Grants Management:

EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability

GAO-06-625: Published: May 12, 2006. Publicly Released: May 18, 2006.

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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.

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.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to GAO's recommendation, EPA has developed a strategy for grant closeout including a strategy for addressing grantee's late submission of grants. Specifically, EPA's Office of Grants and Debarment issued a "Policy on Compliance, Review, and Monitoring" (effective January 2008) that requires that each office performing below stated performance goals in closing out grants by more than 5 percent in a fiscal year will be required to submit a closeout strategy. The purpose of the strategy is to identify problems in closeout, outline a plan to correct the problems, and increase future closeout performance. According to an EPA official, these problems would include problems with late submission of required final documentation that GAO identified in its report. This policy substantially meets the intent of our recommendation.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by developing a strategy for addressing grantees' late submission of required final documentation.

    Agency Affected: Environmental Protection Agency

  2. Status: Closed - Implemented

    Comments: According to an EPA Office of Grants and Debarment official, EPA considered GAO's recommendation and instead of developing a new performance measure, EPA decided to focus more management attention on those units that were not closing out grants in a timely way. As a result of this focus, EPA significantly improved its performance, exceeding its performance target of 90 percent. In fiscal years 2006 and 2007, EPA closed out over 96 percent of grants. This effort effectively met the intent of our recommendation.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by developing a performance measure and target for the grant closeout standard.

    Agency Affected: Environmental Protection Agency

  3. Status: Closed - Implemented

    Comments: In response to GAO's recommendation, EPA issued a policy that required EPA staff to document ongoing monitoring in the agency's grants database. Specifically, in September 2007, EPA's Office of Grants and Debarment issued a "Policy on Compliance, Review and Monitoring" (effective January 2008) to require project officers and grants specialists to document ongoing monitoring in the agency's database. According to an EPA official, as a result of this policy, managers can monitor compliance with documentation requirements agencywide.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of ongoing monitoring by considering requiring project officers and grant specialists to document ongoing monitoring in the agency's grants database so that the managers can monitor compliance agencywide.

    Agency Affected: Environmental Protection Agency

  4. Status: Closed - Implemented

    Comments: In our report, "Grants Management:EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability" (May 2006), we found that EPA's new results policy was a positive step, but its current performance measure for the results policy did not take account the new criteria for identifying and measuring results. We recommended that EPA develop a performance measure and target that better reflects the new environmental results policy. In response to recommendation, EPA determined that it had internal controls to address all criteria. Specifically, EPA stated that it would conduct a comprehensive program review that included assessing the extent to which EPA was achieving the the results policy, which substantially meets our recommendation. In April 2010, EPA completed its comprehensive program review and found that about 94% of final progress reports reviewed were consistent with EPA's results policy.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of environmental results by developing a performance measure and target that better reflects the new environmental results policy.

    Agency Affected: Environmental Protection Agency

  5. Status: Closed - Implemented

    Comments: In response to our May 2006 report "Grants Management: EPA Has Made Progress in Grants Management but Needs to Address Weaknesses in Implementation and Accountability", EPA's Office of Grants and Debarment reconsidered its closeout standard and took action to eliminate inconsistencies in closeout policy. Specifically, EPA eliminated the 180-day standard for grant closeout because it was insufficient period of time to close out grants. For example, research grants required peer review before the grant could be closed out which could not be completed within the 180 days. EPA created a new closeout policy in its September 2007 "Policy on Compliance, Review and Monitoring" (effective January 2008) which replaced a 1992 policy and the existing monitoring policy which contained the 180-day standard, making its policies consistent, as GAO recommended. Furthermore, as a result of our report, EPA placed new emphasis on achieving its performance measure that 90 percent of grants in the current fiscal year must be closed out by the end of succeeding fiscal year. In fiscal years 2006 and 2007, EPA exceeded its performance target, achieving over 96 percent closeout of grants.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by establishing a standard for the timely closeout of grants and ensure that EPA's monitoring and other policies are consistent with that standard.

    Agency Affected: Environmental Protection Agency

  6. Status: Closed - Implemented

    Comments: In our May 2006 report "Grants Managements: EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability", GAO found that 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 review grant files, and managers are not always meeting their commitments to address known problems. Despite the importance of ongoing monitoring, EPA had not created a performance measure and target for documenting monitoring, which elevate the importance of monitoring to the agency. Based on GAO's recommendation, EPA issued its "Grants Management Plan, 2009-2013" in October 2008 which incorporates a performance measure and target for ongoing monitoring--referred to within EPA as baseline monitoring.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of ongoing monitoring by developing a performance measure and a performance target for ongoing monitoring.

    Agency Affected: Environmental Protection Agency

  7. Status: Closed - Implemented

    Comments: In our report,"Grants Management:EPA Has Made Progress In Grants Reforms but Needs to Address Weaknesses in Implementation and Accountability" (May 2006), GAO found that EPA grants specialists were not always closing out grants properly. Specifically, in the three regions we visited, we found instances where appropriate documentation was missing from the closeout files. EPA guidance states that inadequate file documentation, among other things, violates EPA's file management requirements and creates the appearance of poor grants administration. In response to our recommendation, in September 2007, EPA issued a "Policy on Compliance, Monitoring and Review" (effective January 2008) that addressed proper closeout of grants. Specifically, the policy identified the specific steps that all staff must follow in closing out grants (see section 7.0 , p. 11)). Furthermore, in May 2010, EPA conducted a comprehensive program review including a review to ensure that grants have been properly closed out and found that 87 percent of grants were closed out in compliance with its closeout policies.

    Recommendation: As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by issuing revised policies and procedures to ensure proper closeout of grants.

    Agency Affected: Environmental Protection Agency

 

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