[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
   FEDERAL GRANTS MANAGEMENT: A PROGRESS REPORT ON STREAMLINING AND 
                 SIMPLIFYING THE FEDERAL GRANTS PROCESS
=======================================================================

                                HEARING

                               before the

                SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
                POLICY, INTERGOVERNMENTAL RELATIONS AND
                               THE CENSUS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 29, 2003

                               __________

                           Serial No. 108-53

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform









                        U.S. GOVERNMENT PRINTING OFFICE
89-456                         wASHINGTON  : 2003
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota                 ------
MARSHA BLACKBURN, Tennessee          BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
              Philip M. Schiliro, Minority Staff Director

   Subcommittee on Technology, Information Policy, Intergovernmental 
                        Relations and the Census

                   ADAM H. PUTNAM, Florida, Chairman
CANDICE S. MILLER, Michigan          WM. LACY CLAY, Missouri
DOUG OSE, California                 DIANE E. WATSON, California
TIM MURPHY, Pennsylvania             STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                        Bob Dix, Staff Director
                 Scott Klein, Professional Staff Member
                      Ursula Wojciechowski, Clerk
           David McMillen, Minority Professional Staff Member
















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 29, 2003...................................     1
Statement of:
    Miller, Karen M., president-elect, National Association of 
      Counties, commissioner, Boone County, MO; Marvin G. Parnes, 
      executive director of research administration, University 
      of Michigan; and Kathy Crosby, director of workforce 
      development, Goodwill Industries International, Inc........    63
    Springer, Linda M., Controller, Office of Federal Financial 
      Management, Office of Management and Budget; Dr. Ed Sontag, 
      Assistant Secretary for Administration and Management, U.S. 
      Department of Health and Human Services Lead Agency for E-
      Grants Initiative and Public Law 106-107 Compliance; and 
      Paul Posner, Managing Director, Federal Budget and 
      Intergovernmental Relations, U.S. General Accounting Office     8
Letters, statements, etc., submitted for the record by:
    Clay, Hon. Wm. Lacy, a Representative in Congress from the 
      State of Missouri, prepared statement of...................    94
    Crosby, Kathy, director of workforce development, Goodwill 
      Industries International, Inc., prepared statement of......    81
    Miller, Karen M., president-elect, National Association of 
      Counties, commissioner, Boone County, MO, prepared 
      statement of...............................................    66
    Parnes, Marvin G., executive director of research 
      administration, University of Michigan, prepared statement 
      of.........................................................    73
    Posner, Paul, Managing Director, Federal Budget and 
      Intergovernmental Relations, U.S. General Accounting 
      Office, prepared statement of..............................    34
    Putnam, Hon. Adam H., a Representative in Congress from the 
      State of Florida, prepared statement of....................     4
    Sontag, Dr. Ed, Assistant Secretary for Administration and 
      Management, U.S. Department of Health and Human Services 
      Lead Agency for E-Grants Initiative and Public Law 106-107 
      Compliance, prepared statement of..........................    23
    Springer, Linda M., Controller, Office of Federal Financial 
      Management, Office of Management and Budget, prepared 
      statement of...............................................    11

















   FEDERAL GRANTS MANAGEMENT: A PROGRESS REPORT ON STREAMLINING AND 
                 SIMPLIFYING THE FEDERAL GRANTS PROCESS

                              ----------                              


                        TUESDAY, APRIL 29, 2003

                  House of Representatives,
   Subcommittee on Technology, Information Policy, 
        Intergovernmental Relations and the Census,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2203, Rayburn The Capitol, Hon. Adam Putnam (chairman of 
the subcommittee) presiding.
    Present: Representatives Miller of Michigan and Watson.
    Staff present: Bob Dix, staff director; John Hambel, senior 
counsel; Scott Klein, Chip Walker, and Lori Martin, 
professional staff members; Ursula Wojciechowski, clerk; David 
McMillen, minority professional staff member; and Jean Gosa, 
minority assistant clerk.
    Mr. Putnam. A quorum being present, this hearing on the 
Subcommittee on Technology, Information Policy, 
Intergovernmental Relations and the Census will come to order.
    Good morning and welcome to today's hearing examining the 
efficiency of the Federal grants application, disbursement and 
management process.
    I flew up this morning, and I pulled out my material for 
the hearing and was reviewing some of the testimony, and the 
nice lady sitting next to me in a very full flight--we were 
very close to one another--looked over my shoulder, and she 
said, I notice that you're reading some material on Federal 
grants management. I said, ``Yes, ma'am.'' And she said, 
``Well, I manage the grants for the Department of Justice for 
the Bureau of Judicial Assistance.'' And I said, ``That is kind 
of interesting,'' and she proceeded to tell me some of the 
problems that she has experienced. And she said, ``What is your 
role in all of this?'' And I said, ``Well, I'm a Member of 
Congress,'' and she said, ``Well, you're mighty young, aren't 
you?'' I said, ``Yes, ma'am, I get that a lot.'' She said, 
``Republican or Democrat?'' I said, ``I'm a Republican.'' She 
said, ``What a shame.'' I said, ``A shame?'' She said, ``Yes, 
quite, what a shame.'' I said, ``OK.''
    So that's how my morning was spent. And you can rest 
assured that at our next hearing, the Department of Justice 
will be present. But you've got to love a country where you're 
free to express your opinions.
    The Federal Government last year provided State and local 
governments with grants totaling more than $350 billion, or 15 
percent of our Federal outlays and 3\1/2\ percent of GDP. This 
compares to the less than $1 billion sent to the local and 
State governments in the 1940's, an amount totaling, at that 
time, less than 5 percent of Federal outlays and one half 
percent of GDP.
    By 2008, State and local governments are projected to 
receive more than $480 billion annually from the Federal 
Government. The Federal Government also focuses resources on 
universities and nonprofits, with some 71,000 grants provided 
each year totaling more than $60 billion.
    In my former role as a State legislator, we often spoke 
around the Statehouse about the role of the Federal moneys and 
the role that they played in our own policymaking decisions. 
Clearly, the role of Federal Government resources within our 
communities is large. Some even may say too large. But by the 
same token, service delivery to our citizens cannot and should 
not be accomplished solely through programs based in 
Washington, DC.
    The Federal Government must continue its collaborative 
effort as a partner with various grant entities that deliver 
services to the American public. The reliance we mutually place 
on this partnership, functioning with limiting resources, makes 
it more critical than ever that we spend grant moneys wisely, 
that we have efficient processes in place to manage that grant 
money and that the grants process is transparent and 
accessible.
    Today we will examine the processes by which States, 
localities, universities and not-for-profits discover, apply, 
secure and manage more than $410 billion this year alone. The 
current system for awarding and administering grants is highly 
decentralized, involves thousands of Federal employees, remains 
primarily paper-based, and each grant has different statutory, 
regulatory, policy and process requirements.
    Although there have been many incremental attempts over the 
years to streamline this process, more recent grants management 
legislative reforms are leading us toward massive changes to 
the system, primarily by utilizing technology, combined with a 
citizen-centric attitude.
    In 1999, Congress passed the Federal Financial Assistance 
Management Improvement Act with the intent to improve the 
effectiveness and performance of Federal grant programs, 
simplify the application and reporting requirements, improve 
the delivery of services to the public and facilitate greater 
coordination among the delivering services. Of course, the 
devil is in the details and the execution.
    Between 1999 and 2001, our 26 Federal grantmaking agencies 
joined together, led by the Department of Health and Human 
Services, to develop the core of a plan that improved grants 
management as envisioned by Congress. That plan, in compliance 
with the new law, cut across all Federal agencies, focused on 
efficiency and openness for all by utilizing technology, and 
requires common applications in reporting by all agencies. This 
massive effort formed the basis of what we now know as E-
Grants, a top priority E-Government initiative followed closely 
by the President through his President's Management Agenda. The 
E-government Act of 2002 further enhanced the tools available 
to the Federal Government to make E-Grants technology-based 
solutions work, including such provisions as authorizing 
electronic signatures and addressing internal data sharing 
between agencies.
    Today we'll take a close look at the ways we have been 
conducting business, both past and present, with the goal of 
making sure all of our recent legislative and technology-based 
solutions are on the right track and meet the desired mutual 
goals. In that light, I hope we will be able to accomplish 
several things at this hearing.
    We need to determine if we are on course with full 
compliance with the Federal Financial Assistance Management Act 
of 1999. We need to make sure that E-Grant solution provides a 
complete and amenable solution to all stakeholders. We need to 
assure that we are getting full cooperation across all 
agencies, as well as coordinating with the grantee community on 
all improvements, or changes--I guess improvements are in the 
eye of the beholder. We need to make sure adequate resources 
are on the table from each grantmaking agency, as well as make 
sure we are promoting a productive climate that rewards change-
agents and a citizen-centric culture within agency leadership.
    We hope to determine if further legislative action or 
housekeeping legislation is required to keep the process on 
track, and take a fresh look at the additional benefits derived 
from a unified grants management system with an eye on 
utilizing this system to improve post-award accountability, 
improve internal analysis capabilities, reduce duplicative 
Federal programs and reduce the number of required printed 
reports on grants that can be derived in realtime based on the 
resulting unified data base.
    The Federal Financial Assistance Management Act has an 8-
year timeline. We are at an appropriate half-way point to 
evaluate all of the moving pieces, make sure we are headed in 
the right and same direction with this effort and ensure our 
laws and regulations continue to allow us to succeed in this 
enormously valuable national State and local partnership.
    [The prepared statement of Hon. Adam H. Putnam follows:]



