grants management offices must conduct in-depth administrative
reviews, on a minimum of 10 percent of grantees annually, to evaluate
the grantee's administrative and financial capacity. For on-site
administrative reviews, EPA conducts "transaction testing"--that is,
reviewing a grantee's accounting ledgers and underlying documentation
for unallowable costs, such as lobbying and entertainment expenditures.
* Program offices must conduct programmatic reviews on a minimum of 10
percent of grantees annually to assess the grantees' activities in key
areas, such as the progress the grantees are making in conducting the
work and in meeting the grant's terms and conditions.
In 2003, we reported that although the in-depth review is a useful tool
for monitoring a grantee's progress, the agency lacked a way to
systematically identify grantee problems agencywide because the
information from its in-depth monitoring was gathered in a form that
could not be readily analyzed.[Footnote 30] We also found that the
policy did not incorporate a statistical approach to selecting grantees
for review. Without a statistical approach, EPA could not evaluate
whether 10 percent was appropriate, nor could it project the results of
the reviews to all EPA grantees.
We recommended that EPA take action to address these issues. EPA has
since incorporated the data from its in-depth monitoring into a
database, analyzed the information to identify key problems, and taken
corrective actions to address systemic problems. By taking these
actions, EPA has found, among other things, that grantees have not had
documented policies and procedures for managing grants. Without these
policies and procedures, grantees may not be able to operate their
financial and administrative systems appropriately. As a result of this
finding, EPA is conducting the preaward reviews discussed earlier to
ensure that nonprofit grantees have required financial and
administrative systems in place. EPA has also increased training to
grantees.
Since issuing its most recent revision to the monitoring policy in
2005, EPA has initiated several practices that should further
strengthen in-depth monitoring. In 2006, it began incorporating a
statistical approach for selecting grantees for administrative in-depth
reviews. In 2007, EPA plans to use a statistical approach to select
grants for programmatic in-depth reviews. When the statistical approach
is fully implemented, it should significantly reduce the percent of
grantees reviewed, according to an agency official. Furthermore, the
statistical approach will enable the agency to project results among
various types of grantees. EPA also began incorporating transaction
testing into administrative desk reviews in 2006 because it found that
administrative desk reviews were not otherwise yielding adequate
financial information about grantees.
While EPA has improved its in-depth monitoring, the Office of Grants
and Debarment has found that staff do not always take corrective
actions, or document actions taken, to address findings identified
during this monitoring. The office found that corrective actions were
documented for only 55 percent of the 269 problems identified through
administrative and programmatic reviews. We reported similar results in
August 2003. According to an Office of Grants and Debarment official,
while some EPA staff took corrective actions, they did not document
those actions in EPA's grantee computer database. Until this problem is
addressed, the Office of Grants and Debarment will not be able to fully
assess the extent to which corrective actions have or have not been
taken to address identified grantee problems. Without these
assessments, EPA cannot be assured that grantees are in full compliance
with the terms and conditions of their grants.
Inadequate Documentation of Ongoing Monitoring Hinders Accountability:
Ongoing monitoring is critical because, in contrast to in-depth
monitoring, it is conducted on every grant at least once a year
throughout the life of the grant, and the results are used to determine
whether the grantee is on track to meeting the terms and conditions of
its grant agreement. EPA's grant specialist and project officer
manuals--used as training tools for EPA staff involved in grants--
emphasize that staff should properly document grant monitoring
activities to maintain an official agency record. Agency officials
state that proper documentation of monitoring is necessary to ensure
that third parties--such as other EPA staff who assume responsibility
for the grant or a supervisor--can fully understand and review the
actions that have occurred during the project period. Moreover, a lack
of documentation raises questions about the adequacy of project
officers' and grant specialists' ongoing monitoring of grantee
performance. Despite the importance of documenting ongoing monitoring,
the absence of documentation in grant files has been a long-standing
problem that we reported on in 2003.
To conduct ongoing monitoring, EPA policy requires the following:
* Grant specialists should ensure that administrative terms and
conditions of the grants are met and review the financial status of the
project. The grant specialist is to speak with the project officer and
the grantee at least annually during the life of the grant.
* Project officers should ensure that programmatic award terms and
conditions are being met, including ensuring that they have received
progress reports from the grantee. Project officers are also to speak
with the grant specialists and the grantee at least annually during the
life of the grant.
According to the monitoring policy, the grant specialists and project
officers must document the results of their ongoing monitoring in their
grant files.
Despite this policy, the lack of documented ongoing monitoring remains
a problem. EPA's recent internal reviews in program and regional
offices demonstrate--as did our review in three regional offices--that
EPA grant specialists and project officers still do not consistently
document ongoing monitoring. In 2004 and 2005, the Office of Grants and
Debarment found limited or incomplete documentation of ongoing
monitoring in internal reviews it conducted in seven program and
regional offices.[Footnote 31] In addition, self-assessments completed
by 11 program and regional offices during this period identified the
same lack of documentation. Our analysis of these reviews indicates
that several offices experienced recurring problems in 2004 and 2005.
For example, an August 2004 Office of Grants and Debarment internal
review cited one regional office as having "very limited" documentation
of ongoing monitoring; and in the following year, the regional office's
self-assessment found the same documentation problem with project
officer files.
Because of these documentation problems, two of the three regional
offices we visited have committed to using checklists to document their
ongoing monitoring. Regions 1 and 9 had implemented such checklists at
the time of our review. As table 2 shows, however, of the 40 project
officer and grant specialist files we reviewed in regions 1 and 9, more
than half of the checklists were either missing, blank, or incomplete.
Table 2: Table 2: Use of Ongoing Monitoring Checklist in Region 1 and 9
Grant Files for Two Programs:
Checklist status: Missing or blank checklist[A];
Project officer file: 14;
Grant specialist file: 3.
Checklist status: Incomplete checklist;
Project officer file: 0;
Grant specialist file: 5.
Checklist status: Complete checklist or checklist not yet
applicable[B];
Project officer file: 6;
Grant specialist file: 12.
Checklist status: Total;
Project officer file: 20;
Grant specialist file: 20.
Source: GAO analysis of EPA documents on selected wetland and nonpoint
source grants awarded between January 1, 2004, through June 30, 2005.
See app. I.
[A] These files should have contained checklists documenting ongoing
monitoring.
[B] Checklists may legitimately be left blank until 1 year has elapsed
assuming no grant activity occurred that would warrant EPA staff to
conduct monitoring.
[End of table]
The water program office in Region 5 also developed a checklist for
documenting ongoing monitoring but had not yet implemented it at the
time of our review. Consequently, in Region 5, we examined other
documentation of ongoing monitoring in the grant files and found
similar omissions. None of the six files requiring annual contact with
the grantee--three grant specialist files and three project officer
files--had documentation showing that this contact had occurred.
In the three regions, we also found that project officers' files did
not always contain grantees' progress reports, which can be required
quarterly, semiannually, or annually, as defined by an individual
grant's terms and conditions. Thirteen of the 32 project officer grant
files we reviewed in these regions were missing at least one or more
progress reports required by the grant's terms and conditions.
According to EPA's project officer manual, progress reports are the
project officer's primary mechanism for determining if the grantee is
fulfilling its grant agreement obligations. In general, progress
reports should contain information that compares grantee progress with
the stated grant objectives, identify problems with meeting these
objectives, and state the reasons for those problems. While the
submission of progress reports is clearly the grantee's responsibility,
it is also the project officer's responsibility to work with the
grantees to ensure that they provide their progress reports in
accordance with the terms of the grant. When EPA staff do not obtain
progress reports, they cannot monitor effectively, which may hinder
accountability.
In the three regions we visited, the lack of documentation for ongoing
monitoring occurs because of weaknesses at the staff, supervisory, and
management level. First, grant specialists and project officers do not
consistently document key monitoring efforts. For example, several
staff stated that they had not printed out their e-mail correspondence
with grantees or recorded those contacts in the official grant files.
Other staff cited their workload as a reason for not documenting
monitoring. Lack of documentation also occurs because grant specialists
and project officers rely on other staff with technical expertise,
known as "technical contacts," to assist with ongoing monitoring, and
these technical contacts may not provide the documented results of
their monitoring for inclusion in the grant file. We found this
situation had occurred in two of the three regions we visited. For
example, one administrative project officer--a project officer who
maintains files but is not necessarily knowledgeable about the
technical aspects of the project--had asked for key monitoring
documentation from a technical contact, who did not provide it. The
technical contact had the monitoring documents in his work area and
said he would routinely provide them to the project officer in the
future.
Second, the lack of ongoing monitoring documentation may occur, in
part, because supervisors do not always effectively review grant files
for compliance with grant policies. According to staff we interviewed
in the three regions, to their knowledge, their supervisors had not
reviewed their files to assess compliance with the agency's monitoring
policies, which could contribute to the lack of documentation. A
regional project officer told us that he would have completed the
ongoing monitoring checklist if his regional program supervisor had
made it a priority. In another region, officials told us that some
supervisors do review some files, but they do not have enough time to
review every file.
In contrast, supervisory review can contribute to complete
documentation of ongoing monitoring. For example, Region 5 was cited as
having "excellent" documentation for ongoing monitoring in an Office of
Grants and Debarment 2003 internal review. According to the EPA
supervisor in Region 5 at the time of the 2003 review, she had notified
staff that she would review their grant files to assess compliance with
EPA policy for ongoing monitoring, among other things. She believes
that her review contributed to the region's excellent rating.
Third, senior EPA managers in the regions do not always ensure that
their commitments to improve monitoring documentation are being met.
