Recovery Act:

Agencies Are Addressing Broadband Program Challenges, but Actions Are Needed to Improve Implementation

GAO-10-80: Published: Nov 16, 2009. Publicly Released: Nov 16, 2009.

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Access to broadband service is seen as vital to economic, social, and educational development, yet many areas of the country lack access to, or their residents do not use, broadband. To expand broadband deployment and adoption, the American Recovery and Reinvestment Act (Recovery Act) provided $7.2 billion to the Department of Commerce's National Telecommunications and Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) for grants or loans to a variety of program applicants. The agencies must award all funds by September 30, 2010. This report addresses the challenges NTIA and RUS face; steps taken to address challenges; and remaining risks in (1) evaluating applications and awarding funds and (2) overseeing funded projects. The Government Accountability Office (GAO) reviewed relevant laws and program documents and interviewed agency officials and industry stakeholders.

NTIA and RUS face scheduling, staffing, and data challenges in evaluating applications and awarding funds. NTIA, through its new Broadband Technology Opportunities Program, and RUS, through its new Broadband Initiatives Program, must review more applications and award far more funds than the agencies formerly handled through their legacy telecommunications grant or loan programs, including NTIA's largest legacy grant program, Public Safety Interoperable Communications. NTIA and RUS initially proposed distributing these funds in three rounds, but recently adopted two rounds. To meet these challenges, the agencies have established a two-step application evaluation process that uses contractors or unpaid, independent experts for application reviews and plan to publish information on applicants' proposed service areas to help ensure the eligibility of proposed projects. While these steps address some challenges, the upcoming deadline for awarding funds may pose risks to the thoroughness of the application evaluation process. In particular, the agencies may lack time to apply lessons learned from the first funding round and to thoroughly evaluate applications for the remaining rounds. NTIA and RUS will oversee a significant number of projects, including projects with large budgets and diverse purposes and locations. In doing so, the agencies face the challenge of monitoring these projects with far fewer staff per project than were available for their legacy grant and loan programs. To address this challenge, NTIA and RUS have hired contractors to assist with oversight activities and plan to require funding recipients to complete quarterly reports and, in some cases, obtain annual audits. Despite these steps, several risks remain, including a lack of funding for oversight beyond fiscal year 2010 and a lack of updated performance goals to ensure accountability for NTIA and RUS. In addition, NTIA has yet to define annual audit requirements for commercial entities funded under the Broadband Technology Opportunities Program.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To reduce the risk of awarding funds to projects that may not be sustainable or do not meet the priorities of the Recovery Act, the Secretaries of Commerce and Agriculture should (1) delay the issuance of the second Notice of Funds Availability (NOFA) in order to provide time to analyze application and evaluation processes and apply lessons learned from the first funding round, and (2) provide review time in the second funding round comparable with other broadband grant and loan programs.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: The American Recovery and Reinvestment Act (Recovery Act) appropriated $7.2 billion to extend access to broadband throughout the United States. The Recovery Act provided $4.7 billion to the National Telecommunications and Information Administration and $2.5 billion to the Rural Utilities Service. The agencies initially indicated that they would award Recovery Act broadband program funds in three separate funding rounds and on July 1, 2009, the agencies released the first joint Notice of Funds Availability detailing the requirements, rules, and procedures for applying for grants, loans, and loan-grant combinations. With an 18-month period to award all program funds and three funding rounds, we found that each funding round would operate under a compressed schedule. We reported that the compressed schedule posed challenges for both program applicants and the agencies. In particular, the agencies would have less time to review applications than similar grant and loan programs. The compressed schedule could increase the risk of awarding funds to projects that may not be sustainable or do not meet the priorities of the Recovery Act. Therefore, in a draft report to the agencies on October 15, 2009, we recommended that the agencies combine the second and third funding rounds. Subsequently, on November 10, 2009, the agencies announced that they would award the remaining funds in one funding round, instead of two rounds. The agencies noted that this change will increase efficiency and better accommodate applicants.

    Recommendation: To reduce the risk of awarding funds to projects that may not be sustainable or do not meet the priorities of the Recovery Act, the Secretaries of Commerce and Agriculture should (1) delay the issuance of the second Notice of Funds Availability (NOFA) in order to provide time to analyze application and evaluation processes and apply lessons learned from the first funding round, and (2) provide review time in the second funding round comparable with other broadband grant and loan programs.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: The American Recovery and Reinvestment Act (Recovery Act) appropriated $7.2 billion to extend access to broadband throughout the United States. The Recovery Act provided $4.7 billion to the National Telecommunications and Information Administration and $2.5 billion to the Rural Utilities Service. The agencies initially indicated that they would award Recovery Act broadband program funds in three separate funding rounds and on July 1, 2009, the agencies released the first joint Notice of Funds Availability detailing the requirements, rules, and procedures for applying for grants, loans, and loan-grant combinations. With an 18-month period to award all program funds and three funding rounds, we found that each funding round would operate under a compressed schedule. We reported that the compressed schedule posed challenges for both program applicants and the agencies. In particular, the agencies would have less time to review applications than similar grant and loan programs. The compressed schedule could increase the risk of awarding funds to projects that may not be sustainable or do not meet the priorities of the Recovery Act. Therefore, in a draft report to the agencies on October 15, 2009, we recommended that the agencies combine the second and third funding rounds. Subsequently, on November 10, 2009, the agencies announced that they would award the remaining funds in one funding round, instead of two rounds. The agencies noted that this change will increase efficiency and better accommodate applicants.