    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Putnam. We are delighted to have a distinguished panel 
of witnesses for each of the panels, and I'm pleased to be 
joined by the vice chairwoman of the subcommittee, the 
gentlelady from Michigan, who has some hometown folks here who 
are participating in this panel as well. So with that, I'll 
recognize Mrs. Miller for her opening remarks.
    Mrs. Miller of Michigan. Thank you, Mr. Chairman. I think 
this mic has a life of its own here, but I probably don't need 
it.
    And your day started off on an airplane with some 
conversation from a lady. My day started off buying a $22 pair 
of eyeglasses at CVS this morning, so we'll see how they work.
    I certainly want to thank all the witnesses, including 
those that are coming from Michigan to testify before the 
subcommittee. I certainly look forward to hearing what all of 
you have to say there.
    The E-Grants Initiative that was outlined in the 
President's Agenda E-Government Component, is an example of how 
the Federal Government can effectively use technology to 
decrease costs and to improve services.
    So it is certainly vital that this initiative be 
implemented swiftly and with a high degree of success, and with 
the amount of reform that presents itself within the Federal 
realm, successful implementation of the E-Grants Program can 
act as a model as this subcommittee examines measures to 
increase the use of and effectiveness of technology.
    And with the passage of the E-Government Act of 2002, there 
is now a legal authority to ensure the development of E-
Government Initiatives, including E-Grants, but legal authority 
does not guarantee success, as has been seen by many reform 
initiatives of the past.
    So I'm pleased that there are so many distinguished 
individuals who are familiar with the user side of Federal 
grant programs that have taken the time to testify before us 
today. Successful reform is not possible without the input of 
those who are actually utilizing the programs, of course.
    Currently there are 26 agencies in the Federal structure 
who are distributing over 210,000 awards. Needless to say, 
there is obviously redundancy, and some unnecessary waste as 
well, between the differing agencies who are administering the 
grants, with similar objectives, and waste within agencies who 
allocate grants spanning different programs.
    The implementation of E-Government can be a very good thing 
if done correctly, but the Federal Government is currently 
finding itself in a situation sometimes where each agency has 
set up its own electronic application, its own reporting 
processes, and this has complicated matters for groups looking 
to obtain Federal grants. And though this may cause some 
problems, the mere fact that agencies are really trying to work 
together now to simplify the grantmaking process, I think, is 
extremely promising. So I look forward to working with the 
members of this subcommittee and the Government Reform 
Committee as a whole and certainly the groups and individuals 
who use these grants, including many of my constituencies, to 
improve the Federal grantmaking process as well.
    Thank you, Mr. Chairman. I'm certainly looking forward to 
hearing the testimony today.
    Mr. Putnam. Thank you. Our first panel of witnesses are 
experienced with congressional testimony. You understand the 
light system and the timing system. So we'll get right to it. 
Please rise, and we'll do the oath.
    [Witnesses sworn.]
    Mr. Putnam. Note for the record that the witnesses 
responded in the affirmative.
    And we will begin with our first witness, Ms. Springer.
    Linda Springer, on March 31, the Senate confirmed the 
President's selection of Linda M. Springer as Controller of the 
Office of Federal Financial Management within OMB.
    Prior to her appointment, Ms. Springer served as Counselor 
to the Deputy Director for Management at OMB. I was most 
impressed by the remarks she made to our colleagues on the 
Government Efficiency Subcommittee several weeks ago expressing 
her priority to further standardize and automate financial 
transactions and improve our ability to manage and account for 
resources more wisely using IT. This will be especially 
important in managing Federal grants.
    I believe this marks the first subcommittee hearing we've 
had without Mr. Foreman, and you are a welcome addition to our 
hearing, so please proceed.

STATEMENTS OF LINDA M. SPRINGER, CONTROLLER, OFFICE OF FEDERAL 
 FINANCIAL MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET; DR. ED 
SONTAG, ASSISTANT SECRETARY FOR ADMINISTRATION AND MANAGEMENT, 
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES LEAD AGENCY FOR E-
 GRANTS INITIATIVE AND PUBLIC LAW 106-107 COMPLIANCE; AND PAUL 
POSNER, MANAGING DIRECTOR, FEDERAL BUDGET AND INTERGOVERNMENTAL 
           RELATIONS, U.S. GENERAL ACCOUNTING OFFICE

    Ms. Springer. Thank you, Mr. Chairman.
    I am pleased to testify before the subcommittee today on 
the status of our efforts to implement the Federal Financial 
Assistant Management Improvement Act, and that act requires the 
Office of Management and Budget to direct, coordinate and 
assist Federal agencies in establishing a common application 
and reporting system and an interagency process for addressing 
the grant streamlining work.
    As you noted, Mr. Chairman, the Federal grants account for 
nearly $400 billion in fiscal year 2003 alone, and that is over 
20 percent of the overall government budgeted outlays. So it is 
a very significant activity.
    Annually, the Federal Government makes over 218,000 awards 
under 600 different programs administered by the 26 Federal 
agencies. The grantee community ranges from sophisticated 
entities with state-of-the-art technology to small rural 
organizations that may not even have computer access. The 
agencies use a variety of administrative processes and 
requirements both governmentwide and agency-specific to support 
the grants life cycle and provide foundation for agency and 
recipient compliance with laws, regulations, requirements 
including fiscal accountability.
    There are significant opportunities to reduce these 
variations and thereby meet the purposes of the act. To 
shepherd the implementation of the act, we've been operating 
with four interagency simplification work groups: Pre-award, 
post-award, audit oversight and electronic processing as well 
as a policy and oversight team. Additionally, under the 
President's Management Agenda's Expanded E-Government 
Initiative, the E-Grants Project is underway addressing the 
work of the former Grants Management Council Electronic 
Processing Work Group, and the HHS agency is the lead for E-
Grants. And you'll hear more about that today from Ed Sontag.
    Interagency work is focused on various process improvements 
and administrative changes that will make it easier for 
recipients to identify, apply for and manage the programs 
funded by the Federal Government. In accordance with the 
requirements of the act, agencies have consulted with non-
Federal constituencies via several actions, including a unique 
electronic mailbox to accept public comments on the grants 
streamlining effort and posting invitations to comment on 
several agencies' grant-related Web sites. Those have been very 
active and have been a tremendous resource to us as we've 
continued this effort.
    The initial plan to implement the act was prepared jointly 
by the 26 Federal grantmaking agencies and submitted to OMB and 
the Congress in mid-May 2001. Last summer each agency submitted 
its update to OMB and the Congress, and we presented our annual 
report. This year's progress report is due to OMB and Congress 
no later than the end of August 2003. What I'm about to give 
you is a flavor of what we'll report at that time.
    Every work group has access to the full set of comments 
that have come in, and that has been factored into the 
decisions about streamlining and simplification. The public and 
grantee community have continued to be involved via conference 
presentations, media news releases, information available on 
grants-related Web sites and the formal 60-day comment period 
of each of our Federal Register proposals. We've made every 
effort to make sure all stakeholders have the opportunity to 
provide substance and comments that will be taken into account 
before anything is made final.
    In the Pre-Award Work Group, we are dealing with standard 
formats for announcements and funding opportunities. A standard 
format was proposed last August with an associative policy 
directive. We've received favorable public comments, and we 
expect to have the standard announcement finalized soon.
    FedBizOpps is an initiative to establish a central Internet 
source for agency announcements to make it easier for potential 
applicants to learn about announcements of funding 
opportunities. OMB circulated the final data elements for this 
FedBizOpps synopses to agencies again this month and expects to 
issue data standards very soon.
    Grant applications: This effort has three initiatives 
related to establishing governmentwide data standards, creating 
an electronic portal and a single assurance statement that 
would show compliance with the award terms. Again this month 
OMB published in the Federal Register a notice proposing those 
standard data elements for both electronic and paper 
applications, and that will eliminate two of the current forms. 
We expect comments back by June, after which we'll finalize 
that data standard.
    Standard award terms and conditions: The pre-award group 
has started to work governmentwide to develop standard terms, 
and that would relate to the administrative requirements in the 
two current OMB circulars, A-102 and A-110 as well as national 
policy requirements. That is work that is ongoing and will be 
ongoing through this year.
    There is a lot more that you may want to follow-up with me 
on, beyond the 5 minutes later on, but there is a fair amount 
in the post-award side as well as additional post--beyond the 
post-award, general audit oversight and other activities, 
similar to the Pre-Award. I can elaborate on those later for 
you, but a lot of activity on the OMB side as well as the group 
as a whole as far as getting announcements for reducing current 
procedures, reducing requirements and simplifying the overall 
process.
    Overall, we've got good feedback on any of those that we 
have published, any of those through the Web site that we've 
had forums on, and we'd be happy to report on those in more 
detail to you.
    Mr. Putnam. Thank you very much, Ms. Springer.
    [The prepared statement of Ms. Springer follows:]


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Putnam. Our next witness is Dr. Ed Sontag. Dr. Sontag 
has been Assistant Secretary for Administration and Management 
at the Department of Health and Human Services since October 
2001. In that role he serves as the top adviser to Secretary 
Tommy Thompson on all major department management issues 
including grants management. With HHS managing more than a 
third of all Federal grant funds distributed, Dr. Sontag and 
his staff have been directed by the President and OMB to lead 
the E-Grants effort and ensure compliance with the Federal 
Financial Assistance Management Act.
    Welcome.
    Mr. Sontag. Good morning, Mr. Chairman, members of the 
subcommittee. I'm pleased to be here today to testify on what I 
think is a good news story, on our progress in improving the 
Federal grant process.
    The Federal Financial Assistance Management Improvement Act 
of 1999 is clearly watershed legislation. It not only provides 
the mandate but the impetus for Federal agencies to improve the 
efficiency and effectiveness of the Federal financial 
assistance process. I'm here today to share with you how we are 
implementing this legislation and how the E-Grants Initiative 
is transforming the grant environment to the benefit of the 
citizenry of this country in support of President Bush's 
Management Agenda and Public Law 106-107.
    The President's Management Agenda is instrumental in 
achieving the reform that is citizen-centered and focused on 
delivering results that matter to the American public. To that 
end, implementation of E-Grants will revolutionize the way in 
which the Federal Government provides customer services to the 
public through improved accessibility, transparency, delivery, 
coordination throughout the grant life cycle.
    The Department of Health and Human Services has 
demonstrated leadership in cross-government efforts to fulfill 
these mandates, including serving as the managing partner for 
the E-Grants Initiative.
    With me today, in case there are any difficult and complex 
questions, is Mr. Charles Havekost, the Director of our E-
Grants Initiative, and Mr. Mark Weisman, who is the Director of 
our Grants Program and the Cochair of our Public Law 106-107 
effort.
    Both of these managers report directly to me, thus ensuring 
a common thread of leadership and accountability throughout our 
efforts. The E-Grants Initiative became the vehicle for 
implementing many of the improvements planned under 106-107. E-
Grants will create a unified electronic storefront for 
interactions between the grant applicants and recipients 
conducting business with Federal grantmaking agencies.
    Grants.gov will simplify the process of finding information 
on Federal grant opportunities, which will produce significant 
benefits for, in particular, smaller applications and those 
that are novice grant applicants.
    HHS is reaching out to all of the Federal grantmaking 
agencies. We have initiated pilot programs, conducted hands-on 
training and are making ourselves available as a resource to 
agencies planning for the full implementation of E-Grants.
    The E-Grants Initiative has been, and continues to be, 
vigorous in its outreach and collaboration with groups such as 
the National Association of State Auditors, Controllers and 
Treasurers, National Association of Counties, National Council 
of American Indians, University Members of the Federal 
Demonstration Partnership, the National Council of University 
Research Administrators.
    The first, and probably the most significant, benefit of 
the E-Grants Program will be the search and find function of 
Grants.gov, and in the past organizations and members of the 
public seeking Federal grant assistance were made to suffer the 
burden of laborious searches through dozens of Federal agencies 
and multiple publications. The find functions of Grants.gov 
will solve this problem by providing one central clearinghouse 
for all information on government grants, allowing the public 
to search by grant topic, eligibility or funding instrument.
    Your constituents can also sign up for e-mail notification 
whenever a grant they may be interested in is posted. On 
October 1st of this year, applicants will be able to submit 
applications electronically through the Grants.gov storefront. 
To meet this October 1 date, we've initiated a pilot effort 
that will allow grantee participants to submit applications in 
an electronic format using standard data elements to 
participating agencies. Looking ahead, we are planning for 
phase 2 of our initiative, including an emphasis on unifying 
and streamlining the management and reporting processes 
required of grantees. This will move us further toward our 
ultimate vision of a one-stop point of service for the American 
public.
    HHS has assumed a proactive role in the implementation of 
Public Law 106-107 and the E-Grants Initiative at the 
department level under Secretary Tommy Thompson's leadership.
    Grant funding opportunities are the means by which and 
through which outstanding achievements can be realized in many 
areas, including but not limited to medical research, 
education, public safety and so on. Simplifying the ability to 
locate and apply for grants is critical to ensure the 
opportunities for future achievements are not missed. President 
Bush's Management Agenda requires this, and the American public 
deserves this. I appreciate your time and attention. Thank you 
for the opportunity to be here this morning.
    Mr. Putnam. Thank you, Dr. Sontag.
    [The prepared statement of Dr. Sontag follows:]




