American Recovery and Reinvestment Act
GAO's Role in Helping to Ensure Accountability and Transparency for Science Funding Gao ID: GAO-09-515T March 19, 2009This testimony discusses GAO's role to help ensure accountability and transparency for science funding in the American Recovery and Reinvestment Act of 2009 (Recovery Act). The purposes of the Recovery Act funds include preserving and creating jobs and promoting economic recovery; assisting those most impacted by the recession; investing in transportation, environmental protection, and other infrastructure to provide long-term economic benefits; and stabilizing state and local government budgets. The Recovery Act, estimated to cost $787 billion, includes more than $21 billion in spending at the Departments of Energy and Commerce, the National Science Foundation (NSF), and the National Aeronautics and Space Administration (NASA) for research and development (R&D) related activities that support fundamental research, demonstrate and deploy advanced energy technologies, purchase scientific instrumentation and equipment, and construct or modernize research facilities. This statement discusses (1) GAO's responsibilities under the Recovery Act related to science funding; (2) particular R&D funding areas that deserve special attention to ensure that funds are best used; and (3) GAO's plans for carrying out its responsibilities under the act.
The Recovery Act directs GAO to provide bimonthly reviews and reporting on selected states' and localities' use of funds. GAO has initiated this work and will examine 16 states and the District of Columbia that contain about 65 percent of the U.S. population and are estimated to receive about two-thirds of the intergovernmental grants funds available through the Recovery Act. Because of the scope of this work, GAO has reached out to the broader accountability community to coordinate our respective roles, planned approaches, and timelines. On February 25, 2009, GAO hosted an initial coordination meeting with the Inspectors General (IG) or their representatives from 17 agencies. In carrying out its oversight roles related to science funding, GAO plans to work together with the IGs as they seek to ensure that Energy, Commerce, NSF, and NASA spend the Recovery Act's R&D-related monies promptly, effectively, and in compliance with applicable laws. GAO's prior work has identified several Energy, Commerce, NSF, and NASA programs that deserve special attention from management and the IG's office to ensure that funds are put to best use. For example, the Recovery Act made $6 billion available to Energy to support $60 billion in new loan guarantees under its innovative technology loan guarantee program. However, in July 2008, GAO reported that DOE was not well positioned to manage the loan guarantee program effectively and maintain accountability because it had not completed a number of key management and internal control activities. GAO recommended, among other things, that DOE complete detailed internal loan selection policies and procedures that lay out roles and responsibilities and criteria and requirements for conducting and documenting analyses and decision making. The act also made $3.5 billion available to Energy to fund R&D on renewable energy and fossil energy. In December 2008, GAO reported that DOE does not formally assess whether industry would undertake oil and gas R&D without federal funding, raising questions about the appropriate use of federal funds, and recommended that DOE assess the likelihood that the R&D would not occur without federal funding. The Recovery Act provided a total of $1 billion to NASA, including $400 million for exploration. In March 2009, GAO reported that 10 of 13 NASA projects with life-cycle costs exceeding $250 million had experienced significant cost and/or schedule growth--on average, development costs had increased by 13 percent and launch had been delayed by 11 months. To make the most effective and efficient use of resources, GAO plans to fulfill its Recovery Act responsibilities by working together with the IGs to leverage strengths and avoid duplication of effort wherever possible. In consultation with Congress as part of its general responsibilities, GAO also will target at- risk programs for review and expand its work on base programs to examine any related stimulus funding.
GAO-09-515T, American Recovery and Reinvestment Act: GAO's Role in Helping to Ensure Accountability and Transparency for Science Funding
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Testimony:
Before the Subcommittee on Investigations and Oversight, Committee on
Science and Technology, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Thursday, March 19, 2009:
American Recovery And Reinvestment Act:
GAO's Role in Helping to Ensure Accountability and Transparency for
Science Funding:
Statement of Patricia Dalton, Managing Director:
Natural Resources and Environment:
GAO-09-515T:
GAO Highlights:
Highlights of GAO-09-515T, a testimony to the Subcommittee on
Investigations and Oversight, Committee on Science and Technology,
House of Representatives.