For example, in the post-award monitoring plans submitted to the Office
of Grants and Debarment for two of the EPA regions we visited, the
plans stated that the regions would place a checklist in the grant
specialist and project officer files documenting ongoing monitoring
activities. Although the two regions developed the checklists, more
than half of the checklists we reviewed were missing, blank, or
incomplete. This occurred, in part, because senior managers did not
ensure that commitments were met in their post-award monitoring plans.
Despite the importance of ongoing monitoring, EPA has not created a
performance measure for documenting ongoing monitoring that would
underscore its importance to managers and staff. Furthermore, EPA's
Integrated Grants Management System has a field for recording
information about ongoing monitoring that could enable the agency to
systematically identify whether this monitoring is documented
agencywide, but recording this information is optional. Establishing a
performance measure and/or requiring the entry of information could
enhance accountability for implementing the monitoring policy.
EPA Has Reduced Its Closeout Backlog, but Grant Closures Are Often
Delayed and Sometimes Improperly Carried Out:
As part of its grant reforms, EPA incorporated grant closeout into its
monitoring policy and its Grants Management Plan.[Footnote 32] During
closeout, EPA ensures that the grant recipient has met all financial
requirements and provided final technical reports, and ensures that any
unexpended balances are "deobligated" and returned to the agency.
Delays in closing out the grant can unnecessarily tie up obligated but
unexpended funds that could be used for other purposes. Furthermore,
according to EPA's closeout policy, closeout becomes more difficult
with the passage of time because persons responsible for managing
various aspects of the project may resign, retire, or transfer; and
memories of events are less clear.
The monitoring policy states that the agency is committed to closing
out grants within 180 days after the end of the grant's project period.
Under its monitoring policy, EPA provides 180 days for closeout because
(1) grantees--by regulation and policy--have up to 90 days after the
grant project period to provide all financial and technical reports;
[Footnote 33] and (2) by policy, agency staff--grant specialists and
project officers--have 90 days to review grantee information and
certify that financial and technical requirements have been met.
Following certification, the grant specialist closes out the grant with
a letter to the grantee stating that the agency closed out the grant.
EPA's Grants Management Plan identified measures with targets that were
developed to assess EPA's closeout performance.
In reviewing EPA's management of grant closeouts, we found that EPA (1)
has effectively reduced its historic backlog of grants due for
closeout; (2) does not always close out grants in a timely way--within
180 days after the project period ends, as required by agency policy;
and (3) does not always close out grants properly based on the regional
files we reviewed.
EPA Has Effectively Reduced Its Historic Closeout Backlog:
In the past, EPA had a substantial backlog of grants that it had not
closed out. EPA reported that by 1995, the agency had amassed a backlog
of over 18,000 completed grants that had not been closed out from the
past 2 decades. In fact, EPA had identified closeout, among other
things, as a material weakness--an accounting and internal control
weakness that the EPA Administrator must report to the President and
Congress.[Footnote 34] As we reported in 2003, however, EPA improved
its closeout of backlogged grants, eliminating backlog as a material
weakness. Specifically, for fiscal year 2005, using its historic
closeout performance measure, EPA reported that it had closed 97.8
percent of the 23,162 grants with project end dates between the
beginning of fiscal year 1999 and the end of fiscal year 2003. EPA came
close to its 99-percent target of closing out this backlog.
EPA Does Not Always Close Out Grants in a Timely Manner:
EPA developed a second closeout performance measure--which we call the
current closeout performance measure--to calculate the percent of
grants with project end dates in the prior fiscal year that were closed
out by the end of the current fiscal year (September 30). For example,
as table 3 shows, EPA closed out 79 percent of the grants with project
end dates in fiscal year 2004 by the end of reporting fiscal year 2005
(September 30, 2005) but did not meet its performance target of 90
percent.
Table 3: Table 3: EPA's Current Closeout Performance Target Compared
with Percent EPA Reported as Meeting That Target, Reporting Fiscal
Years 2003-2005:
Reporting fiscal year: 2003 (baseline).
Project end dates: 10/01/2001 through 9/ 30/2002;
Current closeout performance target (percent): 90%;
Percent of grants meeting the current closeout performance target: 83%;
Reporting fiscal year: 2004;
Project end dates: 10/01/2002 through 9/30/2003;
Current closeout performance target (percent): 90%;
Percent of grants meeting the current closeout performance target: 85%;
Reporting fiscal year: 2005;
Project end dates: 10/01/2003 through 9/30/2004;
Current closeout performance target (percent): 90%;
Percent of grants meeting the current closeout performance target: 79%;
Reporting fiscal year: 2006;
Project end dates: 10/01/2004 through 9/30/2005;
Current closeout performance target (percent): 90%;
Percent of grants meeting the current closeout performance target: Data
will be available in October 2006.
Source: EPA documents.
Note: The reporting fiscal year reflects grants that had project period
end dates from the prior year.
[End of table]
EPA's current closeout performance measure does not calculate whether
EPA closed the grant within 180 days. Rather, this measure only reports
whether EPA closed the grant by the end of the following fiscal year
(the fiscal year in which it reports on closeouts--the reporting year).
The measure, in fact, can allow for a much more generous closeout time,
from 183 days beyond the 180 days to as much as 547 days (18 months)
beyond the 180 days--because EPA does not report the performance
measure until September 30, the end of the current fiscal year, as
shown by hypothetical examples in table 4.
Table 4: Table 4: Minimum and Maximum Times Allowed under EPA's Current
Closeout Performance Measure:
Time allowed under policy beyond 180 days for grant closeouts: Minimum
time;
Project period end date: Sept. 30, 2004;
Closeout due date (180 days allowed after project ends): Mar. 31, 2005;
Reporting date for performance measure: Sept. 30, 2005;
Number of days elapsed between the closeout due date and the reporting
date: 183 (6 months).
Time allowed under policy beyond 180 days for grant closeouts: Maximum
time;
Project period end date: Oct. 1, 2003;
Closeout due date (180 days allowed after project ends): Apr. 1, 2004;
Reporting date for performance measure: Sept. 30, 2005;
Number of days elapsed between the closeout due date and the reporting
date: 547 (18 months).
Source: GAO.
Note: EPA routinely waits about 1 month after the end of the fiscal
year--in this case, until October 2005--to allow sufficient time for
end-of-fiscal year data to be entered into its system.
[End of table]
EPA's current performance measure for closing out grants is a valuable
tool for determining if grants were ultimately closed out. However, we
believe that this performance measure--taken alone--is not a sufficient
way to measure closeout because it does not reflect the 180-day
standard specified in EPA policy.
To determine the percentage of grants that were closed within 180 days,
we examined EPA's analysis of closeout time frames for regional
offices, headquarter offices, and agencywide. As table 5 shows, EPA is
having significant difficulty in meeting the 180-day standard.
Table 5: Table 5: Percent of Grants Closed Out Agencywide and for
Program and Regional Offices, by Length of Time to Closeout, Fiscal
2005 Reporting Year:
Percent of grants closed out: Length of time to closeout for projects
ending in fiscal year 2004: On time (0-180 days);
Percent of grants closed out: Agencywide: 37;
Percent of grants closed out: Program offices: 35;
Percent of grants closed out: Regional offices: 1: 30;
Percent of grants closed out: Regional offices: 2: 26;
Percent of grants closed out: Regional offices: 3: 51;
Percent of grants closed out: Regional offices: 4: 43;
Percent of grants closed out: Regional offices: 5: 16;
Percent of grants closed out: Regional offices: 6: 49;
Percent of grants closed out: Regional offices: 7: 44;
Percent of grants closed out: Regional offices: 8: 45;
Percent of grants closed out: Regional offices: 9: 32;
Percent of grants closed out: Regional offices: 10: 52.
Percent of grants closed out: Length of time to closeout for projects
ending in fiscal year 2004: Late (181-270 days);
Percent of grants closed out: Agencywide: 19;
Percent of grants closed out: Program offices: 15;
Percent of grants closed out: Regional offices: 1: 26;
Percent of grants closed out: Regional offices: 2: 9;
Percent of grants closed out: Regional offices: 3: 26;
Percent of grants closed out: Regional offices: 4: 31;
Percent of grants closed out: Regional offices: 5: 9;
Percent of grants closed out: Regional offices: 6: 15;
Percent of grants closed out: Regional offices: 7: 29;
Percent of grants closed out: Regional offices: 8: 28;
Percent of grants closed out: Regional offices: 9: 21;
Percent of grants closed out: Regional offices: 10: 18.
Percent of grants closed out: Length of time to closeout for projects
ending in fiscal year 2004: Significantly late (271+ days);
Percent of grants closed out: Agencywide: 25;
Percent of grants closed out: Program offices: 34;
Percent of grants closed out: Regional offices: 1: 40;
Percent of grants closed out: Regional offices: 2: 14;
Percent of grants closed out: Regional offices: 3: 21;
Percent of grants closed out: Regional offices: 4: 17;
Percent of grants closed out: Regional offices: 5: 14;
Percent of grants closed out: Regional offices: 6: 21;
Percent of grants closed out: Regional offices: 7: 18;
Percent of grants closed out: Regional offices: 8: 27;
Percent of grants closed out: Regional offices: 9: 26;
Percent of grants closed out: Regional offices: 10: 20.
Percent of grants closed out: Length of time to closeout for projects
ending in fiscal year 2004: Not closed;
Percent of grants closed out: Agencywide: 19;
Percent of grants closed out: Program offices: 16;
Percent of grants closed out: Regional offices: 1: 4;
Percent of grants closed out: Regional offices: 2: 51;
Percent of grants closed out: Regional offices: 3: 2;
Percent of grants closed out: Regional offices: 4: 9;
Percent of grants closed out: Regional offices: 5: 61;
Percent of grants closed out: Regional offices: 6: 14;
Percent of grants closed out: Regional offices: 7: 9;
Percent of grants closed out: Regional offices: 8: 1;
Percent of grants closed out: Regional offices: 9: 21;
Percent of grants closed out: Regional offices: 10: 10.