    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Putnam. I next recognize Paul Posner.
    Paul L. Posner is Managing Director for Federal Budget and 
Intergovernmental Relations Issues for the U.S. General 
Accounting Office. He has testified many times before 
congressional committees on Federal budgeting and financing, 
performance budgeting and intergovernmental fiscal 
relationships. He is also an adjunct professor at Johns Hopkins 
and Georgetown Public Policy Graduate Programs, and I 
understand is the author of a book that grabbed my attention 
titled, The Politics of Unfunded Federal Mandates.
    Mr. Posner, you're recognized. Welcome.
    Mr. Posner. Thank you, Mr. Chairman. It's a pleasure to be 
here.
    My testimony will be somewhat different than what you've 
heard before. We at GAO have a mandate to evaluate the Federal 
Financial Assistance Act by 2005, and we will look forward to 
beginning that over the next year and working with a variety of 
people in this room. In the meantime, I thought what I would 
talk about is the backdrop for the whole system that we're 
looking at. In other words, what we've heard so far suggests 
some promising and important efforts to simplify and 
standardize a system that is inherently fragmented. I thought I 
would read to you from an evaluation of the grants system that 
I have here which says, ``That the grant system: one, lacks an 
adequate means for disseminating grant information; two, 
creates a high degree of funding uncertainty; three, fosters 
complex and varying application and administrative processes; 
four, is fragmented with similar programs administered by 
different agencies and with programs too restrictive to meet 
State and local needs.''
    Now, this sounds very contemporary--like it just came off 
of the e-mail this morning. In fact, this was a 1975 report GAO 
issued called ``Fundamental Changes Are Needed to Federal 
Assistance to State and Local Governments.''
    Now, what this says is there are and have been some heroic 
efforts at the Federal level and the State and local level to 
coordinate a very confusing and complex array of programs that 
we have, a myriad of overlapping and duplicative programs. The 
coordination that does exist often is done from below.
    There is a lot of creativity out there in packaging 
programs, but it often takes heroic actions. Simplification and 
standardization can help. We need to ally ourselves at the 
Federal level with those seeking to try and make comprehensive 
program changes, but we also need to keep our focus on the root 
cause: This is a Federal assistance system that is inherently 
fragmented.
    And I wanted to first point to this chart here which shows 
that notwithstanding some of the earlier initiatives to block 
grants in the early 1980's, the number of categorical grant 
programs has grown to roughly 660, where we stand today.
    The second chart very briefly shows the composition of 
those programs. The top 20 programs comprise 78 percent of the 
funds. What is important to look at is the right-hand side of 
that chart, that 169 of these grants have less than $5 million 
per year available, in other words, less than 1 percent of all 
grant funds go through 169 programs.
    Now, I don't challenge the creativity of people to use 
money in whatever amounts but I think we can all imagine a less 
burdensome and costly administrative system to deliver these 
kinds of funds.
    Now, these problems come home to persistent problems in 
performance that GAO has identified in many different areas, 
whether it is reports recently on the 50 homelessness programs 
in eight Federal agencies, the 23 housing service programs in 
four Federal agencies, the 26 food and nutrition programs in 
six Federal agencies or the 44 job training programs in nine 
agencies, even after the Workforce Investment Act consolidated 
a number of them.
    I won't go into more detail now, but with the time 
permitted we can talk later about some of the problems that 
this prompts in service delivery and accountability.
    The last point I wanted to talk about was Homeland 
Security, because we have seen how important coordination is, 
particularly at the local level, to address these new threats 
to the Nation. We, in our very well-intentioned way, are 
offering a variety of assistance programs that are also 
fragmented, complex and difficult to manage.
    We have the next chart here that shows the pattern that we 
see, even after the reorganization of the Department of 
Homeland Security. We have a number of--16 that we count--major 
Federal assistance programs that go down to State and local 
governments through a variety of conduits, some to States, some 
to different State agencies within States, some directly to 
local actors like firefighters, law enforcement personnel and 
hospitals. Many are very different in the way they distribute 
the money. Some are formula based. Some are project grants. 
Some have matching requirement. Some don't. Some have 
maintenance of effort. Some don't.
    There is quite a bit of overlap in activities; 12 of the 16 
grants are available, for example, for training, 7 for 
equipment, and 8 for exercises. And, again, this is post-DHS 
reorganization, and we know, for example, that several of those 
programs that aid State and local preparedness are, in fact, 
still in different directorates within the department. So we 
still have a substantial problem with a fragmented system for 
Homeland Security that remains to be addressed, and I think 
that is being discussed.
    Now, my statement has a number of options that are 
available to the Congress to address this in a more fundamental 
way. We've blocked grants which consolidate and devolve 
authority and consolidated grants which don't necessarily have 
to devolve authority. There are models available where grants 
can be consolidated while retaining accountability for strong 
performance goals and waivers.
    The point is to say that these efforts that we are going to 
be monitoring are important and somewhat heroic in some ways, 
but they take place in the context of a highly fragmented 
system. Thank you.
    Mr. Putnam. Thank you very much, Mr. Posner.
    [The prepared statement of Mr. Posner follows:]



