Additional Action Needed to Address Persistent Governance and Funding Challenges

GAO-11-478: Published: May 6, 2011. Publicly Released: May 6, 2011.

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In response to the Federal Financial Assistance Management Improvement Act of 1999, the Office of Management and Budget (OMB), among other things, deployed as the central grant identification and application portal for federal grant programs in 2003 and named the Department of Health and Human Services (HHS) its managing partner. As a result of funding and governance challenges-- such as untimely contributions, a lack of performance metrics, unclear lines of authority, and confusion over roles and responsibilities among's governance bodies-- that have adversely affected operations, GAO is required to examine (1) key factors HHS should consider when proposing a funding model for, and (2) how the governance bodies could address's previously identified governance challenges. To do this, GAO analyzed agency documents and interviewed officials at HHS, OMB, the Grants Executive Board (GEB), three case study agencies that manage similar E-Gov initiatives and three partner agencies.

In keeping with OMB's expectation to move toward a fee-for-service model, starting with the fiscal year 2010 budget, the contribution calculation changed to better reflect agencies' use of's services. However, GAO found that the calculation results in different contribution amounts for agencies with similar usage profiles because the calculation includes a measure of agency size that does not correlate well with an agency's use of For example, usage data for the fiscal year 2011 contributions indicates that the Department of Housing and Urban Development (HUD, a large agency) posted 40 grant opportunities and received 4,817 applications through the Web site while the National Endowment for the Humanities (NEH, a small agency) posted 42 opportunities and received 4,577 applications. However, HUD's contribution is $414,422 while NEH's is $155,159. In addition, GAO found that the Program Management Office (PMO) does not track and report on certain key costs, limiting partner agencies' ability to understand the relationship between services received and amounts paid for that service. also does not charge partner agencies for all known costs, which can result in some agencies subsidizing other agencies' use of the system. Finally, continues to suffer from untimely agency contributions. While the other EGov initiatives GAO spoke with report similar challenges, some take mitigating steps that aid them in managing delays. They are: (1) depositing partner fees/contributions into multiyear appropriation accounts and (2) receiving some form of funds from their managing partners until partner agency contributions become available. Accountability and responsibility for performance among its governance bodies--the PMO, GEB and HHS's Office of the Chief Information Officer (OCIO)--remains unclear. Since GAO first reported on these issues in July 2009, some progress has been made clarifying roles and responsibilities, developing performance measures to track important aspects of system performance, and providing partner agencies with key performance and cost information. However, although the GEB and the OCIO continue to share responsibility for approving major changes to, and funding for, the system, there remains little evidence that the GEB-approved funding for is considered in HHS's review of as an IT investment as required by OMB guidance. In addition,'s performance measures have not changed since GAO reported on them and still do not provide a clear picture of system performance. Finally, does not communicate some key performance and activity cost information with its partner agencies. A new federal grants governance model under OMB review would merge various governance entities and serve as the federal grants advisory body responsible for establishing the direction for and coordinating all governmentwide grants initiatives, including As a preliminary, concept document, it is understandable that it contains few implementation details; however, the proposal lacks even an overview of several critical elements, such as how grants initiatives would be managed as IT investments. GAO is making four recommendations to HHS aimed at improving's funding calculation, cost tracking, and annual and strategic plan; and knowledgesharing with other E-Gov initiatives. HHS generally agreed with our findings and recommendations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In June 2015, HHS officials reported that during the Fiscal Year 2016 (FY 2016) funding contribution review, several partner agencies expressed concerns on the funding algorithm. In response, a working group, consisting of participants from 13 agencies, was established to discuss and review potential options for revising the FY 2017 funding algorithm. The working group met several times and identified options for revising the algorithm, all of which were intended to more closely link agency contributions to system use. Options were then presented to the governing body, the Financial Assistance Committee for eGov (FACE), for a vote on June 17, 2015. An option was selected by a majority vote from the partner agencies. The new algorithm will be in place from FY 2017 through FY 2021.

    Recommendation: To improve economic efficiency and support effective management of the system, the Secretary of Health and Human Services should work with the Grants Executive Board--or similar organization should the governance structure change--to improve the allocation of costs among users by developing and implementing a calculation that more clearly links agency contributions to their system use.

    Agency Affected: Department of Health and Human Services

  2. Status: Closed - Implemented

    Comments: In June 2015, HHS officials reported that has developed an Intra-Government Payment and (IPAC) Tracking Report, which reflects all billings of funding from each partner. The IPAC Tracking Report is available for agencies to review at any time. Billings are implemented on a monthly basis, tied to disbursements against obligations. Also, the Program Management Office also regularly reports budget and cost information in regular meetings with the Council on Financial Assistance Reform (COFAR) and the Financial Assistance Committee for eGov (FACE).

    Recommendation: To improve economic efficiency and support effective management of the system, the Secretary of Health and Human Services should build on and use its existing cost-tracking capabilities to expand its cost information and communicate that information to partner agencies in greater detail. This includes capturing, charging for, and reporting on all services provided to partner agencies.

    Agency Affected: Department of Health and Human Services

  3. Status: Closed - Implemented

    Comments: In response to our recommendation, in April 2013 the PMO released a strategic planning document that identifies specific goals and objectives, stakeholder benefits for each goal, and lead individuals who are responsible. The document also lays out a high-level implementation plan, mapping goal "focus areas" by fiscal year and identifying areas of accomplishment. The plan also identifies the status of a number of recommended system improvements and links those improvements to related costs.

    Recommendation: To improve economic efficiency and support effective management of the system, the Secretary of Health and Human Services should link its strategic plan to an annual operating plan that links costs and spending to performance goals and milestones, and includes progress against goals and system initiatives.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: PMO officials report that they reach out to and share knowledge with managing partners (MPs) of other E-Gov initiatives in a variety of ways. First, MP agencies for E-Gov initiatives are members of's User Group. This group was recently reinvigorated, and met quarterly in FY 2013. PMO officials reported that these agencies often share information during these meetings from their perspective as e-Gov MPs. In addition, the PMO participates in the recently-formed Grants and Loans Committee for e-Government (GLCE). These meetings include information sharing from other federal grant- and loan-making agencies who are also managers of other e-Gov initiatives. Finally, PMO officials stated that they also interact less formally with E-Gov MPs on an on-going basis.

    Recommendation: To improve economic efficiency and support effective management of the system, the Secretary of Health and Human Services should build on its recent outreach efforts and engage in knowledge sharing with the managing partners of other E-Gov initiatives.

    Agency Affected: Department of Health and Human Services


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