Percent of grants closed out: Length of time to closeout for projects
ending in fiscal year 2004: Total;
Percent of grants closed out: Agencywide: 100;
Percent of grants closed out: Program offices: 100;
Percent of grants closed out: Regional offices: 1: 100;
Percent of grants closed out: Regional offices: 2: 100;
Percent of grants closed out: Regional offices: 3: 100;
Percent of grants closed out: Regional offices: 4: 100;
Percent of grants closed out: Regional offices: 5: 100;
Percent of grants closed out: Regional offices: 6: 100;
Percent of grants closed out: Regional offices: 7: 100;
Percent of grants closed out: Regional offices: 8: 100;
Percent of grants closed out: Regional offices: 9: 100;
Percent of grants closed out: Regional offices: 10: 100.
Source: GAO analysis of EPA information from EPA's Grant Information
and Control System database, as of December 31, 2005.
Note: Totals may not add up to 100 due to rounding.
[End of table]
As the table shows, agencywide, only 37 percent of grants with project
end dates in fiscal year 2004 were closed out within 180 days, 25
percent were significantly late--at least 3 months beyond the 180-day
standard, and 19 percent were not closed.
Table 6 shows that EPA's current performance measure is masking the
fact that the agency is having significant difficulty in closing out
grants within 180 days.
Table 6: Table 6: Comparison of EPA's Performance against the Current
Closeout Measure and the 180-Day Standard, Fiscal 2005 Reporting Year:
Unit: Agencywide;
Percent of grants meeting the current measure and 180-day standard:
Current closeout performance measure: 79%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 37%.
Unit: Program offices;
Percent of grants meeting the current measure and 180-day standard:
Current closeout performance measure: 81%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 35%.
Unit: Region 1;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 96%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 30%.
Unit: Region 2;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 49%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 26%.
Unit: Region 3;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 97%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 51%.
Unit: Region 4;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 91%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 43%.
Unit: Region 5;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 37%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 16%.
Unit: Region 6;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 85%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 49%.
Unit: Region 7;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 90%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 44%.
Unit: Region 8;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 99%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 45%.
Unit: Region 9;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 76%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 32%.
Unit: Region 10;
Percent of grants meeting the current measure and 180- day standard:
Current closeout performance measure: 89%;
Percent of grants meeting the current measure and 180-day standard: 180-
day standard: 52%.
Source: EPA data.
Notes: For the current closeout performance measure, GAO's analysis of
information from EPA's Grant Information and Control System database,
as of November 30, 2005; for the 180-day standard, GAO's analysis of
information from EPA's Grant Information and Control System database,
as of December 31, 2005.
[End of table]
In guidance on preparing the annual post-award monitoring plans, the
Office of Grants and Debarment has indicated that agency offices should
use the agency's current closeout performance measure--90 percent of
the grants with project end dates in the prior fiscal year--as the
closeout goal.[Footnote 35] In effect, as a regional grants management
office manager stated, the performance measure, not the 180-day
standard, is the target EPA is working toward for closing out grants.
At the regional level, our analysis of closeout data for the wetland
and nonpoint source grant programs indicates that grants were closed
out late because of (1) grantee delays and/or (2) internal delays
within the agency. We reviewed 34 closed grants in three regions.
First, as table 7 shows, grantees often submit their final financial
and technical reports after the 90 days that they are allowed.[Footnote
36]
Table 7: Table 7: Length of Time It Took Grantees to Deliver Final
Financial and Technical Reports for Two Grant Programs in Regions 1, 5,
and 9:
Days for grantees to deliver final reports: 1-90 days (on time);
Number of grants: 9.
Days for grantees to deliver final reports: 91-180 days;
Number of grants: 10.
Days for grantees to deliver final reports: 181-270 days;
Number of grants: 6.
Days for grantees to deliver final reports: 271-450 days;
Number of grants: 4.
Days for grantees to deliver final reports: 451 + days;
Number of grants: 1.
Days for grantees to deliver final reports: Report missing from file or
date of receipt could not be determined;
Number of grants: 4.
Days for grantees to deliver final reports: Total;
Number of grants: 34.
Source: GAO analysis of EPA documents on selected wetland and nonpoint
source grants for grants closed out between January 1, 2004, and June
30, 2005.
Note: Technical reports and financial reports are submitted separately.
Our analysis is based on the date of the last report submitted.
[End of table]
According to regional staff, different types of grantees may be
submitting their reports late for different reasons. Specifically:
* States do not always provide their final technical and financial
closeout reports on time. The states may not be on time because, for
example, they (1) are understaffed; (2) are awaiting the completion of
work conducted by sub-grantees or subcontractors--which can be
legitimately delayed because of weather conditions that affect the
project's progress; or (3) consider closeout a lower priority than
applying for new grants. Furthermore, states do not believe there will
be any consequences if they submit final reports late because their
grants are for continuing environmental programs.
* Tribes may submit their final reports late because of high turnover
among tribal staff and limited organizational capacity, and because
tribal councils, which meet intermittently, must approve the reports.
While grantees are responsible for providing final reports within 90
days, EPA staff are responsible for working with the grantees to ensure
that the reports are received on time. Under EPA's 1992 closeout
policy, grant specialists must notify grantees 90 days before the
project end date that final reports will be due 90 days thereafter.
However, we found that regional staff do not always send out these
letters. For example, Region 5 adopted the practice of reminding
grantees 45 days before the project end date because the grants
management office believes that the 90 days is too long in advance to
be effective. However, several Region 5 grant specialists stated that
their workload is also preventing them from sending out the 45-day
letter to grantees.
According to EPA's closeout policy, if a grantee is late with the final
financial or technical report, the region should send reminder letters
that escalate in tone as time progresses. In Region 1, for example, if
the grantee does not submit its materials within 90 days, the grants
management office sends a letter asking that the grantee contact its
grant specialist to discuss the reasons for the overdue reports; if the
region does not receive the reports within 120 days after the project
has ended, the grants management office sends a certified letter that
more strongly calls for the submission of these required reports.
When these letters do not result in grantee compliance, regional staff
and managers told us that they have no realistic option for taking
strong action against states that are late--such as withholding money-
-because these grantees have continuing grants for environmental
programs.
Second, late closeouts result from a variety of internal agency delays.
As shown in table 8, of those files that had information that we could
use to determine the dates the reports were submitted, regional staff
closed out about half within the 90 days provided for in EPA guidance.
For 9 of the 30 files that had this report information, it took the
project officers or the grant specialists over 180 days to close out
the grant after receiving the final reports from the grantees.
Table 8: Table 8: Length of Time Elapsed for Grants Management Offices
to Close Out Grants after Grantee Provides Final Reports for Two Grant
Programs, Regions 1, 5, and 9:
Days from receipt of final report from grantee to closeout: 1-90 days;
Number of grants: 14.
Days from receipt of final report from grantee to closeout: 91-180
days;
Number of grants: 7.
Days from receipt of final report from grantee to closeout: 181-270
days;
Number of grants: 3.
Days from receipt of final report from grantee to closeout: 271-450
days;
Number of grants: 2.
Days from receipt of final report from grantee to closeout: 451 + days;
Number of grants: 4.
Days from receipt of final report from grantee to closeout: Report
missing from file or date of receipt could not be determined;
Number of grants: 4.
Days from receipt of final report from grantee to closeout: Total;
Number of grants: 34.
Source: GAO analysis of EPA documents on selected wetland and nonpoint
source grants for grants closed out between January 1, 2004, and June
30, 2005.
[End of table]
For grant closeouts, generally, regional staff often cited workload as
a factor contributing to delays in agency closeout. Delays also
occurred because of peak workload periods during the year, such as the
fourth quarter of the fiscal year, when regions generally give priority
to awarding new grants. Officials in the three regions we visited also
told us that they have transferred or will transfer the administrative
and financial functions of grants closeout to EPA's Las Vegas Finance
Center, which should reduce the grant specialists' workload, allowing
them to focus on other aspects of grants management.
Regional practices also may have contributed to delays in two of the
three regions we reviewed. Region 5 had two practices that contributed
to delays in closing out grants. First, the region uses technical
contacts to assist with monitoring the wetland and nonpoint source
grant programs, including closeouts. The project officer first reviews
the grantee's final reports to ensure they are complete and then asks
the technical contact to comment on specific points and certify in
writing that technical requirements have been met. The project officer
then certifies in writing to the grant specialist that the grantee has
met programmatic terms and conditions and, from that perspective, the
grant can be closed out. Regional staff stated that in certain cases
the added step of getting signoff by the technical contact resulted in
closeout delays because the technical contact did not always review the
grantee's final reports in a timely way.
Second, to address its closeout problem, the region's grants management
office attempted an administrative change to expedite closeout--having
a single grant specialist manage closeout. When this approach did not
prove effective, the region returned to its practice of having the
original grant specialists responsible for closing out grants.
According to regional staff, the transition to and from this process
exacerbated delays in grant closeouts. The original grant specialists
had other grant work and waited until that work was completed before
closing out the grants that were returned to them. Region 5 had the
lowest percentage of grants closing out within 180 days for all its
programs among EPA's 10 regions (16 percent for fiscal year 2005 as
shown in table 5).
Region 9 had delayed closures for continuing nondiscretionary grants,
in part, because of a practice, discontinued in November 2004, of
routinely carrying over unspent funds from these grants. That is, the
region would not close out a grant until it had awarded a new grant.
The unspent funds from the old grant would then be processed as an
amendment to the new grant, in order to allow grantees to keep their
unspent funds. For example, one state nonpoint source grant was closed
278 days beyond the 180 days because the project officer had asked the
grant specialist to carry over $426,000 in unspent funds to the
following year's grant.