    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    Mr. Putnam. At this time we will move to questions, and we 
will begin with Mrs. Miller.
    Mrs. Miller of Michigan. Yes. I think for Ms. Springer, you 
were mentioning about the e-public mailbox that you have and 
some of the public comments that you get and also the 
FedBizOpps, which I wasn't quite sure what that was. Maybe you 
could expand on that. But as you mentioned the phrase 
``customer service,'' I'm happy to hear people talk about that. 
Obviously we can't have that being a novel concept for the 
Federal Government or any level of government. It really needs 
to be an operative phrase. So we think about the end users in 
that.
    And as you are getting public comment and these kinds of 
things, how are you utilizing that kind of concept? I mean, 
they are the end users, right? They are obviously communicating 
with you on how they are finding the application process or 
perhaps whatever kind of comments they are giving you. Are you 
utilizing those kinds of comments in your business planning? 
Are you finding any particular trend lines with any of the 
public mailbox, the e-public mailbox that is enlightening?
    Ms. Springer. Yes, we are. The answer to that is yes, they 
are enlightening, yes, we are using them. The comments that we 
got are typically focused to the particular initiative. There 
are obviously a broad range of initiatives. So that they are 
very helpful beyond the general feeling of, ``yeah, this is 
great, we need it.'' They are very specific to the initiative. 
Every work group has full access to those comments. No 
initiative goes out without review fully of all the comments 
that come in. Everybody that is involved from the government 
side has access to them. They are discussed. They are tested 
against the proposals that are coming out and both before any 
particular Federal Register announcements, for example, and 
then comments that come in on kind of the second wave that 
comes in once it is publicly announced in the Federal Register.
    And all of those have been helpful. Generally they've been 
favorable as well. We find that not only helpful but favorable. 
So we take that we're on the right track in most cases.
    Mrs. Miller of Michigan. That is unusual. Usually you just 
hear the negative comments but not the positive ones.
    Can you tell me what the FedBizOpps is?
    Ms. Springer. Yes. The FedBizOpps is a portion of the 
Internet site for the General Services Administration. We've 
established under this E-Grants Project--and Ed could elaborate 
further, if I go a little bit astray here--but we've 
established a governmentwide E-Find Function within that 
FedBizOpps portion. So it's Web-enabling through that GSA 
capability, the ability to find information about grants.
    Mrs. Miller of Michigan. Thank you, Mr. Chairman.
    Mr. Putnam. Thank you, Mrs. Miller. Let me begin my 
questions with Mr. Posner.
    What, if any, requirements under Public Law 106-107 are not 
being addressed currently?
    Mr. Posner. Well, this is something we have not yet 
evaluated, and as I said, we're positioning ourselves to start 
looking at as these changes are actually rolled out. And so we 
look forward to looking at the substantial activities that have 
taken place and at how different agencies are working with 
HHS's leadership to implement the act. But we've we have not 
yet looked at that.
    Mr. Putnam. Dr. Sontag, are we currently in compliance with 
the law?
    Mr. Sontag. I believe we are.
    I can speak directly to Department of Health and Human 
Services. I think not only are we in compliance with the law, I 
think we're using it for constant self-evaluation of how we 
award grants, of how we can actually streamline them. I know in 
our department, which has a history of very independent 
agencies we've been using 106-107 process to bring consistency 
across our department.
    Mr. Putnam. You are also the chairman of the overall task 
force coordinating this, aren't you?
    Mr. Sontag. No, I'm not.
    Mr. Putnam. Ms. Springer, are we fully compliant with the 
law?
    Ms. Springer. I believe we are in compliance with the law. 
One of the things that was in the original report that came in 
2001 is a checklist of action steps by year for each calendar 
year, and if you go down that list, as I have had opportunity 
to do, I find that with the exception primarily of the shift 
from the original vision for technology to the E-Grants as that 
has emerged under the President's Management Agenda, I was able 
to check off the box under every single one of those 
activities.
    Mr. Putnam. Are all grantmaking entities required to use 
the E-Grants process?
    Ms. Springer. They are. There are some that are still 
moving toward it. So, for example, there is a requirement to 
use certain payment systems for making the grants payments and 
disbursements. There is one for the Defense Department and two 
others that are systems that are specified. Of the 24 main 
agencies, all of them have designated which system. Fourteen 
have already migrated to it. The other 10 are already in the 
process of waiting for changes or in the process of migrating.
    So that is an example of compliance, and I would say 
activities are in line with the expectations in all those.
    Mr. Putnam. What agencies predominantly make up the 
smallest 169 grants, those under $5 million? Are they 
concentrated in any one particular area?
    Mr. Posner. I don't think they are concentrated in any one 
particular agency. We could provide you with a list of all 
those for the record. A number of them, I believe, are in HHS.
    This is something, by the way, that has been a persistent, 
perennial issue. Fifteen years ago we reported much the same 
finding, so that there are a number of programs that are very 
small.
    Mr. Putnam. In your review, and I understand that y'all 
have a more comprehensive review underway, have you made 
observations or come to any conclusions on the proper channel 
for these grants? In other words, there are some thoughts of 
only distributing Federal moneys to the States and then letting 
the States make that next leap? And I'm sure we'll have some 
input from the counties later. Or is there any evidence that 
shows that it's better directed directly from the Federal 
Government to the end user?
    Mr. Posner. That is a good question, and it is obviously 
one that's very important for the Homeland Security debate.
    I think there's a couple of things to consider, and we are 
in the process of looking at this.
    One is that giving money directly to the State at least 
ensures some coordination throughout the State and that there's 
some possibility of promoting the kind of collaboration among 
local governments within regions. One of the emerging 
challenges within Homeland Security is the need to have 
governments within a region work together to realize the 
economy of scale that the problem requires.
    On the other hand, many local governments, let's say, do 
not have a completely harmonious relationship with their 
States, and the extent to which the problem is concentrated at 
the local level, may cause Congress to mandate direct pass-
throughs, like in the education area. Some of those Homeland 
Security Grants mandate an 80 percent pass-through to the local 
governments. Some there's a variety of things that you can do 
to both realize some of the broader State planning advantages 
while nonetheless being fairly sure that the money, in fact, is 
going to get down to the places where the needs are greatest.
    Mr. Putnam. Ms. Springer, do you know how much money the 
Federal Government spends in managing the grants process and 
what that would be as a percentage of people who contribute to 
charity? People, they like to know that 85 percent or 95 
percent of what they give to Good Will or the United Way is 
spent on providing services. How much does it cost for us to 
actually administer 169 different grant programs that are less 
than $5 million each?
    Ms. Springer. That is a good question. I don't know the 
answer, but I will find that out for you. It makes sense to 
find that out. I think certain agencies are structured 
differently. So, for example, in one agency there may actually 
be a grants management function separate and apart for example, 
from the CFO's office, and some of the other agencies that are 
less grant-intensive, it might all be done out of a CFO shop.
    So we could certainly find that out.
    Mr. Putnam. I think it's an important thing to know. In 
testimony that we'll have from the second panel that I read--I 
believe it's from the University of Michigan--they single out 
NSF and NIH as being tremendous examples of how things can work 
and perhaps others as not being so.
    But I think it's important for us to know what it's costing 
us to administer these, and at the end of the day, who actually 
holds the grantees accountability for those funds being spent? 
Is it your job? Is it the agency's job? Is that delegated to 
State and local governments? Who actually does that?
    Ms. Springer. Well, it's a combination. The agencies are 
responsible from an audit standpoint for the awards that are 
granted by their agencies. We have the provisions of the Single 
Audit Act, for example, that reinforces the effort to make sure 
that the money is spent as it is expected to, there is no 
fraud, waste or abuse.
    Additionally, one of the things we are looking at very 
carefully as a result of the Erroneous or Improper Payments Act 
of 2002 passed late last year, is grants programs. That is a 
portion of that. So that would include grants that are 
distributed directly from the Federal Government as well as 
those that go to the States and any of those are within the 
purview of review from an Erroneous Payments standpoint. So 
that would be the responsibility that we would work with the 
agencies on.
    Additionally, from an overall effectiveness as opposed to 
just the fraud or the efficiency of the spending, there's also 
analysis of the purpose, are the dollars going to the purpose 
that we expect and the program results? One of the things that 
the administration is doing--it started with this last budget 
cycle--is the program assessment process through the tool 
called the PART. And there were a third of the PARTS that are 
done this year related to grants programs. So there are several 
initiatives, a combination of the agency level, the Single 
Audit Act work, as well as the Erroneous Payments and the PART 
process that are meant to evaluate effectiveness of the 
programs.
    Mr. Putnam. I was home doing town hall meetings for the 
past 2 weeks over the district work period, and one of the 
things that came up very frequently with law enforcement 
officials is the amount of time that it takes to receive the 
money after having been notified that they've been awarded the 
grant, and I suspect that may not be limited to law 
enforcement.
    What is the average time that transpires between the 
awarding of the grant and receiving the money?
    Ms. Springer. I don't know the answer to that question, 
but, again, I could find that one out. I don't know if anyone 
else does.
    Mr. Putnam. Mr. Posner, do you know?
    Mr. Posner. No. I think it depends on the type of grant and 
whether you have a continuous relationship, for example, if you 
get the grant annually renewed versus a one-time kind of thing. 
There is a lot of variables that enter into that. But I don't 
know of a particular number, actually.
    Mr. Putnam. Dr. Sontag, one of the concerns that will come 
up in the second panel involves the differences between 
agencies who deliver grants to a specific institution or entity 
versus to a particular individual. Does HHS have a policy on 
who the actual grant recipient is, and if so, could you 
elaborate on that?
    Mr. Sontag. Generally 99 percent of the time our grants go 
to agencies. With research grants, there's usually a principal 
investigator designated, and in rare cases if that principal 
investigator would move locations, the grant sometimes could go 
along. But very, very few of our grants are awarded to 
individuals.
    Now, the exception of that would be training grants, 
scholarships and the like.
    Mr. Putnam. And, again, we'll get into this deeper in the 
second panel, but I wanted you to have an opportunity to 
comment on it.
    For example, the difference between administering a grant 
to a specific university or even university system versus to a 
specific researcher who then has the flexibility to adjust the 
grant application or adjust the commitments or timelines 
without running it through some clearinghouse at the State 
university system or within that research facility.
    Department of Education, as an example administering grants 
to a school district versus an individual teacher or an 
individual principal, just as examples.
    I understand that a methodology has been developed to 
determine the level of resources that each agency can bring to 
the table. Can you name some of the agencies that have been 
particularly helpful in providing resources and leadership who 
have been key players in that process?
    Mr. Sontag. In the E-Grant process?
    Mr. Putnam. Yes.
    Mr. Sontag. Well, certainly within the Department of Health 
and Human Services the National Institute of Health is 
essentially going to be the major player of consolidating our 
E-Grants efforts. The grants dissemination, application 
process, etc., will be through essentially a filter at NIH. We 
have smaller agencies within the department that have very 
small grant programs, and we're working very closely with them 
to bring them into the fold.
    Mr. Putnam. Now, earlier I asked you if you chaired the 
task force, and I may not have been particularly clear. Is it 
correct that HHS is taking a lead role in implementing the E-
Grants Program with OMB?
    Mr. Sontag. Yes, sir. I'm sorry. I thought you asked me if 
I was Chief Financial Officer.
    Mr. Putnam. I apologize. I probably did. But I just wanted 
to clarify that. So I apologize, for both of our sakes.
    One of the key things that runs through these hearings on a 
variety of issues but particularly the E-Government Initiatives 
is that the obstacles aren't particularly technological in 
nature but cultural.
    Could the three of you please comment on the cultural or 
the human capital personnel management-type challenges that we 
face in reforming grants management, beginning with Ms. 
Springer.
    Ms. Springer. I think that one of the things I have noticed 
is that across all of these grantmaking agencies, you have some 
initiatives that have started at the agency level. Some 
agencies have been slower to respond on their own. So prior to 
a governmentwide approach that tries to harmonize and simplify 
down to just one approach, you have some agencies that have 
just on their own moved ahead.
    So you'll have a particular department--I'll mention the 
Department of Education, for example--that has advanced its own 
initiative. One of the things that we need to do is to 
harmonize them back in with other agencies that maybe haven't 
done a whole lot. So that is one cultural variation that we 
need, and in one case you're trying to move them up to a state-