Why GAO Did This Study:
This testimony discusses GAO‘s role to help ensure accountability and
transparency for science funding in the American Recovery and
Reinvestment Act of 2009 (Recovery Act). The purposes of the Recovery
Act funds include preserving and creating jobs and promoting economic
recovery; assisting those most impacted by the recession; investing in
transportation, environmental protection, and other infrastructure to
provide long-term economic benefits; and stabilizing state and local
government budgets.
The Recovery Act, estimated to cost $787 billion, includes more than
$21 billion in spending at the Departments of Energy and Commerce, the
National Science Foundation (NSF), and the National Aeronautics and
Space Administration (NASA) for research and development (R&D) related
activities that support fundamental research, demonstrate and deploy
advanced energy technologies, purchase scientific instrumentation and
equipment, and construct or modernize research facilities.
This statement discusses (1) GAO‘s responsibilities under the Recovery
Act related to science funding; (2) particular R&D funding areas that
deserve special attention to ensure that funds are best used; and (3)
GAO‘s plans for carrying out its responsibilities under the act.
What GAO Found:
The Recovery Act directs GAO to provide bimonthly reviews and reporting
on selected states‘ and localities' use of funds. GAO has initiated
this work and will examine 16 states and the District of Columbia that
contain about 65 percent of the U.S. population and are estimated to
receive about two-thirds of the intergovernmental grants funds
available through the Recovery Act. Because of the scope of this work,
GAO has reached out to the broader accountability community to
coordinate our respective roles, planned approaches, and timelines. On
February 25, 2009, GAO hosted an initial coordination meeting with the
Inspectors General (IG) or their representatives from 17 agencies. In
carrying out its oversight roles related to science funding, GAO plans
to work together with the IGs as they seek to ensure that Energy,
Commerce, NSF, and NASA spend the Recovery Act‘s R&D-related monies
promptly, effectively, and in compliance with applicable laws.
GAO‘s prior work has identified several Energy, Commerce, NSF, and NASA
programs that deserve special attention from management and the IG‘s
office to ensure that funds are put to best use. For example, the
Recovery Act made $6 billion available to Energy to support $60 billion
in new loan guarantees under its innovative technology loan guarantee
program. However, in July 2008, GAO reported that DOE was not well
positioned to manage the loan guarantee program effectively and
maintain accountability because it had not completed a number of key
management and internal control activities. GAO recommended, among
other things, that DOE complete detailed internal loan selection
policies and procedures that lay out roles and responsibilities and
criteria and requirements for conducting and documenting analyses and
decision making. The act also made $3.5 billion available to Energy to
fund R&D on renewable energy and fossil energy. In December 2008, GAO
reported that DOE does not formally assess whether industry would
undertake oil and gas R&D without federal funding, raising questions
about the appropriate use of federal funds, and recommended that DOE
assess the likelihood that the R&D would not occur without federal
funding. The Recovery Act provided a total of $1 billion to NASA,
including $400 million for exploration. In March 2009, GAO reported
that 10 of 13 NASA projects with life-cycle costs exceeding $250
million had experienced significant cost and/or schedule growth”on
average, development costs had increased by 13 percent and launch had
been delayed by 11 months.
To make the most effective and efficient use of resources, GAO plans to
fulfill its Recovery Act responsibilities by working together with the
IGs to leverage strengths and avoid duplication of effort wherever
possible. In consultation with Congress as part of its general
responsibilities, GAO also will target at-risk programs for review and
expand its work on base programs to examine any related stimulus
funding.
View [hyperlink, http://www.gao.gov/products/GAO-09-515T] or key
components. For more information, contact Patricia Dalton at (202) 512-
3841 or daltonp@gao.gov.
[End of section]
Chairman Miller, Ranking Member Broun, and Members of the Subcommittee:
I am pleased to be here today to discuss our plans for carrying out our
oversight roles related to science funding provided by the American
Recovery and Reinvestment Act of 2009 (Recovery Act).[Footnote 1] I
will also provide an overview of prior GAO work that identifies several
programs that deserve special attention from agency managers and from
the Inspectors General (IG) at the Department of Energy, the Department
of Commerce, the National Science Foundation (NSF), and the National
Aeronautics and Space Administration (NASA) to ensure that additional
science funds these agencies will receive under the Recovery Act are
put to the best uses. The Congress and the administration have
fashioned a significant response to what is generally reported to be
the Nation's most serious economic crisis since the Great Depression.