Overall, a combination of grantee lateness and internal inefficiencies
contributed to late closeouts. For example:
* In Region 5, it took 795 days--615 days beyond the 180-day standard-
-to close out a 2-year wetland grant for $56,778. The grantee submitted
the final financial status report 114 days late because a key grant
contact had died. However, it took the region an additional 591 days
after the grantee provided the final reports to close out the grant.
According to the grant specialist, closeout was delayed, in part,
because of internal administrative delays and because the grant was
"lost" under a stack of other closeout files.
* In Region 1, closure of a nonpoint source grant that provided
$796,532 over 10 years was delayed primarily because of a lack of
documentation. According to the project officer who inherited the file
from a retiring employee, the file had unusually poor documentation,
with no assurance that the grant's terms and conditions had been met.
Moreover, the state employee who assumed responsibility for the grant
could not locate all the reports detailing how the grant money had been
used. Consequently, it took the project officer nearly 5 months beyond
the allotted 180 days to review available information, ascertain that
grant activities had been completed, and close out the grant.
According to some of the project officers and grant specialists staff
with whom we spoke, the 180 days allowed for closeout in EPA's policy
is a reasonable amount of time. Moreover, some staff said that if more
days were allowed, EPA might take longer. As noted in the closeout
policy, as more time passes and the original grant specialists and
project officers move on, it becomes more difficult to close out a
grant. Finally, one regional official pointed out that if the deadline
for closeout were extended, then unexpended funds would go unused for
longer periods of time, which would tie up funds that could have been
used for other purposes.
We note, however, that EPA still has a 1992 closeout policy that is not
consistent with its current monitoring policy. Specifically, although
both the 1992 closeout policy and the monitoring policy state that
closeout should occur within 180 days after the end of the project
period, the 1992 policy also states that closeout should occur within
180 days after receipt of all required reports and other deliverables.
This aspect of the 1992 policy could be construed to mean that EPA has
up to 270 days to close out grants since grantees have up to 90 days to
submit their reports. Office of Grants and Debarment officials stated
that EPA has formed a work group to review its monitoring and closeout
polices. As part of its review, the office plans to examine this
inconsistency and the reasonableness of the 180-day closeout
requirement. It expects to revise these policies in 2006.
Grants Were Not Always Closed Out Properly:
Adding to the agency's closeout problems, 8 of the 34 closed grants we
reviewed in the regions were not closed out properly. Specifically:
* Region 1 grant specialists had not adequately reviewed the indirect
cost rate grantees submitted as part of their final financial status
report which, in turn, led to improper closeout in 5 of the 10 files we
reviewed. Reviewing the files' final financial report checklist, we
found instances in which the question on the checklist that addresses
indirect cost rates had been left blank or had been answered
incorrectly. This problem occurred, in part, because the grant
specialists did not adequately review the work of student interns who
initially reviewed the financial status reports and completed the
checklists. These "noncore" employees were used to help reduce the
grant specialists' workload and the grant specialists were expected to
review their work before they signed off on the checklist.
* In Region 5, one grant specialist's file was missing the final
financial status report, which is a key report that describes how the
grantee spent the grant funds and whether any unspent funds remain that
need to be deobligated.
* In Region 9, Lobbying and Litigation Certification Forms--whose
purpose is to ensure that federal dollars are not spent for lobbying or
litigation activities--were missing from two grant files. After waiting
some time, the grant specialist decided to close out the grants without
the forms. The grant specialist manual states that grant specialists
are responsible for notifying the grants management office if the
grantee has not complied with this certification requirement.
EPA's guidance states that inadequate file documentation, among other
things, (1) violates the file management requirement that all
significant actions must be documented, (2) provides an incomplete
historical record of a grant project, (3) prevents staff from
substantiating facts if a dispute arises, and (4) creates the
appearance of poor grant administration and oversight.[Footnote 37]
Furthermore, the guidance specifically states that the file should
include evidence of closeout, including the final report or product.
In Region 1, we also identified an accountability concern when grants
were closed out by administrative project officers. An administrative
project officer for a Performance Partnership Grant had not always
received written approval from the technical contacts, who evaluated
grantee documents before the administrative project officer certified
that the grantee had met all the terms and conditions of the grant.
According to a regional official, technical contacts at times tell the
project officer that they have reviewed technical documents but do not
provide written approval. Although the administrative project officer
certified that grantees met their programmatic obligations, the
administrative project officer was "uncomfortable" doing so without
written approval from technical contacts that they had reviewed final
documents.
As with monitoring, without effective supervisory review of the grant
and project officer files, grants may be improperly closed out. With
more effective supervision, grants would be more likely to be properly
closed out.
EPA Has Initiated Actions to Obtain Results from Grants, but Its
Efforts Are Not Complete:
EPA has taken steps to obtain environmental results from its grants,
but its efforts are not complete. First, EPA included a performance
measure in its Grants Management Plan for identifying expected
environmental results in grant workplans. In 2004, EPA was far from
meeting its performance target. Although EPA does not yet have final
data for 2005, EPA officials told us that their preliminary data
indicate they are closer to meeting this performance target. Second,
EPA issued an environmental results policy, effective in January 2005
that for the first time requires EPA staff to ensure that grants
specify well-defined environmental outcomes.[Footnote 38] However,
EPA's current performance measure does not take into account the new
criteria for identifying and measuring results from grants established
by the policy. EPA acknowledges that it has not yet fully identified
better ways to integrate the agency systems for reporting on the
results of grants. While EPA has taken these positive steps, OMB's
evaluations of EPA grant programs in 2006 indicate that EPA must
continue its concerted efforts to achieve results from its grants.
EPA Has Developed a Performance Measure and Issued a New Policy for
Specifying Environmental Results:
The Grants Management Plan established a performance measure for
identifying environmental outcomes from grants: the percent of grant
workplans that discusses how grantees plan to measure and report on
environmental outcomes.[Footnote 39] In 2004, EPA was far from meeting
its performance target. Although EPA does not yet have final data for
2005, an EPA official told us that their preliminary data indicate that
the agency is closer to meeting this performance target of 80 percent
for 2005.[Footnote 40]
Table 9: Table 9: Extent to Which EPA Met Its Target for the Percent of
Grant Workplans with Environmental Outcomes, 2003-2005:
Calendar year: 2003 (baseline);
Performance measure: Percent target: Not applicable;
Performance measure: Percent of grant workplans with environmental
outcomes: 31.
Calendar year: 2004;
Performance measure: Percent target: 70;
Performance measure: Percent of grant workplans with environmental
outcomes: 45.
Calendar year: 2005;
Performance measure: Percent target: 80;
Performance measure: Percent of grant workplans with environmental
outcomes: Not yet available.
Source: EPA documents.
[End of table]
EPA also issued an environmental results policy in 2004, which was
effective in January 2005, or about 2 years later than proposed in the
Grants Management Plan. The policy is promising in that--for the first
time--it requires EPA staff to ensure that grant workplans specify well-
defined environmental outputs (activities) and environmental outcomes
(results), which enables EPA to hold grantees accountable for achieving
them. However, planning for grants to achieve environmental results,
and measuring results, is a difficult, complex challenge. As we have
reported, while it is important to measure the results of environmental
activities rather than just the activities themselves, agencies face
difficulties in doing this.[Footnote 41] Environmental outputs are
inherently easier to develop and report on than environmental outcomes.
The policy is also promising because, among other things, it (1) is
binding on managers and staff throughout the agency; (2) emphasizes
environmental results throughout the grant life cycle--awards,
monitoring, and reporting; and (3) requires that grants be aligned with
the agency's strategic goals and linked to environmental results.
To align grants with the agency's strategic goals and link the grants
to results, the policy requires for the first time that EPA program
offices ensure that (1) each grant funding package includes a
description of the EPA strategic goals and objectives the grant is
intended to address and (2) the offices provide assurance that the
grant workplan contains well-defined outputs and, to the "maximum
extent practicable," well-defined outcome measures. Outcomes may be
environmental, behavioral, health-related, or programmatic in nature,
and must be quantitative. EPA included the provision to "the maximum
extent practicable" in the policy 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. In June 2005, the EPA Inspector
General found that the agency's results policy was generally consistent
with leading nongovernmental organizations that fund environmental
projects and that emphasize grants performance measurements.[Footnote
42]
Efforts to Obtain Results from Grants Are Not Yet Complete:
EPA's performance measure and the new results policy are positive
steps, but the agency's efforts to address results are not yet
complete. Although EPA has issued an environmental results policy, its
current performance measure does not take into account the new criteria
for identifying and measuring results. EPA has identified the following
seven criteria that grant agreements should meet and is using these
seven criteria as the basis for assessing the implementation of the
policy.[Footnote 43] That is, the agreements should:
* include a description of how the grant is linked to EPA's Strategic
Plan,
* specify at least one EPA goal and its related objective that the
project addresses,
* identify the appropriate program results code--a code applied to new
grant awards that aligns the grant with EPA's strategic goals and
objectives,
* include an assurance that the program office has reviewed the
workplan and that the workplan includes well-defined outputs and
outcomes,
* include a requirement for performance reports from recipients,
* include well-defined outputs in the workplans, and:
* include well-defined outcomes in the workplans.
According to an Office of Grants and Debarment official, the results
policy calls for outcomes that are not only well defined but that also
include quantitative measures. However, recognizing the difficulty and
complexity posed by applying such measures, the official said, for the
purposes of assessment, EPA modified its criteria to include well-
defined outcomes with or without quantitative measures.