    Recommendation: To ensure that all funded projects receive sufficient oversight and technical support beyond September 30, 2010, and through their required completion dates, the Secretaries of Commerce and Agriculture should develop contingency plans to ensure sufficient resources for oversight of funded projects beyond fiscal year 2010.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: The American Recovery and Reinvestment Act (Recovery Act) authorized the National Telecommunications and Information Administration (NTIA), in consultation with the Federal Communications Commission, to create the Broadband Technologies Opportunities Program (BTOP); the Recovery Act appropriated $4.7 billion for NTIA. Through BTOP, NTIA would manage competitive grants to a variety of entities for broadband infrastructure, public computer centers, and innovative projects to stimulate demand for, and adoption of, broadband. We found that NTIA faced the risk of having insufficient resources to actively monitor BTOP-funded projects. In particular, funded projects needed to be complete no later than 3 years following the date of issuance of the award. Yet, the Recovery Act only provided funding through September 30, 2010. In a November 2009 report, we noted that without adequate resources beyond fiscal year 2010, NTIA may not be able to ensure that all projects are completed as intended and to guard against waste, fraud, and abuse. Therefore, we recommended that the Secretary of Commerce develop contingency plans to ensure sufficient resources for oversight of funded projects beyond fiscal year 2010. In fiscal year 2012, NTIA published the BTOP Monitoring and Assessment Plan. The BTOP monitoring function included various activities, including desk reviews, site visits, and program report reviews. One of the guiding principles was that the plan must allocate program staff resources and activities based on available resources. Therefore, the plan applied a core set of monitoring activities to each grant, and based on identified issues and risks, additional monitoring activities would be performed. By developing a monitoring and assessment plan, NTIA helps ensure that projects are implemented on time, on schedule, and with the intended benefits, while also mitigating waste, fraud, and abuse.

    Recommendation: To ensure that all funded projects receive sufficient oversight and technical support beyond September 30, 2010, and through their required completion dates, the Secretaries of Commerce and Agriculture should develop contingency plans to ensure sufficient resources for oversight of funded projects beyond fiscal year 2010.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: In the American Recovery and Reinvestment Act (Recovery Act), Congress authorized the Department of Agriculture's Rural Utilities Service (RUS) to establish the Broadband Initiatives Program (BIP) to make loans and award grants and loan/grant combinations for broadband infrastructure projects primarily in rural areas; the Recovery Act appropriated $2.5 billion for RUS. We found that RUS faced the risk of having insufficient resources to actively monitor BIP-funded projects after September 30, 2010, which could result in insufficient oversight of projects not yet completed by that date. In particular, some projects were not expected to be complete until 2013. However, the Recovery Act only provided funding through September 30, 2010. Further, RUS officials reported that given the large increase in its project portfolio from BIP, RUS's capacity to actively monitor these projects after its BIP funding expired may be stressed. Because of this, we reported that RUS may be unable to ensure that all recipients have expended their funding and completed projects as required. Therefore, to ensure that all funded projects receive sufficient oversight and technical support, we recommended that the Secretary of Agriculture develop contingency plans to ensure sufficient resources for oversight of funded projects beyond fiscal year 2010. RUS has taken several actions to address our recommendation and improve oversight of funded projects. RUS is putting into place a multifaceted oversight framework to monitor compliance and progress of BIP funding. RUS plans to use the same oversight framework for BIP that it uses for its existing grant and loan programs; the main components of RUS's oversight framework are (1) financial and program reporting and (2) desk and field monitoring. We expressed concern with this initial strategy, because existing RUS staff members have other duties in addition to oversight of BIP projects. RUS subsequently enhanced its oversight framework by extending its contract with ICF International to provide BIP program support through 2013. According to RUS, the agency fully funded the contract extension using Recovery Act funds and no additional appropriations are required to continue the contract through fiscal year 2013. As we noted, without these resources, RUS might not be able to ensure that all projects are completed as intended and guard against waste, fraud, and abuse.