The Recovery Act's combined spending and tax provisions are estimated
to cost $787 billion, including more than $21 billion in additional
spending at Energy, Commerce, NSF, and NASA for research and
development (R&D) related activities, including supporting fundamental
research, demonstrating and deploying of advanced energy technologies,
purchasing scientific instrumentation and equipment, and constructing
or modernizing research facilities. (See appendix I.)
The accountability community will play an important role in reviewing
the use of Recovery Act funds. In addition to GAO, the community
includes the IGs, state auditors, local government auditors, and the
Recovery Accountability and Transparency Board. The Recovery Act has
identified the following specific responsibilities for GAO, the IGs,
and the Recovery Accountability and Transparency Board:
* GAO is charged with reviewing the use of funds by selected states and
localities and commenting on funding recipients' estimates of the
number of jobs created and retained as a result of the funding. We also
have several other reporting responsibilities.[Footnote 2]
* IGs across government are expected to audit the efforts of federal
agencies' operations and programs related to the Recovery Act, both
individually within their particular entities and collectively, as many
of them are members of the Recovery Accountability and Transparency
Board.
* The Recovery Accountability and Transparency Board is intended to
help prevent waste, fraud, and abuse by reviewing contracts and grants
to ensure they meet applicable standards, follow competition
requirements, and are overseen by sufficient numbers of trained
acquisition and grants personnel. The Board has a range of authorities
and is charged with reporting to the President and the Congress any
potential problems requiring immediate attention in addition to
reporting quarterly and annually.
My statement today discusses (1) our responsibilities under the
Recovery Act to provide bimonthly reviews of selected states' and
localities' use of funds; (2) particular R&D funding areas that deserve
special attention to ensure that funds are best used; and (3) our plans
for carrying out our responsibilities under the Recovery Act.
Our Responsibilities under the Recovery Act and Our Plans to Evaluate
At-Risk Programs:
The Recovery Act directs GAO to provide bimonthly reviews and reporting
on selected states' and localities' use of funds. We have initiated
work on the first review, which will examine 16 states, the District of
Columbia, and selected localities. Specifically, we are examining how
these states and localities are using the act's funds and whether they
are, among other things, (1) preserving and creating jobs and promoting
economic recovery; (2) assisting those most impacted by the recession;
(3) investing in transportation, environmental protection, and other
infrastructure that will provide long-term economic benefits; and (4)
stabilizing state and local government budgets in order to minimize and
avoid reductions in essential services and counterproductive state and
local tax increases. We will track the following 16 states, and the
District of Columbia, over the next few years to provide an ongoing
longitudinal analysis of the use of funds under the Recovery Act:
Arizona, California, Colorado, Florida, Georgia, Iowa, Illinois,
Massachusetts, Michigan, Mississippi, New Jersey, New York, North
Carolina, Ohio, Pennsylvania, and Texas. These states contain about 65
percent of the U.S. population and are estimated to receive about two-
thirds of the intergovernmental grants funds available through the
Recovery Act.
Because of the scope of this work, we have reached out to the broader
accountability community to coordinate our respective roles, planned
approaches, and timelines. Soon after the act was passed, the acting
Comptroller General reached out to the IG community and, with Ms.
Phyllis Fong, the Chair of the Council of Inspectors General on
Integrity and Efficiency, hosted an initial coordination meeting on
February 25, 2009, with the Inspectors General or their representatives
from 17 agencies. It was a very productive discussion in which we
outlined coordination approaches going forward. The acting Comptroller
General also talked with Mr. Earl Devaney soon after the President
appointed him as Chair of the Board on February 23, 2009, to ensure
effective coordination of our respective efforts.