of-the-art activity and responsiveness. In the other case, they 
might view it as a step back. In fact, it isn't. Often we can 
leverage off of what they've done, but you do have a very wide 
variety, spectrum of existing approaches that we need to 
harmonize.
    Mr. Putnam. Dr. Sontag.
    Mr. Sontag. I'd like to speak to it from two vantage 
points.
    First from the HHS grant consolidation effort. HHS has had 
a history of a very decentralized agency, very independent, 
very productive agencies, the National Institute of Health, the 
Center for Disease Control, FDA and so on. Their quality and 
their independence have made it more difficult to consolidate 
grants.
    At the same time, we think we can achieve considerable cost 
saving to the American public by consolidating essentially the 
grant management process at the department level and even at 
the agency-head level. We have many more grants offices than we 
need. The policies sometimes contradict each other, and we're 
working very hard to issue consistent policies across the 
department. We've initiated a review of all grant announcements 
that come out of the department. To that end, we're looking for 
length. We're looking for ease of application. We're looking 
for simplicity of language, and we've made I think great 
strides.
    The same issue, Mr. Charles Havekost administers our E-
Grant Initiative across government. We're finding similar 
problems, where agencies have had a history of being very 
independent and doing things the correct way according to their 
sense to give up data points, give up data cells, information, 
is going to be a very complex challenge.
    But speaking particularly to 106-107 in the Department of 
Health and Human Services, we think we can improve quality of 
grants administration and save the American public considerable 
dollars.
    Mr. Putnam. Mr. Posner.
    Mr. Posner. Well, it's always been difficult for agencies 
carrying out related programs in different agencies to address 
and coordinate. They have different constituencies and 
different congressional focuses.
    One of the things I would comment on is, there's a 
phenomenon that is called ``picket fence federalism'' which 
talks about how specialists at each level of government form 
alignments with other specialists. Highly specialized and 
trained and expert people sometimes get used to dealing with 
their counterparts at State and local governments without 
looking at the collateral relations they have, either with 
related programs or even with their nominal superiors. Very 
often mayors are in some ways dealt out of this process, and 
that has been a classic problem with the grant system that we 
have, which I think it falls in the cultural realm.
    The other is the different Federal roles across different 
Federal programs. Programs have all different sorts of 
positions vis-a-vis the Federal Government's relationships with 
nonFederal parties. Sometimes it's devolutionary; sometimes 
it's partnerial; sometimes it's highly centralized. The 
administrative processes can be standardized, but coordinating 
the fundamentals of oversight are going to be different.
    Mr. Putnam. What are the penalties for agencies who are not 
compliant, whether with the E-Grants portion or 106-107?
    Ms. Springer.
    Ms. Springer. I'm not aware that the law itself actually 
specifies any particular penalties. We expect that the agencies 
are going to be compliant. We don't have any reason to think 
that they won't be. From the standpoint of penalties, frankly I 
haven't considered it to any great degree, because we have 
gotten cooperation across the board, and as I mentioned 
earlier, we are on track on everything.
    In my 4 weeks since I've been confirmed, I haven't come 
across penalties I guess is the fair answer.
    Mr. Putnam. Maybe that is one way to look at it. But if I 
have a blank piece of paper here with Homeland Security, 
essentially. We just created it. It's already a mess. We know 
that it's going to be heavily driven by a grants process, 
because the nature of Homeland Security is that it's not just 
here in Washington, DC. It's in EMSs and fire departments and 
sheriff's offices.
    So you've got a clean slate basically. There's still a 
little bit of time to start that one, with the lessons of 100, 
200 years of picket fences. So how should we clean that chart 
up, now that we have the opportunity to at least make one 
department a model without having to deal with the cultural 
resistance that's built up over time?
    Ms. Springer. I think that what our effort is going to 
focus on is the administration. There are two pieces here. I 
think there's the administration effort that the act is asking 
us to work on. There's also the substance of consolidating 
programs, and it strikes me that there are almosts of both 
here.
    One is just the construction of the programs themselves, to 
the extent that you have six or eight different entities 
serving similar purposes, that needs to be brought together 
from market standpoint. But the administration aspect, which is 
within the scope of the act, I think works alongside of that. 
So certainly with the administration of it, we can harmonize 
that so that there is one way to get to all of those, but the 
fact that there remains six different offerings or programs is 
something that, I think, is outside the scope of the act but 
that we should try and influence.
    Mr. Putnam. Hope County, FL, in considering material help 
to better prepare my Health Department to deal with a bioterror 
attack, do I call HHS for grant money or the Department of 
Homeland Security?
    Ms. Springer. What we're trying to do with this act is to 
have one place that will have all of those listed. At this 
point, it looks like it's constructed in a way that you have 
all of those, and, I agree with you that it's set up in a way 
that's not customer service oriented, if you will. But, again, 
the program construction is something that I think we can help 
influence. If that's within the scope of this, then that would 
be an expansion I think of what we're doing currently.
    Mr. Putnam. Mr. Posner, you're an adjunct professor. Get a 
little academic on us and tell us how it ought to be.
    Mr. Posner. This is where the rubber meets the road. I 
think you put your finger on the most important issue here, and 
we have urged some kind of consolidation. Just take the first 
two boxes on the left. The ODP which was imported from Justice 
and FEMA really substantially fund the same things: sometimes 
different recipients, but they fund training, exercises, 
equipment and the like. They have different rules, different 
formulas. Now, they are also in the same department but in 
different directorates. At the very least one could look at the 
model of consolidating funding streams. It doesn't necessarily 
mean you have to go all the way to block grants.
    In my statement, I talk about the spectrum. I mean, block 
grants have traditionally been a way to consolidate and devolve 
authority. You can separate those two things out. You can 
consolidate grants like EPA has done with the performance 
partnerships and still hold the States or local governments 
accountable for results, assuming you can measure and agree on 
the goals that you're trying to achieve. Now, we may not be 
there yet in Homeland Security. We may not have consensus about 
how you measure preparedness, but we know some of the 
fundamentals. We know something about training, mutual-aid 
agreements, the need for exercises, so we have some sense of 
what we want these locals to do, and we have possibly the 
foundations to form what EPA calls a performance partnership.
    Then the other side of the spectrum is where you accept the 
existing system and deal with the pain points on an as-needed 
basis, which can be, you know, an expedient certainly better 
than nothing in some sense but not the fundamental change I 
think that you're pointing to.
    Mr. Putnam. Mrs. Miller, I have vastly exceeded my time 
allowance. You're recognized for as long as you need.
    Mrs. Miller of Michigan. Thanks. Just a couple of quick 
questions, Mr. Chairman. I appreciate that.
    I'm going to get back to this whole concept of E-Government 
and customer service in particular with E-Government. Ms. 
Springer was saying it's been 4 weeks since she has been 
confirmed. I'm a new Member. I've been here for 4 months, and 
I'm not the biggest technology person in the world. In 
Congress, we're trying to use our individual Web sites to 
assist our constituents. And it's one of the things, 
particularly in my district office, my district directors are 
saying you cannot believe all these different grants and the 
kinds of questions that people are asking in order to access 
these different grants and the information.
    First point, as you mentioned, is there some way that you 
will then be assisting the individual Members of Congress? 
We're trying to get our Web site up and going now where we're 
interacting at length with CRS for all the different grants. We 
sort of are just cannibalizing their site. Do you have a plan 
for assisting the individual members in using all this grant 
applications as we get organized here?
    Mr. Sontag. We have no plan at this point to assist Members 
of Congress.
    Mrs. Miller of Michigan. Yes. But you can't be doing this 
in a vacuum.
    Mr. Sontag. The ease of E-Gov is going to allow for the 
citizenry of this country to access information. Persons 
calling from Polk County or Ann Arbor, MI, looking for 
information right now would find it is not just the Federal 
agencies dealing with that problem. If it is within HHS, there 
would probably be a dozen. If we are successful--and I am 
confident that we will be--people will be able to access 
accurate, very detailed information on where they should go for 
grant information, the application process, etc. That is going 
to be the service. Congresswoman Miller, we have made no effort 
to strategize this for Congress, but I would be happy to 
entertain such a request.
    Mrs. Miller of Michigan. We should certainly at a minimum 
be able to drive people to a link to these kinds of things. The 
questions that we're all getting are what kinds of grants are 
available and what is the process.
    Perhaps this is not the right question for those of you, 
but, just from an infrastructure standpoint, what kind of 
challenges are you facing with 26 different agencies as your 
architecture, to make the data bases interoperable? I'm sure 
you're facing all kinds of challenges with that. It is 
interesting listening to Dr. Posner say you are citing these 
material weaknesses from 1975 and here we are now trying to get 
these agencies to talk to one another.
    Mr. Sontag. Speaking for HHS, it gives us enough data base 
to work from where we have multiple different servers, delivery 
systems, etc. But the process that we outlined on E-grants is 
one of the 26 Federal agencies coming together not under HHS's 
rubric but under a cooperative venture where we are looking at 
every grant program to see how it could fit. I think people 
going into this process had been willing to give up, and that's 
the only way that it is going to work.
    The process we have worked out with OMB to fund the E-
grants initiative is that these 26 agencies are pledged to 
contribute X amount of dollars depending on the size of their 
grant program. So they are all, in a sense, partners with us. 
That has helped us deal with many of the complexities. But I 
think many of the technical issues are still ahead of us.
    Mrs. Miller of Michigan. Thank you, Mr. Chairman.
    Mr. Putnam. Thank you, Mrs. Miller.
    A followup question for this panel: Ms. Springer, will all 
agencies be required to use the E-Grant system?
    Ms. Springer. Yes, they will.
    Mr. Putnam. By when?
    Ms. Springer. We're looking to--I'm going to defer maybe to 
Dr. Sontag on the exact date. The first group is in 2003, end 
of 2003 pilot group, and then the final date for the rest is 
when?
    Mr. Sontag. Is 2004 and 2005.
    Ms. Springer. 2004 and 2005.
    Mr. Putnam. So they're divided into three groups?
    Ms. Springer. I'm not sure if it's three actual dates. I 
know it starts in the fall, October 2003. Do you have a 
schedule there?
    Mr. Sontag. OMB is going to put a policy in place that will 
essentially require posting of all announcements through the E-
Gov process that I talked about by October of this year.
    Mr. Putnam. All posting will be on-line?
    Mr. Sontag. Posting as a grant announcement.
    Mr. Putnam. By October 2003?
    Ms. Springer. The grant announcement piece of it.
    Mr. Putnam. Just an awareness portion. They won't be able 
to apply on-line by October, will they?
    Ms. Springer. The E-Apply part is the part that will come 
second. Over the course of the 2003 to 2005 timeframe, by the 
end of 2005, we will have not only the announcements but also 
the apply.
    Mr. Putnam. Thank you very much.
    Any other last comments that this panel would like to make 
before we move to panel two? Dr. Sontag.
    Mr. Sontag. Just one question, Mr. Putnam. I want to be a 
voice for the small grantee. I know in the age of consolidation 
large grants are considered to drive much in our country, but 
some of the best grants I've ever seen funded have been 
$30,000, $40,000, what I call storefront grants to start local 
early childhood programs. Whatever we do in consolidation, I 
think we should still allow room for what I call the small 
grantee.
    Mr. Putnam. Any other comments?
    Thank you very much, panelists. We appreciate your support. 
We will take a 5-minute recess while we set up the second 
panel.
    [Recess.]
    Mr. Putnam. If the second panelists would please take their 
seats and then immediately rise again to be sworn in.
    I would also ask if there is anyone attending with the 
witnesses who will be providing information to the 
subcommittee, backup information, ancillary information, to 
please rise and also be sworn in.
    [Witnesses sworn.]
    Mr. Putnam. I would note for the record that the witnesses 
responded in the affirmative.
    We will get right to our second panel.
    We will begin with Karen Miller.
    In addition to representing the citizens of Boone County, 
MO, as a county commissioner for more than a decade now, Karen 
M. Miller joins us as president-elect of the National 
Association of Counties. She will take over the presidency in a 
few months, where I understand she has already exhibited an 
interest in making sure localities across America, including 
Boone County, are fully utilizing the Internet to improve 
services for citizens and improve intergovernmental alliances.
    Allow me also to extend my condolences on behalf of the 
entire subcommittee, as I understand your grandmother passed 
away last week. Your being here today under these circumstances 
exhibits a true commitment to your organization's membership 
and goals.
    We are delighted to have you here. If you have friends or 
family who would like to take a picture of you testifying 
before Congress, as humble a congressional gathering as this 
is, you are certainly welcome to come around here and do that. 
I know that is a pretty neat thing.
    Welcome. You are recognized.