Since EPA has adopted new criteria for assessing environmental results
from grants based on its environmental results policy, its current
performance measure--the percentage of grant workplans that discuss how
grantees plan to measure and report on environmental outcomes--may not
be sufficient to assess the implementation of the policy. EPA's current
performance measure does not take into account the new criteria for
identifying and measuring results from grants established by the
policy. Establishing a new performance measure and target to reflect
the new policy would enhance EPA's ability to assess the agency's
effectiveness in implementing the policy.
In addition, EPA continues to face difficulties in ensuring that its
grants are achieving public health and environmental results.
Specifically, EPA acknowledges that it has not yet fully identified
better ways to integrate the agency systems for reporting on the
results of grants. EPA does not have a systematic way of collecting
information about the results of its grants agencywide. As stated in
the results policy, the Office of Grants and Debarment convened a
workgroup to (1) examine existing EPA systems for collecting results
from grant programs, (2) identify better ways to integrate these
systems, and (3) potentially amend the policy to reflect its findings.
The workgroup has begun an inventory of existing EPA systems. Until
recently, EPA recognized--but had not addressed in its results policy-
-the known complexities of measuring environmental outcomes: (1)
demonstrating outcomes when there is a long lag time before results
become apparent and (2) linking program activities with environmental
results because of multiple conditions that influence environmental
results. In April 2006, the Office of Grants and Debarment provided an
online training course for project officers on environmental results
with guidance on how to address these measurement complexities.
Furthermore, OMB has found that EPA has problems in demonstrating
results from its grants. Using its Program Assessment Rating Tool
(PART), OMB annually evaluates federal programs in four critical areas
of performance: program purpose and design, planning, management, and
results, each scored from 0 to 100.[Footnote 44] OMB combines these
scores to create an overall rating: effective, moderately effective,
adequate, and ineffective. In addition, programs that do not have
acceptable performance measures or have not yet collected performance
data generally receive a rating of "results not demonstrated." As table
10 shows, the PART ratings have found that some of EPA's programs are
"ineffective" or "results not demonstrated," although there has been
some improvement from 2004 through 2006.[Footnote 45]
Table 10: Table 10: Combined OMB PART Ratings of EPA Grant Programs,
2004-2006:
Year: 2004;
Number of grant programs by combined rating: Moderately effective: 0;
Number of grant programs by combined rating: Adequate: 2;
Number of grant programs by combined rating: Ineffective: 0;
Number of grant programs by combined rating: Results not demonstrated:
8;
Total: 10.
Year: 2005;
Number of grant programs by combined rating: Moderately effective: 0;
Number of grant programs by combined rating: Adequate: 9;
Number of grant programs by combined rating: Ineffective: 2;
Number of grant programs by combined rating: Results not demonstrated:
5;
Total: 16.
Year: 2006;
Number of grant programs by combined rating: Moderately effective: 1;
Number of grant programs by combined rating: Adequate: 12;
Number of grant programs by combined rating: Ineffective: 3;
Number of grant programs by combined rating: Results not demonstrated:
2;
Total: 18.
Source: OMB documents.
[End of table]
Despite this progress, a closer examination of the ratings for 2006
indicated that, with one exception, the scores for the results
component were lower than the scores given to other components. (See
table 11).
Table 11: Table 11: OMB PART Scores for All Components of the Combined
Rating, Fiscal Year 2006:
Grant program: Air Quality Grants and Permitting;
Component scores (0 to 100): Program purpose and design: 60;
Component scores (0 to 100): Planning: 44;
Component scores (0 to 100): Management: 77;
Component scores (0 to 100): Results: 13.
Grant program: Alaska Native Villages;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 50;
Component scores (0 to 100): Management: 11;
Component scores (0 to 100): Results: 7.
Grant program: Brownfields Revitalization;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 50;
Component scores (0 to 100): Management: 90;
Component scores (0 to 100): Results: 17.
Grant program: Clean Water State Revolving Fund;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 50;
Component scores (0 to 100): Management: 78;
Component scores (0 to 100): Results: 26.
Grant program: Drinking Water State Revolving Fund;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 63;
Component scores (0 to 100): Management: 89;
Component scores (0 to 100): Results: 33.
Grant program: Endocrine Disruptors;
Component scores (0 to 100): Program purpose and design: 80;
Component scores (0 to 100): Planning: 70;
Component scores (0 to 100): Management: 91;
Component scores (0 to 100): Results: 26.
Grant program: Environmental Education;
Component scores (0 to 100): Program purpose and design: 60;
Component scores (0 to 100): Planning: 75;
Component scores (0 to 100): Management: 90;
Component scores (0 to 100): Results: 13.
Grant program: Lead-Based Paint Risk Reduction Program;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 78;
Component scores (0 to 100): Management: 77;
Component scores (0 to 100): Results: 72.
Grant program: Leaking Underground Storage Tank Cleanup Program;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 75;
Component scores (0 to 100): Management: 100;
Component scores (0 to 100): Results: 42.
Grant program: Nonpoint Source Pollution Control Grants;
Component scores (0 to 100): Program purpose and design: 80;
Component scores (0 to 100): Planning: 88;
Component scores (0 to 100): Management: 100;
Component scores (0 to 100): Results: 40.
Grant program: Ocean, Coastal, and Estuary Protection;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 44;
Component scores (0 to 100): Management: 85;
Component scores (0 to 100): Results: 27.
Grant program: Pesticide Enforcement Grant Program;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 63;
Component scores (0 to 100): Management: 89;
Component scores (0 to 100): Results: 8.
Grant program: Pesticide Field Programs;
Component scores (0 to 100): Program purpose and design: 80;
Component scores (0 to 100): Planning: 13;
Component scores (0 to 100): Management: 44;
Component scores (0 to 100): Results: 13.
Grant program: Public Water System Supervision Grant Program;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 75;
Component scores (0 to 100): Management: 78;
Component scores (0 to 100): Results: 17.
Grant program: Tribal General Assistance Program;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 50;
Component scores (0 to 100): Management: 78;
Component scores (0 to 100): Results: 25.
Grant program: U.S.-Mexico Border Water Infrastructure;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 63;
Component scores (0 to 100): Management: 89;
Component scores (0 to 100): Results: 20.
Grant program: Underground Injection Control Grant Program;
Component scores (0 to 100): Program purpose and design: 100;
Component scores (0 to 100): Planning: 75;
Component scores (0 to 100): Management: 89;
Component scores (0 to 100): Results: 17.
Grant program: Water Pollution Control Grants;
Component scores (0 to 100): Program purpose and design: 60;
Component scores (0 to 100): Planning: 75;
Component scores (0 to 100): Management: 89;
Component scores (0 to 100): Results: 40.
Source: OMB document.
[End of table]
While EPA has taken positive steps, OMB's 2006 assessment indicates
that EPA must continue its concerted efforts to achieve results from
its grants.
EPA Has Taken Steps to Manage Grants Staff and Resources More
Effectively but Still Faces Major Management Problems:
EPA has taken steps to manage grants staff and resources more
effectively in four key areas: (1) analyzing workload; (2) providing
training on grant policies; (3) assessing the reliability of the
agency's grants management computer database--the Integrated Grants
Management System; and (4) holding managers and staff accountable for
successfully fulfilling their grant responsibilities. Because much
remains to be accomplished, management attention to these issues is
still needed.
EPA Is Examining Grants Staff Workload:
As we reported in 2003 and found again in this review, regional grants
managers and staff are concerned that staff do not have sufficient time
to devote to effective grants management. They pointed out that the new
policies increased the time needed to implement each step of the grants
process, such as the more planned, rigorous approach now required for
competing grants. However, one regional official pointed out that this
increase workload has not been offset with an increase in resources or
the elimination of other activities.
Fulfilling an objective identified in the Grants Management Plan, in
April 2005, an EPA contractor completed a workload analysis of project
officers and grant specialists.[Footnote 46] The analysis showed that
EPA had an overall shortage of project officers and grant specialists,
expressed in full-time equivalents. However, the contractor recommended
that before EPA adds staff, it take steps to improve the effectiveness
and efficiency of its grants management operations. For example, the
contractor recommended that EPA review its grant activities and assign
"noncore" activities where possible to auxiliary federal or nonfederal
staff to improve operations, freeing EPA staff to conduct their core
work. It defined noncore activities to typically include those that are
related to grant closeouts.
The Office of Grants and Debarment asked the grant offices to prepare
project officer workforce plans--due in 2006--that incorporate the
workload analysis to promote "accountable" grants management.
EPA Has Provided Some Training on Grant Policies:
As outlined in the Grants Management Plan, EPA has developed a long-
term grants management training plan.[Footnote 47] Under the plan, EPA
continues to certify project officers for grant activities by requiring
them to take a 3-day, project officer course before they are allowed to
conduct grant management activities, and thereafter take a refresher
course to maintain their certification.
To address the grant reforms, the agency provided additional training.
For example, EPA held a grants management conference in 2004, attended
by 465 EPA staff, which included workshops on new policies. In 2005,
the Office of Grants and Debarment conducted agencywide training on the
new competition policy. It also conducted training on the environmental
results policy.
However, according to EPA staff, the amount of training has not been
sufficient to keep pace with the issuance of new grant policies. For
example:
* A 2006 self-assessment conducted by one program office found that
project officers and managers expressed frustration that both the pace
and complexity of new policy requirements left project officers
vulnerable because they were not properly trained in the policies.
* A 2005 Region 9 self-assessment found that the region's project
officers did not believe that they had received sufficient guidance
from their programs in headquarters.
* A Region 1 official stated that the rapid pace of new policies and
brief lead time between issuance and the effective date made it too
difficult for the regions to adequately train staff on all the new
policies related to grants management. Nevertheless, Region 1 developed
a training course for its project officers on the award process to
address new grant reform policies issued in 2005. However, only about
25 of the region's 200 project officers attended the optional 90-minute
course, although there were three opportunities to do so.