In consultation with the Congress in exercising our general statutory
authority to evaluate the results of government programs and
activities, we will target at-risk programs for review. We will also
incorporate reviews of stimulus funding whenever we are examining base
programs. There are many implementation challenges to ensuring adequate
accountability and efficient and effective implementation of the
Recovery Act. Experience tells us that the risk for fraud, waste, and
abuse grows when billions of dollars are going out quickly, eligibility
requirements are being established or changed, new programs are being
created, or a mix of these characteristics. This suggests the need for
a risk-based approach to target for attention on specific programs and
funding structures early based on known strengths, vulnerabilities, and
weaknesses, such as a track record of improper payments or contracting
problems. We currently are assessing all of the programs receiving
Recovery Act funds for key risk factors, including new programs,
significant growth, new delivery mechanisms, and known problems. In
recent years, the accountability community has produced a wide variety
of best practice and related guides that can assist agencies in
ensuring they have the needed internal controls in place from the
outset. These best practices and related guides cover such areas as
fraud prevention, contract management, and grants accountability.
R&D Funding Areas that Deserve Special Attention:
Our prior work has identified several areas that deserve special
attention from management and the IG's office to ensure that funds are
put to best use. The following examples highlight problems associated
with (1) a new program--Energy's innovative technology loan guarantee
program--which does not have established management and internal
control activities, (2) an existing program that cannot readily
determine whether private entities would fund a project without the
federal funds, (3) an existing program that awards a large amount of
matching funds to demonstrate or deploy advanced technologies but
cannot ensure that industrial partners will complete the project, and
(4) an existing program with a history of cost overruns and schedule
slippage for its major projects.
* The Recovery Act made $6 billion available to Energy to support $60
billion in new loan guarantees under its innovative technology loan
guarantee program. However, our July 2008 report entitled Department of
Energy: New Loan Guarantee Program Should Complete Activities Necessary
for Effective and Accountable Program Management [hyperlink,
http://www.gao.gov/products/GAO-08-750] found that DOE was not well
positioned to manage the loan guarantee program effectively and
maintain accountability because it had not completed a number of key
management and internal control activities. To improve the
implementation of the loan guarantee program and to help mitigate risk
to the federal government and American taxpayers, we recommended that
DOE take several steps, including (1) completing detailed internal loan
selection policies and procedures that lay out roles and
responsibilities and criteria and requirements for conducting and
documenting analyses and decision making, (2) amending application
guidance to include more specificity on the content of independent
engineering reports and on the development of project cost estimates to
provide the level of detail needed to better assess overall project
feasibility, and (3) further developing and defining performance
measures and metrics to monitor and evaluate program efficiency,
effectiveness, and outcomes. We are currently engaged in an ongoing
engagement to determine the current state of the loan guarantee program
and what progress DOE has made since our last report.
* The Recovery Act made $3.5 billion available to Energy to fund R&D on
renewable energy and fossil energy. However our December 2008 report
entitled Research and Development: DOE Could Enhance the Project
Selection Process for Government Oil and Natural Gas Research
[hyperlink, http://www.gao.gov/products/GAO-09-186] found that DOE does
not formally assess whether industry would undertake oil and gas R&D
without federal funding. To better ensure that DOE selects oil and gas
R&D projects that industry is unlikely to pursue, we recommended that
DOE's project selection process include a formal assessment of the
likelihood that the R&D would not have occurred without federal
funding. Our review of similar federal programs has found that agencies
may be unable to ensure that their funding is not duplicating existing
or planned research that would be conducted in the same period in the
absence of federal financial assistance. In addition, our work has
questioned a R&D program's ability to obligate a large influx of
appropriations because the review, selection, and approval of
individual project proposals from the private sector can be lengthy and
requires substantially more scientific peer review panels to assess the
technical merits of each proposal and staff with expertise in making
grant awards.