    Recommendation: To ensure that management has appropriate tools in place to evaluate the effectiveness of Broadband Technology Opportunities Program (BTOP) and Broadband Initiatives Program (BIP) and to apply limited resources to achieve desired program outcomes, the Secretaries of Commerce and Agriculture should use information provided by program applicants in the first funding round to establish quantifiable, outcome-based performance goals by which to measure program effectiveness.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: In the American Recovery and Reinvestment Act (Recovery Act), Congress appropriated $2.5 billion for the Department of Agriculture's Rural Utilities Service (RUS); RUS established the Broadband Initiatives Program (BIP) to make loans and to award grants and loan-grant combinations for broadband infrastructure projects in rural areas. The Government Performance and Results Act of 1993 directs federal agencies to establish objective, quantifiable, and measureable goals within annual performance plans. While RUS established quantifiable program goals for its existing broadband grant and loan programs, we found that RUS had not updated its goals to reflect the large increase in funding it received for broadband programs under the Recovery Act. Therefore, to ensure that management has appropriate tools in place to evaluate the effectiveness of BIP and to apply limited resources to achieve desired program output, we recommended that RUS establish outcome-based performance goals by which to measure program effectiveness. During fiscal 2011, RUS established a long-term performance measure for BIP: the number of households, businesses, and community institutions subscribing to broadband service from BIP awardees. In particular, RUS established the goal for BIP projects to provide new or improved broadband service to 359,405 subscribers. According to RUS, this is an excellent indicator of the effectiveness and sustainability of the projects funded and a measure of the ongoing economic development impact of broadband infrastructure on rural communities in general. As we noted, with such goals, future efforts to expand broadband deployment and adoption may lack important information on the types of projects that were most effective at meeting subscriber goals and other targets, thereby limiting the ability to apply federal resources to programs with the best likelihood of success.

    Recommendation: To ensure that management has appropriate tools in place to evaluate the effectiveness of Broadband Technology Opportunities Program (BTOP) and Broadband Initiatives Program (BIP) and to apply limited resources to achieve desired program outcomes, the Secretaries of Commerce and Agriculture should use information provided by program applicants in the first funding round to establish quantifiable, outcome-based performance goals by which to measure program effectiveness.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: In the American Recovery and Reinvestment Act (Recovery Act), Congress authorized the Department of Commerce's National Telecommunications and Information Administration (NTIA) to create the Broadband Technology Opportunities Program (BTOP) to manage competitive grants to a variety of entities for broadband infrastructure, public computer centers, and innovative projects to stimulate demand for, and adoption of, broadband; the Recovery Act provided $4.7 billion for NTIA. We found several risks to adequate oversight, including a lack of updated performance goals. In particular, NTIA had established preliminary performance measures for BTOP; however, NTIA had not established quantitative, outcome-based goals for those measures. We noted that NTIA's use of sequential funding rounds provided an opportunity for the agency to collect important data from applicants early in the program that could be used to develop meaningful performance goals. Therefore, to ensure that management has appropriate tools in place to evaluate the effectiveness of BTOP and to apply limited resources to achieve desired program outcomes, we recommended that the Secretary of Commerce use information provided by program applicants in the first funding round to establish quantifiable, outcome-based performance goals by which to measure program effectiveness. In its 2012 Annual Performance Plan Formulation, NTIA identified four performance goals for BTOP. These goals included (1) miles of broadband networks deployed, (2) community anchor institutions connected, (3) new and upgraded public computer workstations, and (4) new household and business subscribers to broadband. For each of these four goals, NTIA reported quantitative targets, such as 250,000 new householder and business subscribers to broadband in fiscal year 2012. As we noted, without such goals, future efforts to expand broadband deployment and adoption may lack important information on the types of projects that were most effective at meeting subscriber goals and other targets, thereby limiting the ability to apply federal resources to programs with the best likelihood of success.

    Recommendation: To ensure that NTIA has sufficient insight into the expenditure of federal funding by commercial entities that may receive BTOP grants, the Secretary of Commerce should determine whether commercial entities should be subject to an annual audit requirement.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: The American Recovery and Reinvestment Act (Recovery Act) appropriated $4.7 billion for the Department of Commerce's National Telecommunications and Information Administration (NTIA) to manage competitive grants to a variety of entities for broadband infrastructure, public computer centers, and innovative projects to stimulate demand for, and adoption of, broadband. The first round grant awardees include public (e.g., state and local governments), for-profit, nonprofit, cooperative, and tribal entities. We found that NTIA did not have audit requirements or guidelines in place for annual audits of commercial entities. NTIA officials reported that because this is the first program managed by the agency to make grants to commercial entities, the agency did not have existing audit guidelines for commercial entities. We recommended that NTIA determine whether commercial entities should be subject to an annual audit requirement. On May 17, 2010, NTIA reported that for-profit awardees will be required to comply with the program-specific audit requirements set forth in OMB Circular A-133, Subpart B, Section 235. Section 235 provides audit and reporting guidance for program-specific audits. Such audit and reporting will give NTIA the oversight tool it needs to help ensure that projects meet the objectives of the Recovery Act and guard against waste, fraud, and abuse.

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