Regional officials also noted that the grant reforms are changing the
skill mix required of both project officers and grant specialists.
According to a Region 5 official, the grant specialist was once a
clerical position, but additional responsibilities required under the
new grants policies indicates that a business degree or financial
background would be helpful. Region 9 officials told us that
traditionally project officers had technical and scientific skills.
However, the grant reforms had increased the need for interaction with
grantees, which required more skills in oral communications,
organization, and analysis. An Office of Grants and Debarment official
explained the agency is weighing what should be considered as the right
skill mix for agency staff involved in grant activities.
EPA Has Developed a Grants Database but Has Not Completed a Data
Quality Review:
In 1997, EPA began developing the Integrated Grants Management System
to better manage its grants, and EPA now also uses this database to
inform the public and the Congress about its $4 billion investment in
grants. Data quality problems in this database could impair the
agency's ability to effectively manage grants and provide accurate
information. In 2005, we recommended that EPA conduct a comprehensive
data quality review of its Integrated Grants Management
System.[Footnote 48] EPA undertook a review, which it expects to be
completed in 2006.
EPA Has Taken Steps to Enhance Staff and Management Accountability, but
Concerns Remain:
EPA's Grants Management Plan included an objective of establishing
clear lines of accountability for grants management, including
performance standards that address grants management responsibilities
for project officers. As we reported in 2003, project officers did not
have uniform performance standards; instead, each supervisor set
standards for each project officer, and these standards may or may not
have included grants management responsibilities.
Later in 2003, EPA's Assistant Administrator for the Office of
Administration and Resources Management asked all senior resource
officials to review the current performance standards of all employees
below the senior executive service who had grants management
responsibilities.[Footnote 49] This review was to ensure that the
complexity and extent of these employees' grants management duties were
reflected in their performance standards and position descriptions. The
Assistant Administrator asked senior resource officials to ensure that
such standards were in place. The Office of Grants and Debarment is
assessing the extent to which the guidance was implemented; the
assessment is to be completed in May 2006.
As we reported in 2003, the Office of Grants and Debarment faces some
difficulties in holding managers and staff accountable for effective
grants management. The office does not directly oversee many of the
managers and staff who perform grants management duties, particularly
the approximately 2,100 project officers in headquarter and regional
program offices. This division of responsibilities makes it more
difficult to hold these staff accountable for grants management.
In 2005, EPA's Inspector General reported that EPA was not holding
supervisors and project officers accountable for grants
management.[Footnote 50] Specifically:
* EPA does not have a process to measure an individual project
officer's performance in carrying out grants management duties. In
practice, supervisors relied on project officers to inform them of
grants management weaknesses.
* EPA managers and supervisors are not discussing project officer
grants management responsibilities during end-of-year evaluations.
Managers were not discussing project officers' grants management
responsibilities during year-end evaluations; and, if grant issues were
addressed, the discussion focused on the grant recipient's performance,
rather than on the project officer's performance. Supervisors provided
various reasons for rating project officers without discussing grants
management responsibilities, stating, for example, that the year-end
evaluation should focus on problems or issues with grantee performance,
and project officers' responsibilities should be discussed at staff
meetings or at other times through the year.
* EPA managers had not conveyed weaknesses from the agency's internal
reviews and self-assessments to project officers. EPA managers did not
communicate weaknesses identified in internal reviews, such as a lack
of documentation of cost reviews and ongoing monitoring, and
supervisors were not aware of these identified weaknesses.
Our review is consistent with the Inspector General's findings. As
previously discussed, EPA grants staff told us that their supervisors
were not reviewing their grant files to determine compliance with grant
monitoring policies. It is possible that the awarding, monitoring, and
closeout problems we found would have been mitigated by effective
supervisory review.
In response to the Inspector General's concerns, EPA issued a plan in
January 2006 to ensure that the agency's new performance appraisal
system--Performance Appraisal and Recognition System--addresses grants
management responsibilities. The new system requires that (1)
appraisals of project officers and supervisors/managers include a
discussion of grants management performance; (2) performance agreements
and associated mid-year and end-of-year performance discussions focus
on key areas of preaward reviews of nonprofit grantees, competition,
post-award monitoring, and environmental results; and (3) performance
discussions take into account the results of internal reviews, such as
those conducted by the Office of Grants and Debarment, self-
assessments, and performance measure reviews. For the 2007 performance
appraisal process, EPA plans to establish a workgroup to develop final
performance measures to assess the grants management performance of
project officers and supervisors and plans to incorporate these
measures into 2007 performance agreements.
More broadly, to address the growing demands of the grant reforms and
enhance accountability, the Office of Grants and Debarment formed a
senior-level grants management council that cuts across the
organization by including representatives from program offices, such as
the Office of Water, and regional offices. The council is to help
develop and implement new policies agencywide. Similarly, the regional
offices we visited have formed grants management councils to coordinate
and implement grant reforms with the region's grants management office
and various program offices.[Footnote 51]
Despite the efforts of these various national-and regional-level
offices, managers, and councils to identify problems and undertake
corrective actions, some grants management problems still persist. For
example, although some of the regions we visited had implemented
checklists as internal controls to ensure the documentation of ongoing
monitoring, the regions did not ensure they were actually completed.
Closeout problems that were identified by EPA's current performance
measure have not been effectively addressed.
Conclusions:
About 3 years into its Grants Management Plan, 2003-2008, EPA has made
important strides in achieving its grant reforms, particularly in
competing a higher percentage of grants and trying to identify results
from its grants. However, EPA has not resolved its long-standing
problems in documenting ongoing monitoring and closing out grants. As
it revises its management plan, EPA has an opportunity to tackle these
continuing problems.
Without adequate documentation of ongoing monitoring, EPA cannot be
fully assured that grantees are on track to fulfilling the terms and
conditions of their grants. Furthermore, the agency's lack of
documentation indicates weaknesses at all levels: staff do not always
document their monitoring; supervisors do not always effectively review
grant files; and managers are not always meeting their commitments to
address known problems with lack of documentation. Despite the
importance of ongoing monitoring, EPA has not created a performance
measure and target for documenting monitoring, which should elevate the
importance of ongoing monitoring to the agency. EPA is also not taking
full advantage of its grants management database, which has a data
field for documenting ongoing monitoring. That is, EPA does not require
project officers and grant specialists to enter monitoring
documentation information into its database. With the information in
the database, EPA would be better able to determine that staff are
meeting documentation requirements. Use of performance measures and
targets for ongoing monitoring as well as the database could enhance
accountability.
EPA's current performance measure and target for closing out grants is
a valuable tool for determining if grants were ultimately closed out,
but it is not a tool for determining whether grants were closed out
with the 180-days now specified in EPA's monitoring policy. EPA needs
an accompanying measure that accurately reports whether grants are
closed out within the 180 days or other standard EPA may establish.
EPA's current measure and target mask the fact that, agencywide, almost
two-thirds of grants are not closed out within 180 days. Without a
specific performance measure and target, EPA will not be able to
correct its lack of timeliness in closing out grants. We recognize that
grantees' late submission of required reports is a common problem that
contributes to the lack of timeliness in closing out grants. Because
fixing this problem on a case-by-case basis is difficult, the agency
needs an overarching strategy to address it.
Furthermore, in the three regions we visited, we found instances in
which appropriate documentation was missing from the closeout files.
While we do not know the extent of this problem agencywide, these
problems could indicate a major weakness that EPA may need to address.
In responding to a draft of this report, EPA acknowledged that it does
have a problem in closing out grants properly. Finally, we note that
inconsistencies in EPA's monitoring and closeout policies may hinder
EPA's ability to close out grants in a timely fashion.
While EPA has made strides in trying to identify and obtain results
from its grants by issuing an environmental results policy, it has not
yet established a performance measure and target that reflect the
policy's direction.
Finally, the lack of effective supervision may have contributed to the
problems we identified. EPA has issued a plan in January 2006 to ensure
that the agency's new performance system addresses grants management
responsibilities. It is too early to tell whether this plan will
effectively hold managers and staff accountable for grants management.
Recommendations:
As EPA revises its Grants Management Plan, the agency has an
opportunity to strengthen the management of its grants. We recommend
that the Administrator of EPA direct the Office of Grants and Debarment
to take action in the following three areas:
Ongoing monitoring.
* Develop a performance measure and a performance target for ongoing
monitoring, and:
* Consider requiring project officers and grant specialists to document
ongoing monitoring in the agency's grants database so that the managers
can monitor compliance agencywide.
Grant closeout.
* Establish a standard for the timely closeout of grants and ensure
that EPA's monitoring and other policies are consistent with that
standard.
* Develop a performance measure and target for the grant closeout
standard.
* Develop a strategy for addressing grantees' late submission of
required final documentation.
* Issue revised policies and procedures to ensure proper closeout of
grants.
Environmental results.
* Develop a performance measure and target that better reflects the new
environmental results policy.
Agency Comments and Our Response:
We provided a draft of this report to EPA for review and comment. We
received oral comments from EPA officials, including the Director of
the Office of Grants and Debarment. Overall, EPA officials agreed with
our recommendations, and they stated that the agency has begun to take
steps to implement them and will incorporate them into the agency's and
Grants Management Plan. In addition, EPA officials provided some
clarifying language for our recommendations, which we incorporated as
appropriate. Furthermore, EPA officials acknowledged that proper
closeout of grants is an agencywide problem that needs to be addressed.
Based on this acknowledgement, we strengthened our recommendation to
state that EPA needs to issue revised policies and procedures to better
ensure the proper closeout of grants, rather than determine the extent
of improper closeouts at the agency. EPA agreed. Finally, EPA provided
additional information about the agency's efforts to address the
complexities of measuring environmental results and other clarifying
comments, which we incorporated into this report, as appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 6 days
from the report date. At that time, we will send copies of this report
to the congressional committees with jurisdiction over EPA and its
activities; the Administrator, EPA; and the Director, Office of
Management and Budget. We will also make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
If you have any questions about this report, please contact me at (202)
512-3841. Key contributors to this report are listed in appendix II.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report.