   STATEMENTS OF KAREN M. MILLER, PRESIDENT-ELECT, NATIONAL 
ASSOCIATION OF COUNTIES, COMMISSIONER, BOONE COUNTY, MO; MARVIN 
   G. PARNES, EXECUTIVE DIRECTOR OF RESEARCH ADMINISTRATION, 
UNIVERSITY OF MICHIGAN; AND KATHY CROSBY, DIRECTOR OF WORKFORCE 
      DEVELOPMENT, GOODWILL INDUSTRIES INTERNATIONAL, INC.

    Ms. Miller. Thank you very much, Mr. Chairman.
    Good morning, Mr. Chairman and members of the subcommittee. 
My name is Karen Miller, and I am a county commissioner in 
Boone County, MO. I currently serve as the president-elect of 
the National Association of Counties.
    NACo, the National Association of Counties, was established 
in 1935 and is the only national organization representing 
county governments in Washington, DC. Over 2,000 of the 3,066 
counties in the United States are members of the National 
Association of Counties, and we represent 85 percent of the 
population. Federal grants are vitally important to county 
budgets, especially in these difficult economic times, so we 
thank you for the invitation to appear before you today.
    I would like to make three key points on the state of the 
Federal grants management system and the progress that was 
outlined in the Federal Financial Assistance Management 
Improvement Act of 1999: First, local governments, particularly 
in rural America, must overcome several obstacles to find and 
apply for Federal financial assistance. Second, NACo supports 
the streamlining and simplification of financial assistance 
programs that has occurred since the passage of the Federal 
Financial Assistance Management Improvement Act of 1999. Third, 
by using technology, the Federal Government through E-
Government initiatives such as E-Grants could remove the 
barriers that local governments experience.
    Of those 3,066 counties across the United States, over two-
thirds are considered nonmetropolitan, or rural. Local elected 
officials from these counties are at a disadvantage in the 
current Federal grants disbursement system for several reasons. 
First, many of those counties lack the professional staff 
capacity to identify the myriad of Federal grants available. A 
2001 NACo study found that only 28 percent of rural counties 
have a grant writer on staff. The percent of the rural counties 
that employ an economic development professional is only 
marginally better at 38 percent. As a result, these local 
elected officials are forced to try to become experts in the 
Federal grants process themselves. However, county elected 
officials are predominantly part-time public servants who must 
balance their civic duties with professional responsibilities.
    To illustrate this point, NACo quickly surveyed the 47 
State associations of counties across the Nation. States with 
100 percent part-time county commissioners include Florida, 
South Carolina and North Carolina. Additionally, in States that 
did have full-time officials, these commissioners were 
primarily from the large urban counties.
    Small metropolitan and rural county officials can also turn 
to their local regional development organization, known locally 
as councils of government or regional planning commissions. 
These organizations are governed by the local governments they 
serve and provide technical assistance in grants management.
    According to a survey by the National Association of 
Development Organizations, the typical regional development 
organization served six counties and 30 municipalities and 
administers 11 programs. However, their limited staff capacity, 
increasing responsibility and budget cuts have pushed these 
organizations to their limits.
    Another emerging alternative are various private vendors 
that aggregate grant announcements and information into 
sophisticated but expensive on-line data bases. However, due to 
declining tax bases and difficult budget constraints, these 
fee-for-service products remain out of the reach for our rural 
counties.
    The Federal Financial Assistance Management Improvement Act 
of 1999 was passed to ease the burdens of local governments and 
other grant seekers while also capitalizing on recent 
technological advances. NACo supports the streamlining and 
simplification of the Federal grants process and is excited 
about the potential of the E-Grants initiative.
    I have met with Charlie Havekost, the project manager for 
the Department of Health and Human Services, about the 
initiative and have been impressed with his willingness to work 
with county governments through NACo. Specifically, we would 
like to conduct a pilot project with NACo's rural action caucus 
which represents about 1,000 rural elected officials 
nationwide. The caucus would serve as a sounding board on the 
successes and impediments to the E-Grants initiative and would 
be able to provide feedback on future improvements.
    Additionally, NACo will educate its members on the value of 
E-Grants and encourage them to file grants electronically. We 
would like to see a universal application for all Federal 
grants whereby each Federal agency requires similar 
information.
    Further, NACo believes that the Federal Government should 
develop a Web site and an electronic mailing list for grant 
announcements. I feel that there would be a greater awareness 
among the local elected officials if such a site list were 
available.
    In addition, it would be helpful if the Web site and 
mailing list could be tailored based on the user's interests 
and needs.
    In addition, once a grant is identified and the elected 
official would like to apply, the E-Grants platform must 
recognize the wide disparity of Internet access in urban and 
rural America. Unlike urban cities and counties, much of rural 
America lacks access to high-speed Internet service. 
Consequently, Internet access for many rural communities is 
sluggish, dial-up service that may be subject to long distance 
telephone rates. Therefore, NACo supports a system that does 
not require periods of Internet connectivity.
    In conclusion, I believe that the Federal Government can 
build on the success of the Federal Financial Assistance 
Management Improvement Act and mitigate the challenges 
currently facing rural elected officials.
    Mr. Posner stated that he thought that grants should go 
through the States to be able to do a more regional look and 
some continuity, and I concur with that as long as the language 
requires money intended for local governments to be spent that 
way. As an example, the Federal elections reform that the 
Congress so graciously supported, the funds for local elected 
officials to support equipment, in our State, our State has 
decided that there will be no grants, it will be loans with 
interest if we need it, money to replace that equipment. That 
was not the intention of the Congress, and so I think that the 
language that was in the homeland security bill was much 
needed, especially in the times that we are in right now with 
all the State problems.
    Again, I want to thank you, Mr. Chairman and members of the 
committee, for allowing me to appear today and would welcome 
any questions you might have. Thank you.
    Mr. Putnam. Thank you, Commissioner Miller.
    [The prepared statement of Ms. Miller follows:]



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    Mr. Putnam. Mr. Parnes is our next witness. He is associate 
vice president for research and executive director of research 
administration for the University of Michigan, a university 
that is particularly good at getting research money. He has 
served in that office in some leadership capacity for the past 
15 years. As vice president, Mr. Parnes is responsible for 
infrastructure, research administration, technology transfer, 
liaison with industry and day-to-day oversight of Michigan's 
university research units.
    I know our vice chair is especially pleased when she has an 
opportunity to share the knowledge of wisdom of her fellow 
Michigan residents with the subcommittee. Mrs. Miller, would 
you like to make any further comments about the distinguished 
gentleman?
    Mrs. Miller of Michigan. I will just tell you, my father 
graduated from U of M. My husband graduated from Michigan State 
University. I hope you won't hold that against him, but we have 
a constant thing in our family about the two universities.
    But I'm so proud of the University of Michigan and the 
staff that they have and the kind of product that you've been 
churning out for literally generations. It is a national 
treasure, quite frankly. I am very pleased to have you here 
today.
    Mr. Putnam. Welcome.
    Mr. Parnes. Thank you, Mr. Chairman and Members. I am 
delighted to be able to be here representing universities.
    The University of Michigan has done well in the grants 
process. Of our $700 million a year in research expenditures, 
about $500 million of that is from Federal sources. We talk 
about fragmentation. We receive funds, I would say, from 
virtually every Federal agency.
    On the one hand, it speaks to a rich partnership in which 
universities and the Federal Government serve our citizens, but 
there is certainly a lot of potential for administrative 
complexity, redundancy and waste both for us and the granting 
agencies.
    We really believe the Federal Financial Assistance 
Management Act is certainly outlining what's required. We 
applaud the act and the efforts to implement it. We believe, 
however, that from our perspective in the universities the pace 
has been slow and to date the progress made by most government 
agencies for fulfilling the intent appears to us to be minimal 
given the aggressive timeframe that has been established. 
That's a concern that we have.
    We heard about a single product that is really emerging, 
which is a pilot standard format for funding opportunity 
announcements. That's valuable, and we know there is other 
progress being made, but we're concerned about making sure it 
gets implemented.
    I will focus on one area that is of concern to us and many 
other universities where there has been promise but we have 
great concerns and that is electronic grant submissions, the 
application process. We find that there is a lot of labor 
involved in learning to use all of the many systems that are 
still operating, so we have many faculty staff and 
administrators who have to learn to use a great host of 
systems.
    I would like to make a few points as this program moves 
forward that I think are important to us. We really value a 
single system for Federal grant contact. We want this common 
face to be established. However, in the interim, agencies 
continue to develop what we call rogue systems. We call them 
rogue systems because they are developed outside of the E-
Grants initiative and require us to fulfill a lot of the 
business requirements of those programs and agencies at our 
expense.
    We're managing more than a dozen different systems in 
trying to process our grant applications so we really hope that 
there will be some effort to discontinue the development of 
these competing programs and really come under a very clear 
mandate. We like the vision of a single Federal system.
    We think the E-Grants program under Charles Havekost is 
moving in the right direction. We applaud his efforts.
    We would like to see more muscle behind the corralling of 
other systems. Part of this, we need standardization. We're 
interested in reviewing the standards that are currently coming 
out for us to work toward. Part of this is that we then have to 
develop the systems for meeting these standards. We have to 
develop internal mechanisms, our own process for how to get 
data to the portals; and in the past, it has been very hard. 
Other initiatives have failed to get a common standard. So we 
really are hoping that OMB will put some muscle behind getting 
a common standard that the agencies will all use.
    We want systems that involve administrators as the point of 
contact for filling out grants. I know this varies in different 
areas, but for universities we don't want our expensive 
research scientists filling out forms. We want that done 
through administration. We want the process to involve central 
grants offices.
    We think NSF and NIH have gotten this right. They work with 
the university in doing this. We don't want to have individual 
faculty members modifying conditions of a grant for which we 
have fiduciary responsibility. We need a system that works 
directly with the universities.
    Training. We need to make sure we have a lot of good 
training. A lot of the systems that are in operation now are 
cumbersome, difficult to use and take a lot of effort to get 
people up to speed.
    User involvement. We think there needs to be more. There 
has been some. NIH has been wonderful. They have had an 
advisory committee representing a broad spectrum of their grant 
recipients that has met frequently, a lot of e-mail contact. 
That's a model. I think just the commentary may not be 
sufficient. This is a partnership. The universities, through 
the Federal demonstration project, NCURA, AAU, other 
organizations, are willing to pull together and work in a 
unified way. We need to have a partnership if the systems are 
going to work.
    We do understand the complexity of massive data 
transmission. We recognize the efforts that are being made, and 
we want to be partners in ensuring that we are efficient and 
make sure our resources get devoted to the needs of our 
citizens and not to administration.
    Thank you.
    Mr. Putnam. Thank you very much.
    [The prepared statement of Mr. Parnes follows:]