* The Recovery Act made $2.32 billion available to Energy to jointly
fund private sector projects demonstrating clean coal and carbon
capture and sequestration technologies. However, our June 2001
testimony entitled Fossil Fuel R&D: Lessons Learned in the Clean Coal
Technology Program [hyperlink, http://www.gao.gov/products/GAO-01-854T]
and a series of prior reports on the program found that many
demonstration projects had experienced delays, cost overruns,
bankruptcies, and performance problems. We identified several lessons
learned for improving DOE's selection and oversight processes. As a
result of the projects' problems, the Congress since 1995 has rescinded
or reprogrammed almost $900 million of the funds appropriated for the
Clean Coal Technology Program. More recently, our February 2009 report
entitled Clean Coal: DOE's Decision to Restructure FutureGen Should Be
Based on a Comprehensive Analysis of Costs, Benefits, and Risks (GAO-09-
248) found that DOE did not base its decision to restructure FutureGen
on a comprehensive analysis of factors, such as the associated costs,
benefits, and risks. We recommended that, before implementing
significant changes to FutureGen or before obligating additional funds
for such purposes, DOE prepare a comprehensive analysis that compares
the relative costs, benefits, and risks of a range of options that
includes (1) the original FutureGen program, (2) incremental changes to
the original program, and (3) the restructured FutureGen program.
* The Recovery Act provided a total of $1 billion to NASA, including
$400 million for exploration. However, our March 2009 report entitled
NASA: Assessments of Selected Large-Scale Projects [hyperlink,
http://www.gao.gov/products/GAO-09-306SP] noted that NASA plans to
invest billions of dollars in the coming years in science and
exploration space flight initiatives. Our examination of NASA projects
with life-cycle costs exceeding $250 million found that 10 of 13 that
had entered the implementation phase had experienced significant cost
and/or schedule growth--on average, development costs had increased by
13 percent and launch had been delayed by 11 months. NASA has acted to
adopt practices that would better ensure that programs proceed based on
a sound business case that addresses technology maturity, design
stability, complexity of heritage technology, contractor performance
and development partner performance. In particular, NASA has undertaken
an array of initiatives aimed at improving program management, cost
estimating, and contractor oversight. However, until these practices
become integrated into NASA's culture, it is unclear monies will be
well-spent and the achievement of NASA's mission will be maximized.
Our Plans for Carrying Out Our Oversight Responsibilities:
To make the most effective and efficient use of our resources, we plan
to fulfill our Recovery Act responsibilities related to science funding
by working together with the IGs to leverage our strengths and avoid
duplication of effort wherever possible. In consultation with the
Congress, we will also target at-risk programs that receive Recovery
Act science funding for review under our general audit authorities, and
we will expand our work on base programs to examine any related
stimulus funding.
In summary, GAO welcomes the responsibility that the Congress has
placed on us to assist it in the oversight, accountability, and
transparency of the Recovery Act. We will continue to coordinate
closely with the rest of the accountability community. We also are
committed to completing our Recovery Act work on the timetable
envisioned by the act and will keep the Congress fully informed as our
plans evolve.
Mr. Chairman, Representative Broun, and Members of the Subcommittee
this concludes my statement. I would be pleased to respond to any
questions you may have.
Contact and Staff Acknowledgments:
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this testimony. For further
information about this testimony, please contact Patricia Dalton,
Managing Director, Natural Resources and Environment (202) 512-3841 or
Daltonp@gao.gov. Key contributors to this testimony were Richard
Cheston (Assistant Director), Karen Keegan, and Stuart Ryba.
[End of section]
Appendix I: Recovery Act Funding for R&D-Related Activities:
Table 1: :
Dollars in millions.
Department of Energy:
Energy Efficiency and Renewable Energy;
Appropriations: $4,500 million.
Advanced Battery Manufacturing grants: to provide manufacturing
facility funding awards for U.S.-produced advanced battery systems and
vehicle batteries, including advanced lithium ion batteries, hybrid
electrical systems, component manufacturers, and software designers;
Appropriations: $2,000 million.
Biomass research, development, demonstration, and deployment;
Appropriations: $800 million.
Geothermal research, development, demonstration, and deployment;
Appropriations: $400 million.
R&D to increase information and communications technology efficiency
and improve standards;
Appropriations: $50 million.
Other research, development, demonstration, and deployment;
Appropriations: $1,250 million.
Fossil Energy;
Appropriations: $3,400 million.
Fossil Energy R&D;
Appropriations: $1,000 million.
Clean Coal Power Initiative: Round III competition;
Appropriations: $800 million.