Sincerely yours,
Signed by:
John B. Stephenson:
Director, Natural Resources and Environment:
[End of Section]
Appendix I: Scope and Methodology:
This appendix details the methods we used to assess the progress the
Environmental Protection Agency (EPA) has made in implementing its
grant reforms.
To assess EPA's progress, we reviewed information from both
headquarters and the regions. At headquarters, we reviewed EPA's Grants
Management Plan, 2003-2008 and EPA policies that address awarding,
monitoring, and grant results. We also reviewed reports on EPA's grants
management, including prior GAO reports; EPA's Inspector General
reports; the Office of Management and Budget's Program Assessment
Rating Tool; EPA's internal management reviews, including comprehensive
grants management reviews, post-award monitoring plans, grants
management self-assessments from 2003 to 2005; an April 2005 workload
analysis conducted by LMI, a government consultant; and a closeout
analysis prepared for GAO by the Office of Grants and Debarment. We
also interviewed officials in the Office of Grants and Debarment and at
the Office of Water.
In addition, we reviewed EPA performance metric information. These
metrics are based on data from the agency's Integrated Grants
Management System, which is currently undergoing a data quality review,
and the Grant Information and Control System, which has not undergone a
data quality review. Given EPA's ongoing data quality review of the
Integrated Grants Management System--and because we present EPA's
performance metric data as documentary evidence and do not use it as
the sole support for findings, conclusions, or recommendations--we did
a limited reliability review of the two systems. Our assessment
included (1) information from GAO's prior data reliability assessment
work on the two systems and (2) interviews with an Office of Grants and
Debarment official about the data systems and data elements. We
determined that the performance information we used is sufficiently
reliable for our purposes.
To assess the progress and problems EPA has experienced from a regional
perspective, we selected EPA Office of Water programs under the Clean
Water Act, at the Subcommittee's request. We selected Wetland Program
Development Grants (wetland grants) because it is a discretionary grant
program--that is, EPA decides who receives the award and its amount,
and the program is subject to competition. We selected Nonpoint Source
Management Program grants (nonpoint source grants) because it is type
of formula-based grant program--grants that are often awarded on the
basis of formulas prescribed by law or agency regulation.[Footnote 52]
We reviewed EPA's progress at the regional level by selecting grants in
3 of EPA's 10 regional offices: Region 1 (Boston), Region 5 (Chicago),
and Region 9 (San Francisco). We selected these regions because
collectively they represent a significant share of grant funding for
the two programs we reviewed, geographic dispersion, and a significant
share of Performance Partnership Grants among the regional offices.
To ensure coverage of the grant life cycle--from awarding to closing
out grants, we conducted a case study review of a nonprobability sample
of these two programs. Specifically, we asked EPA Regions 1, 5, and 9
to provide lists of wetlands and nonpoint source grants awarded between
January 1, 2004, and June 30, 2005, and those grants officially closed
during this period. We targeted recently awarded and recently closed
grants because the grant reforms began in 2002. To complete the case
study, we reviewed two files per grant--the project officer file and
the grant specialist file--using a detailed data collection instrument.
All data entered in the data collection instrument was verified by a
second party to ensure the accuracy and validity of each entry.
Additionally, we conducted semistructured interviews with project
officers and the grant specialists in order to understand the files.
Overall, we reviewed the files for 32 active grants and 34 closed
grants; and we interviewed administrative project officers, project
officers, and technical contacts, and grant specialists about those
files. We also interviewed senior resource officials and grants
management office managers in the three regions we visited.
We were limited in the number of grants we could review because the
case study approach required multiple, detailed file reviews and
interviews for each grant. Consequently, we selected a nonprobability
sample of active and closed grants in the wetland and nonpoint source
programs to review in each of the three regions. For active grants in
our nonprobability sample, we sorted the grants by recipient type,
project officer, and grant specialist to provide a distribution, and
then randomly selected grants for review. For closed grants, we sorted
the grants similarly, but we also selected grants based on the length
of time it took to close out the grant. Because the case study design
is nonprobabilistic, the findings are not generalizable to all grants
in all regions. However, the case study design provides insights into
regional grant activities for the two Clean Water Act programs in three
regions, and it offers an in-depth perspective on some of the successes
and continuing problems EPA faces in implementing its grants management
reforms. Table 12 shows the population of wetland and nonpoint program
grants in Regions 1, 5, and 9, and the number of those grants we
reviewed.
Table 12: Number of Active and Closed Wetland and Nonpoint Source
Grants from January 1, 2004 through June 30, 2005, in the Universe and
the Number of Grants GAO Reviewed in Three Regions:
Active grants: Number of grants in universe;
Region 1: 13;
Region 5: 18;
Region 9: 33;
Total: 64.
Active grants: Number of grants reviewed;
Region 1: 10[A];
Region 5: 12;
Region 9: 10;
Total: 32.
Closed grants: Number of grants in universe;
Region 1: 26;
Region 5: 16;
Region 9: 60;
Total: 102.
Closed grants: Number of grants reviewed;
Region 1: 10;
Region 5: 13;
Region 9: 11;
Total: 34.
Source: GAO.
[A] We requested 11 files, but EPA Region 1 was unable to locate one of
the files.
[End of table]
We experienced some limitations in conducting our review. For example,
we were not able to assess the implementation of some EPA policies at
the regional level because they had been issued too recently to assess
during our file review time frame. We also found evidence in two of the
three regions we visited that grants staff had added materials to their
files after we had requested the files and before our review, despite
the fact that we had taken precautions to avoid this situation. That
is, we had asked the regions to inform staff not to add documents to
files once they were requested. When we determined that these additions
had occurred, we took mitigating steps to "restore" the grant files to
their original state. Specifically, we checked the dates of documents
to detect any widespread updating of files, asked all project officers
and grant specialists we interviewed who were assigned to the grants in
our sample whether they added anything to the file in preparation for
the GAO visit, asked managers to tell their staff to point out
materials added to the file, and, in one region, shortened the time
between file request and our visit. To adjust for the alterations, we
used a special code in our data collection instrument to denote
"additions," and later subtracted the information in our analysis. The
file alteration mitigation strategies and the analysis adjustments
afford us confidence in the accuracy and validity of our file review
results.
We conducted our work between February 2005 and April 2006, in
accordance with generally accepted government auditing standards.
[End of Section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
John B. Stephenson, (202) 512-3841:
Staff Acknowledgments:
In addition to the contact named above, Andrea Wamstad Brown, Assistant
Director; Bruce Skud, Analyst-in-charge; Rebecca Shea; Lisa Vojta;
Carol Herrnstadt Shulman; Omari Norman; David Bobruff; Matthew J.
Saradjian; and Jessica Nierenberg made key contributions to this
report.
Related GAO Products:
Grants Management: EPA Needs to Strengthen Efforts to Provide the
Public with Complete and Accurate Information on Grant Opportunities.
GAO-05-149R. Washington, D.C.: February 3, 2005.
Grants Management: EPA Continues to Have Problems Linking Grants to
Environmental Results. GAO-04-983T. Washington, D.C.: July 20, 2004.
Grants Management: EPA Needs to Better Document Its Decisions for
Choosing between Grants and Contracts. GAO-04-459. Washington, D.C.:
March 31, 2004.
Grants Management: EPA Needs to Strengthen Efforts to Address
Management Challenges. GAO-04-510T. Washington, D.C.: March 3, 2004.
Grants Management: EPA Actions Taken against Nonprofit Grant Recipients
in 2002. GAO-04-383R. Washington, D.C.: January 30, 2004.
Grants Management: EPA Needs to Strengthen Oversight and Enhance
Accountability to Address Persistent Challenges. GAO-04-122T.
Washington, D.C.: October 1, 2003.
Grants Management: EPA Needs to Strengthen Efforts to Address
Persistent Challenges. GAO-03-846. Washington, D.C.: August, 29, 2003.
Environmental Protection Agency: Problems Persist in Effectively
Managing Grants. GAO-03-628T. Washington, D.C.: June 11, 2003.
Federal Assistance: Grant System Continues to Be Highly Fragmented. GAO-
03-718T. Washington, D.C.: April 29, 2003.
Results-Oriented Cultures: Creating a Clear Linkage between Individual
Performance and Organizational Success. GAO-03-488. Washington, D.C.:
March 14, 2003.
Major Management Challenges and Risks: Environmental Protection Agency.
GAO-03-112. Washington, D.C.: January 2003.
Results-Oriented Cultures: Using Balanced Expectations to Manage Senior
Executive Performance. GAO-02-966. Washington, D.C.: September 27,
2002.
Environmental Protection: Grants Awarded for Continuing Environmental
Programs and Projects. GAO-01-860R. Washington, D.C.: June 29, 2001.
Environmental Protection: EPA's Oversight of Nonprofit Grantees' Costs
Is Limited. GAO-01-366. Washington, D.C.: April 6, 2001.
Environmental Protection: Information on EPA Project Grants and Use of
Waiver Authority. GAO-01-359. Washington, D.C.: March 9, 2001.
Environmental Research: STAR Grants Focus on Agency Priorities, but
Management Enhancements Are Possible. GAO/RCED-00-170. Washington,
D.C.: September 11, 2000.
Environmental Protection: Grants for International Activities and Smart
Growth. GAO/RCED-00-145R. Washington, D.C.: May 31, 2000.
Environmental Protection: Collaborative EPA-State Effort Needed to
Improve Performance Partnership System. GAO/T-RCED-00-163. Washington,
D.C.: May 2, 2000.