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    Mr. Putnam. At this time I would like to recognize Ms. 
Crosby. Ms. Crosby is Director of Workforce Development for 
Goodwill Industries International where she has been managing 
Department of Commerce technology opportunity grants and $20 
million of welfare to work grants. Prior to this role, Ms. 
Crosby spent 19 years at Goodwill Industries for the greater 
Detroit area where she managed some $8.3 million in grants 
involving 120 employees at 11 sites.
    We welcome you to the subcommittee, and you are recognized 
for your testimony.
    Ms. Crosby. Thank you very much. I really appreciate the 
opportunity to speak on behalf of nonprofits to an issue that's 
so important to us and that is maintaining funding to meet the 
needs of the communities where we reside.
    Goodwill Industries International, where I work, supports 
176 local Goodwills in the United States that serve 98 percent 
of all the counties in the United States. One of the 
interesting things about my role as Director of Workforce 
Development is that I represent the mission and, therefore, am 
always looking for funding opportunities for grants at the 
Federal level that we can use to support the mission at the 
local level and reach out to put people back to work.
    I have heard so much today that rings true with what 
Goodwill is concerned about: the issue of common application 
process, the need for training; the need to have a voice in 
developing a system that not only meets the administrative 
needs of the government but the end user needs, I share many of 
the same concerns with the panel that's here.
    But I would like to use my time to address three things 
that I think are particularly challenging for nonprofits of all 
sizes, whether the larger nonprofits in some of our bigger 
cities or whether our small rural nonprofits taking the $30,000 
grants that Mr. Sontag referenced. They are important issues 
for all of us to address.
    The first issue for us is the idea of common definitions in 
grant proposals and the department vernaculars that creep into 
the process. I was taken by just hearing the term ``one-stop'' 
used in relation to E-Grants here. One-stop in the employment 
and training world already has a capital letter connotation. 
We're now going to create a one-stop E-Grant center. It will 
make the search engine real interesting, just finding one stop 
on the dot-gov Web site, because we're creating yet another 
vernacular and another use of a very familiar term.
    From our point of view, searching and mining for Federal 
funds to extend the effectiveness of our mission is 
increasingly challenging. We can create these sites, but 
without the notices that were referenced earlier or another way 
to identify funding related to mission-specific work having 
links to various agencies is not going to be incredibly 
beneficial.
    I certainly am here, too, to advocate on behalf of that 
idea of a common standard for proposals, the time lines, not 2 
weeks to 6 months but something that is reasonable and that we 
know we can count on for the application process, the format, 
so that there are standard elements truly in the application 
process.
    And scoring. Every RFP that is issued has a different 
weight, methodology, thinking behind the scoring and how that 
proposal will be judged. Only experience from writing, winning 
and failing proposals teaches the grant personnel how to 
accurately read the combination of implied expectation, 
regulatory compliance and funding authorization requirements 
contained in every published grant announcement. The style and 
process can vary drastically, and it requires that one knows as 
much as possible about the authoring source in the agency. 
Deciding to respond to an RFP creates a daunting collection of 
challenges.
    I also think that it is important to categorize grant 
opportunities by common services and populations in need rather 
than by the originating agency. Organizations that look for 
funding attempt to leverage that funding across the source 
agencies, and being able to identify all of the funding related 
to a prospective mission is important. I noted in the GAO 
testimony that they had referenced that very topic, and in fact 
that there were 44 different grants available. It said 44 
programs administered by nine different Federal agencies to 
provide employment and training services. That would be exactly 
the type of challenge that we're trying to overcome when we're 
mining for grants and looking for opportunities to meet local 
needs.
    I thank all of you for the chance to be here today. I 
welcome any questions about nonprofits that I might be able to 
address and hope that Goodwill can be part of this ongoing 
discussion.
    Mr. Putnam. Thank you, Ms. Crosby.
    [The prepared statement of Ms. Crosby follows:]