Competitive solicitation for industrial carbon capture and energy
efficiency improvement projects, including a small allocation for
innovative concepts for beneficial carbon dioxide reuse;
Appropriations: $1,520 million.
Competitive solicitation for site characterization activities in
geologic formations;
Appropriations: $50 million.
Geologic sequestration training and research grants;
Appropriations: $20 million.
Program direction;
Appropriations: $10 million.
Science;
Appropriations: $1,600 million.
Advanced Research Projects Agency - Energy;
Appropriations: $400 million.
Innovative Technology Loan Guarantee Program;
Appropriations: $6,000 million.
To pay the costs of guarantees made under section 1705 of the Energy
Policy Act of 2005 for renewable technologies and transmission
technologies. Funds are available until expended. Conferees expect that
these funds will support more than $60 billion in loans for these
projects;
Appropriations: $5,965 million.
Administrative expenses in carrying out the guaranteed loan program;
Appropriations: $25 million.
Funds transferred to and available for administrative expenses for the
Advanced Technology Vehicles Manufacturing Loan Program;
Appropriations: $10 million.
Department of Commerce:
National Institute of Standards and Technology;
Appropriations: $610 million.
Scientific and Technical Research and Services: to support research,
competitive grants, additional research fellowships, advanced research
and measurement equipment and supplies;
Appropriations: $220 million.
Construction of Research Facilities: to address the maintenance backlog
and for construction of new facilities and laboratories. Specifically,
$180 million is for the competitive construction grant program for
research science buildings, including fiscal years 2008 and 2009
competitions;
Appropriations: $360 million.
Transfer of Funds from Health Information Technology: to create and
test standards related to health security and interoperability;
Appropriations: $20 million.
Collaborative efforts to develop a comprehensive framework for a
national smart grid;
Appropriations: $10 million.
National Oceanic and Atmospheric Administration;
Appropriations: $830 million.
Operations, Research and Facilities: to address a backlog of research,
restoration, navigation, conservation, and management activities.[A];
Appropriations: $230 million.
Procurement, Acquisition and Construction: for construction and repair
of facilities, ships and equipment; to improve weather forecasting; and
to support satellite development. Specifically, $170 million is to
address critical gaps in climate modeling and establish climate data
records for continuing research into the cause, effects, and ways to
mitigate climate change;
Appropriations: $600 million.
National Science Foundation;
Appropriations: $3,000 million.
Research and Related Activities: Specifically, $300 million is solely
for the Major Research Instrumentation program and $200 million is for
academic research facilities modernization;
Appropriations: $2,500 million.
Education and Human Resources;
Appropriations: $100 million.
Major Research Equipment and Facilities Construction;
Appropriations: $400 million.
National Aeronautics and Space Administration;
Appropriations: $1,000 million.
Science: Funds are included to accelerate the development of the tier 1
set of Earth science climate research missions and to increase NASA's
supercomputing capabilities;
Appropriations: $400 million.
Aeronautics: Funds are available for system-level research,
development, and demonstration activities related to aviation safety,
environmental impact mitigation, and the Next Generation Air
Transportation System;
Appropriations: $150 million.
Exploration;
Appropriations: $400 million.
Cross agency support: NASA is to give highest priority to restore NASA-
owned facilities damaged from hurricanes and other natural disasters
that occurred in 2008;
Appropriations: $50 million.
Total;
Appropriations: $21,340 million.
Source: Conference Report for the American Recovery and Reinvestment
Act of 2009, House Report 111-16 (Washington, D.C., Feb. 12, 2009).
Note: R&D-related activities include demonstrating and deploying of
advanced energy technologies, purchasing scientific instrumentation and
equipment, and constructing or modernizing research facilities.
[A] Up to $170 million of these funds may be available for coastal and
marine habitat restoration, according to the National Oceanic and
Atmospheric Administration.
[End of table]
[End of section]
Footnotes:
[1] Pub. L. No. 111-5 (Feb. 17, 2009).
[2] See GAO, American Recovery and Reinvestment Act: GAO's Role in
Helping to Ensure Accountability and Transparency, GAO-09-453T
(Washington, D.C.: March 5, 2009).
[End of section]
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