Managing for Results: EPA Faces Challenges in Developing Results-
Oriented Performance Goals and Measures. GAO/RCED-00-77. Washington,
D.C.: April 28, 2000.
Environmental Protection: Factors Contributing to Lengthy Award Times
for EPA Grants. GAO/RCED-99-204. Washington, D.C.: July 14, 1999.
Environmental Protection: Collaborative EPA-State Effort Needed to
Improve New Performance Partnership System. GAO/RCED-99-171.
Washington, D.C.: June 21, 1999.
Environmental Protection: EPA's Progress in Closing Completed Grants
and Contracts. GAO/RCED-99-27. Washington, D.C.: November 20, 1998.
Dollar Amounts of EPA's Grants and Agreements. GAO/RCED-96-178R.
Washington, D.C.: May 29, 1996.
FOOTNOTES
[1] EPA, Grants Management Plan, 2003-2008. EPA-216-R-03-001
(Washington, D.C.: April 2003).
[2] GAO, Grants Management: EPA Needs to Strengthen Efforts to Address
Persistent Challenges, GAO-03-846 (Washington, D.C.: Aug. 29, 2003.
[3] For this report, grant reforms includes EPA's Grants Management
Plan, policies issued just prior to and after the issuance of the plan,
and related efforts.
[4] EPA's internal grants management reviews consist of (1)
comprehensive grants management reviews of headquarter and regional
offices conducted periodically by the Office of Grants and Debarment;
(2) grants performance measure reviews performed annually by the Office
of Grants and Debarment, using documentation in the agency's central
databases; and (3) periodic grants management self-assessments
conducted by EPA program and regional offices.
[5] EPA policy requires that offices provide annual post-award
monitoring plans that address how the offices plan to manage their
monitoring activities for the upcoming year.
[6] OMB's PART is a diagnostic tool meant to provide a consistent
approach to evaluating federal programs.
[7] EPA has two types of formula-based programs, nondiscretionary and
continuing environmental programs, which is hybrid of nondiscretionary
and discretionary grant programs. The nonpoint source grant program is
a continuing environmental program.
[8] In addition, EPA's Office of the Chief Financial Officer conducts
limited grant activity.
[9] Grant actions involving funding include new awards, and increase
and decrease amendments. The 6,728 grant actions involving funding were
composed of 3,583 new grants, 2,628 increase amendments, and 517
decrease amendments. In addition, in fiscal year 2005, EPA awarded
3,042 no cost extensions, which did not involve funding.
[10] 33 U.S.C. § 1254(b)(3).
[11] 33 U.S.C. § 1329(h).
[12] Omnibus Consolidated Rescissions and Appropriations Act of 1996,
Pub. L. No. 104-134, 110 Stat. 1321, 1321-299.
[13] EPA, EPA Order 5700.5: Policy for Competition in Assistance
Agreements, (Sept. 12, 2002).
[14] EPA Office of Inspector General, EPA Needs to Compete More
Assistance Agreements, Report no. 2005-P-00014 (Washington, D.C.: Mar.
31, 2005).
[15] EPA, EPA Order 5700.5A1: Policy for Competition of Assistance
Agreements, 5700.5A1 (Jan. 11, 2005).
[16] The General Services Administration and OMB's Catalog of Federal
Domestic Assistance is a governmentwide compendium of federal programs,
projects, and activities that provide assistance or benefits to the
American public. Assistance includes, but is not limited to, financial
assistance such as grants and cooperative agreements. EPA uses other
tools for announcing some grant programs, such as the Federal Register,
and competitive funding opportunities are announced on www.grants.gov.
[17] GAO, Grants Management: EPA Needs to Strengthen Efforts to Provide
the Public with Complete and Accurate Information on Grant
Opportunities, GAO-05-149R (Washington, D.C.: Feb. 3, 2005).
[18] In fiscal year 2005, EPA competed 1,414 new grants or 93 percent
of the 1,526 new grants eligible for competition.
[19] EPA, Data Quality Standard for the Project Description Field in
the Integrated Grants Management System, GPI-04-05, (Jan. 27, 2005).
[20] EPA, EPA Order 5700.8: EPA Policy on Assessing Capabilities of Non-
Profit Applicants for Managing Assistance Awards, (Mar. 24, 2005).
[21] EPA Office of Grants and Debarment, Memorandum: Written
Justifications for Selecting Assistance Agreements, (Mar. 16, 2005).
This memorandum was written as a supplement to EPA Order 5700.1 Policy
for Distinguishing Between Assistance and Acquisition (March 22, 1994).
[22] GAO, Grants Management: EPA Needs to Better Document Its Decisions
for Choosing between Grants and Contracts, GAO-04-459 (Washington,
D.C.: Mar. 31, 2004).
[23] EPA, Review and Announcement of Discretionary Grants, (Apr. 5,
2005) and EPA, Interim Guidance for New Policy on the Review and
Announcement of Discretionary Grants, (Apr. 28, 2005).
[24] In response to the Government Performance and Results Act of 1993,
EPA has developed a strategic plan that is built around five goals to
protect human health and the environment: (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. EPA, 2003-2008 Strategic Plan: Direction
for the Future, EPA-190R-03-003 (Washington D.C.: Sept. 2003).
[25] The site visits occurred in 2004 and 2005, and reports were issued
later.
[26] In Region 5, the supervisors are "team leaders" who are
responsible for reviewing the cost review checklists, among other award
documents; the grants management officer also reviews the award
documentation.
[27] The agency refers to in-depth monitoring as "advanced monitoring."
[28] The agency refers to ongoing monitoring as "baseline monitoring."
[29] In this report, we refer to EPA's policy that addresses monitoring
as "the monitoring policy." See EPA, EPA Order 5700.6: Policy on
Compliance, Review and Monitoring (Dec. 31, 2002). In January 2004, EPA
revised the monitoring policy. See EPA, EPA Order 5700.6 A1 Policy on
Compliance, Review and Monitoring (Jan. 8, 2004). Subsequently, EPA
extended the policy through December 31, 2006, so that EPA could
consider changes. See EPA, EPA Order 5700.6A1 CHG 1 (Sept. 28, 2005).
[30] GAO-03-846.
[31] The internal reviews were those based on the dates of the site
visits which occurred in 2004 and 2005.
[32] EPA has had a closeout policy in effect since 1992. See EPA, EPA
Closeout Policy for Grants and Cooperative Agreements, GPI-92-04 (Aug.
27, 1992).
[33] 40 C.F.R. § 31.50 (grants to state and local governments); 40
C.F.R. § 30.71 (grants to nonprofit organizations). Each regulation
grants EPA authority to extend the deadline upon the grantee's request.
[34] 31 U.S.C. § 3512.
[35] EPA, Office of Grants and Debarment, Grants Administration
Division, Guidance for Preparation of 2005 Post-Award Management Plans
(Nov. 8, 2004).
[36] The financial and technical reports are key, but not the only,
documents required to closeout a grant. Other documents may include the
(1) Lobbying and Litigation Certification Form and (2) Minority
Business Enterprise/Women Business Enterprise report.
[37] EPA, Grants Management Fact Sheet for Agency Leaders: Number 10:
Assistance Agreement File Documentation and Recordkeeping Requirements
for Grants Management Records (May 1, 1998).
[38] EPA, EPA Order 5700.7: Environmental Results under EPA Assistance
Agreements (Nov. 30, 2004).
[39] The Grants Management Plan's performance measure sets a target for
the percentage of grant workplans, decision memorandum, and terms of
conditions that will include a discussion of how grantees plan to
measure and report on environmental outcomes. However, an Office of
Grants and Debarment official told us that, in practice, the grant
workplan is assessed because it is the primary indicator of compliance
with the policy.
[40] EPA's assessment of the implementation of this performance measure
had not been completed by the end of our review.
[41] GAO-03-846.
[42] EPA, Office of Inspector General, EPA's Efforts to Demonstrate
Grant Results Mirror Nongovernmental Organizations' Practices, Report
No. 2005-P-00016 (June 2, 2005).
[43] EPA plans to complete its first review of the implementation of
the new environmental results policy based on these seven criteria in
2006.
[44] Although we are using OMB information, we have identified concerns
about OMB's PART. See GAO, Performance Budgeting: OMB's Performance
Rating Tool Presents Opportunities and Challenges for Evaluating
Program Performance, GAO-04-550T (Washington, D.C.: Mar. 11, 2004).
OMB's reviews can occur about a year before they are reported as part
of the President's budget.
[45] These assessments, which were part of the President's fiscal year
2005 to 2007 budget submissions, were published in February 2004, 2005,
and 2006, respectively.
[46] LMI Government Consulting, Management of Assistance Agreements at
the Environmental Protection Agency: Workload Analysis and Models,
April 2005.
[47] EPA, Office of Grants and Debarment, Long-term Grants Management
Training Plan, 2004-2008, EPA-216-R-04-001 (Washington, D.C.: Aug.
2004).
[48] GAO-05-149R.
[49] According to the memorandum, the Office of Administration and
Resources Management had determined that senior executive services
standards adequately addressed grants management responsibilities.
[50] EPA Office of Inspector General, EPA Managers Did Not Hold
Supervisors and Project Officers Accountable for Grants Management,
Report No. 2005-P-00027 (Washington, D.C.: Sept. 27, 2005).
[51] To further assist regional grants staff in understanding new
policies, Regions 1 and 9 appointed a project officer and water program
manager, respectively, to serve as regional office experts on grant
policies.
[52] EPA has two types of formula-based programs, nondiscretionary and
continuing environmental programs, which is a hybrid of
nondiscretionary and discretionary grant programs. The nonpoint source
grant program is a continuing environmental program.
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