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    Mr. Putnam. The committee notes for the record the arrival 
of the gentlelady from California, Ms. Watson. Without 
objection, the record is certainly open for your written 
testimony, but if you would like to be recognized for a few 
opening remarks, we will also do that at this time if you so 
desire.
    Ms. Watson. I had been asked by Lacy Clay to deliver his 
opening remarks. I understand he is on his way, so I'll defer 
to him. Thank you so very much, Mr. Chair.
    Mr. Putnam. Yes, ma'am. We are delighted to have you.
    I will look to the gentlelady on my left, Mrs. Miller of 
Michigan, to open with her round of questions for 5 minutes.
    Mrs. Miller of Michigan. I will start with Karen Miller. 
That's a great last name.
    I was actually a former county treasurer, along with some 
of the other jobs I had. After I was county treasurer, then I 
was a Secretary of State.
    I was particularly interested to hear you talk about what 
is happened with the HAVP, the Help America Vote Plan, in 
Missouri where they are loaning the money with interest. That 
was not the intention of the Federal Government for that 
matter. I don't know if I'm asking you a question, but I picked 
up on you talking about that. We're going to get, I think, $50 
million in Michigan. I'm not sure what you're getting in 
Missouri.
    Ms. Miller. I don't know what we're getting in Missouri 
either, but when I left home yesterday my county clerk came to 
me and said, I know you're going to D.C., can you stop by the 
Senate offices and legislator's office?
    Here's what's going on. The State has decided they want to 
loan the counties money for equipment with interest instead of 
doing any grants. They will keep all the funds themselves. I 
know that was not the intention because we were very active in 
that, in getting that funding so that local governments could 
change out that equipment so that we could have consistent 
elections across the country. So I don't know where to go from 
there, but I wanted you to understand that when you give grants 
to the States without some requirement that so much of it goes 
to the locals as you intended when you passed the legislation, 
that can happen.
    Mrs. Miller of Michigan. One of the things we're doing in 
Michigan is our now Secretary of State has put together an 
advisory committee which is inclusive of most of the county 
clerks actually in Michigan. Because the county clerks were 
very instrumental throughout the Nation in getting that 
legislation passed. I'll be interested to see how you do there. 
Could you expand a little bit? You talked about the pilot 
program through NACo that you're contemplating with your rural 
action caucus; and most of the States, of course, have similar 
experiences with a lot of rural areas. As you mentioned, they 
don't have the money to have staff on hand to do the grants and 
to do the grant mining and these kinds of things. What is the 
intention of NACo to do this rural action caucus?
    Ms. Miller. We talked to Mr. Havekost, and one of the 
things he is real interested in is he wants to know if you 
apply for a grant in the hard copy, written way and you apply 
for a grant on-line, how they track. I mean, does it move along 
quicker when it is on-line or is it slower? So he has asked us 
to identify some counties that would be willing to apply both 
ways. That's one way. And to also let them know then the 
problems they had in applying on-line versus what they are used 
to as far as the hard copy. So that is the kind of pilot that 
we were looking at doing, was helping get information more for 
the process than anything.
    Mrs. Miller of Michigan. I think that's an interesting 
concept. That has been sort of a constant theme through this 
testimony this morning, that big is not always better 
sometimes. In some of the smaller grant processes in the rural 
communities and that, we do have to be ever vigilant to make 
sure that they are able to access. They are taxpayers like 
anybody else, wherever they live in America, and that they 
should be able to access these kinds of things. Hopefully, we 
can use the technology properly to allow them to access it that 
way.
    Ms. Miller. I think if it is customizable where you can 
identify what you're looking for, searchable, that it will 
eliminate a lot of the time that it takes to, as Ms. Crosby 
identified, that's so overwhelming just finding where the 
possibilities are. I think that would help rural counties 
across America as much as anything, if they're able to have one 
data base to go to, put in their search, what they're looking 
for and identify where the funds are available.
    Mrs. Miller of Michigan. Then I would question the 
University of Michigan's perspective and I think for all the 
universities perhaps as we talk about some of the people who 
are not so cognizant of the grants that are available and don't 
have grant writers on staff.
    The University of Michigan, of course, has to have some of 
the best expertise in the Nation on accessing your kinds of 
grants. You mentioned earlier about the training, perhaps lack 
of training that you sometimes get. I guess I'm going to ask 
you to expand on that, help materials that are available to 
your staff? You don't want to use, as you mentioned, the 
research individuals to be filling out all the administrative 
kinds of things. What has been the experience of the University 
with asking the Federal Government for assistance, and then 
what has been your experience with the different agencies in 
responding to your needs to assist you?
    Mr. Parnes. I think there is a lot of variability in how 
well the agencies tune in to what the user needs are. I'm sure 
it is related to their mission. NSF, for example, is so tied to 
universities, their fast lane system is very well designed to 
meet their needs. They got a green light on their 
administrative procedure. They have an understanding of the 
training we need to do for staff.
    Some of the other systems, DOE is using basically an 
industry contract system and applying it to a university 
setting.
    You really have a lot of difficulties getting people to 
learn new terminology approaches. Sometimes the materials 
developed to provide training are limited. It's a lot of labor 
to bring everyone to the point where they can successfully 
launch and submit these applications. So there is a wide range.
    Part of it is that there has been a proliferation of 
systems. So we're in a situation now where we may have a dozen 
different systems that we have to learn to use. There is a 
limited amount of capacity for people to keep relearning those. 
We are concerned as this goes forward that whatever is 
developed tries to eliminate that redundancy so we can 
concentrate on training those people who need to be expert in 
those areas.
    Mrs. Miller of Michigan. Perhaps just an open-ended 
question to the panel here. In fact, we were talking during the 
break, one of the things that I found in my constituency there, 
just as an example, Community Development Block Grant funds, 
because of the census tracking requirement that the Federal 
Government has--and we're not particularly an affluent area--
but most of my townships cannot use the money--and these are 
explosive growth areas. They can't use it for roads or 
sidewalks. All they can use it for now is senior citizens 
projects. Of course, those are good projects, but I think there 
should be some more flexibility on some of these grants to 
allow you to really utilize the money as you need.
    We're all interested, of course, in waste, fraud and abuse 
and performance evaluations on how the Federal granting process 
is working. Could any of you give me a little feedback on your 
experience on how the Federal agencies benchmark your 
utilization of the Federal grants? Do you have any specific 
area of concern that we should be looking at as well and how 
perhaps the E-Granting process may accommodate some more 
efficiencies in that area?
    Ms. Miller. Just as I was walking in here today, the staff 
was telling me in Senator Baucus' State there are three 
counties that can get Community Development Block Grants. It 
leaves the rest of the State not eligible. That's what we find.
    In my county, we're not eligible for the most part for 
Community Development Block Grants. So it really limits where 
those funds are being serviced.
    I would be opposed to having that as the only criteria, as 
having Community Development Block Grants. I think there are 
other ways to do funding formulas that can be equitable and get 
the funds down to the areas that really need them.
    Ms. Crosby. When there are uniform outcome measurements 
associated with the authorization of funds, I think it helps us 
all to know what the expectation is at the Federal level. 
Certainly recently there were employment and training outcomes 
outlined that crosscut many of the agencies and make it clear 
that the intent of that funding authorization goes to job 
placement, job retention, improved earning capability, 
regardless of who the authorizing agency is on the funds. There 
is flexibility inherent in knowing that the ultimate outcome is 
to achieve those goals.
    I think that the E-Grants initiative, taken to its 
continuing phases, has the opportunity to do that uniform type 
of data gathering that will allow us all to focus on what the 
intent of the authorization of dollars was versus meeting all 
of the little nuances and compliance detractors along the way 
that have us measuring instead, did we serve 13 percent of XYZ 
with only 18 percent of dollars instead of did you put more 
people to work? Did you find more people able to take 
independent care of their lives? Did you improve the economic 
situation of your community? If those are the intent of the 
dollars, then common measurables will be really, really 
empowering.
    Mr. Parnes. I think universities are very adapted to being 
accountable to agencies for fulfilling obligations of grants. I 
think the efficiency here is in the administrative reporting 
and postaward process and auditing. In other words, the more 
concurrence, the more similarity.
    Again, we're all saving dollars that should be better spent 
on substantive needs rather than a lot of different systems 
that all have at the heart the same business process and the 
same accountability necessities. So it's more the uniformity, 
and we're very willing to be accountable. We just want it to be 
an efficient process.
    Mrs. Miller of Michigan. Thank you, Mr. Chairman.
    Mr. Putnam. Thank you, Mrs. Miller.
    Ms. Watson, you're recognized.
    Ms. Watson. Yes. In listening to the current presenters and 
reading over some of your statements, I have some concerns. 
Mrs. Miller and Mr. Parnes, first, NACo. Do they provide you 
with grantsmanship? It is an art. I have sent my staff in the 
past to the University of Southern California to take 
grantmanship so that we could help community-based associations 
write those grants. I have a concern as to what kind of help, 
and is there a format?
    I was very concerned and interested in what Dr. Parnes was 
saying, because at the university level I know that poorer 
universities have less speedy Internet equipment and so on, and 
to do the E-applications might present a problem. I do know 
trying to put the high and the new technology in our State-
funded universities and colleges has been a real challenge for 
the State of California and so I want to know what impact that 
will have if we go to these E-applications, which is maybe a 
smart way to go. I don't know.
    Also, is there assistance for you through your 
organizations?
    Either one that would like to speak first, fine.
    Ms. Miller. As far as the National Association of Counties, 
we have regular nationwide conferences that we do workshops and 
trainings on specific issues that have been working through the 
Congress. Like when the election reform passed, we had 
workshops on that, as to what it meant, what you needed to be 
looking for, how it could apply to your county. And so, yes, I 
think we do that.
    We also have a research department that helps counties in 
identifying how to do things if they don't know how. I believe 
that we have the capacity to do more, probably. We have already 
said that we were committed to trying to get our counties to 
use the E-Grants application process because we believe that's 
the best way to go for the future is one stop or one place to 
find the grants for sure, as long as they are not required to 
be fill-in-the-blank, on-line all the time because that would 
really hurt rural America. We couldn't do that. I agree with 
your point there, Congresswoman.
    Mr. Parnes. I think that's an excellent point, that there 
needs to be default systems that allow institutions with 
different levels of resources or technology to still 
participate actively in the process. I would certainly support 
that.
    Universities have many resources available to do some of 
the searching and grant writing, although there is a lot of 
variability. National professional associations like the 
National Council of University Administrators or Society of 
Research Administrators have a lot of training programs and do 
a lot of inter-university sharing on approaches to effective 
and efficient grants acquisition, but there is no doubt that 
there are haves and have-nots in terms of the capacity to go 
after those funds.
    Ms. Watson. Thank you.
    Ms. Crosby, you are at Goodwill Industries. You have been 
over the centuries, I should say, very successful with this. 
Can you give us some idea how you have achieved that level of 
success? We in our communities depend on Goodwill Industries to 
fill in where we cannot as government. So can you tell us how 
you do it and how you have done it throughout history?
    Ms. Crosby. I think that Goodwill does bring a couple of 
very unique things to the table when it comes to the grant 
management topic. One is that we are a business. Our roots are 
in the retail business. We have income from those stores where 
we train people and learn about customer service. But what it 
gives our organization as a nonprofit is a true appreciation 
that we are a business and we will operate in a business 
fashion. That isn't to say that other nonprofits don't, but it 
makes it perhaps a little easier to build the systems that are 
relied upon to manage other types of businesses like grants.
    The second thing is we have a strong national organization. 
I was very interested in your comment that grant management is 
an art. I have spent over 20 years learning this. I have taken 
a lot of teasing beacause I'm one of those people who actually 
likes reading OMB circulars.
    Ms. Watson. A rare breed.
    Ms. Crosby. I'm telling you. Then to go and earn a 
certificate in grant management. I go back every year for a 
refresher course. I belong to two professional associations. It 
takes all of that to stay abreast of the art of grant 
management. But what it does for our members is give them a 
national office to go to where we have always housed that 
expertise and maintained a training and an outreach for them so 
that they have resources to learn the art themselves. I think 
it helps us be successful.
    Ms. Watson. It is intriguing to hear you say you're a 
business and in the business of. Being in the business of gives 
you, I think, an extra dimension; and maybe that is what we 
ought to kind of try to get our other organizations to look at, 
the business end of it.
    Paperwork. That has been a huge stumbling block in all 
sectors. It would be interesting--and this is to the 
committee--if we could have you from your end suggest to us how 
the paperwork could be reduced. Maybe this E-application and 
response might be the way to go.
    But I am concerned about the capability and capacity in 
other counties, in universities, colleges. I'm an educator. 
That comes out time and time again. Educators complain about 
the paperwork when they go after these grants. There are so 
many varieties and so many contingencies that they have to 
consider. It just becomes a lot of work.
    It would be interesting to me if you could suggest to us 
how to get to what you need to know and to respond to with less 
paperwork and less writing. Can we use a checkoff? A check box 
system with a few comments?
    I just throw that out. I'm thinking as I'm talking. How can 
we come up with a way to expedite these grant applications and 
require less time of those of you that are responding and kind 
of guarantee greater success? I just throw that out.
    Ms. Miller. Congresswoman, I would say that if the format 
was the same for every kind of grant you applied for and the 
requirements as far as the financial requirements of the entity 
that's applying and stuff, the information could stay 
consistent, then your grant writers within your community or 
within your organization wouldn't have to continually redo that 
and it would be a standard format where they would just change 
then the focus on that particular grant and could leave the 
rest of it as the template that they would always use. I think 
that would help everyone across the country.
    Ms. Crosby. It's so amazing that today one of the first 
places to start in my mind as we dissect the request for 
proposal is, can it be stapled? Can it be bound? Will it have 
to be in a plastic spline or how are we going to have to get it 
there? Will it be 7 copies, 10, 15 or 2? Is it 40 pages? Is it 
75? Do those pages include the resumes and bios or do they 
exclude the resumes and bios? The uniformity of just 
presentation alone could take us a big step. I think E-Grants 
has that potential.
    Mr. Parnes. I would endorse my colleagues here. Even though 
we give up our competitive advantage in Michigan because 
knowing how to do all this really does help, we would sacrifice 
that competitive advantage for simplicity.
    Ms. Watson. I just want to comment on what Ms. Crosby said. 
I was writing my dissertation, and it has to be specific to 
even the borders. It drives you crazy. There are only certain 
people who even type those things up.
    As Dr. Parnes said, some of you can't even compete because 
you have to be so specific. I have always wondered, does 
government really need to do this and all of our different 
agencies and departments and all? So I think you could help us 
by kind of responding to this inquiry, by writing us some of 
your thoughts on how we could streamline it. And maybe the E 
system is the answer. But I'm concerned about the capacity, 
too. We don't have any perfect resolutions to these problems, 
but you could certainly help us as we deliberate.
    Thank you very much.
    Mr. Putnam. Thank you, Ms. Watson.
    I want to share some of those same thoughts. I am glad that 
OMB is still here to listen to a number of these issues.
    Mr. Parnes, you mentioned rogue systems. They are still 
being developed even as, and I presume now, even as OMB is 
attempting to get their hands around a common E-Grant system, 
even as the law mandates that we move toward a standardization, 
that there are still agencies out there developing their own 
specific stovepipe. Is that correct?
    Mr. Parnes. I don't know if I have exact information on the 
start dates for all those systems. Because I think there are 
legacy systems and, as was commented in the first panel, some 
agencies to their credit may have gone out front in developing 
systems at a time where they thought that would be helpful. I'm 
not sure how much development is going on now, although I think 
there is still some. I would need to verify if there are new 
initiatives currently under way or if these are just 
continuations of those systems.
    I think there was a comment about culture when you asked 
the question earlier. I think it gets to the heart of this. And 
we have issues at the universities as well. How do you meld a 
lot of different cultures, each of whom believe their system is 
serving the needs of their agency?
    I think that to me is the most critical element here, is 
having enough strength and will to actually bring those systems 
into alignment. We know there is going to be an interim period 
where some of these older systems are going to run, but we 
really want to see real significant progress toward reducing 
those numbers and making sure there aren't new ones introduced. 
I don't have exact dates on whether those have been initiated 
within this short time period.
    Mr. Putnam. Conversely, is it realistic to expect that 
there would be a universal application that would be specific 
and appropriate to the needs of NIH, work force development and 
local law enforcement grants? Is that really what we want to 
shoot for?
    Ms. Miller. I believe there could be. That there could be 
the template that is the standardization and then a specific 
section that identifies the specific agency you're working 
with. But, for the most part, all the information should be 
standard. As Ms. Crosby said, the same amount of copies, the 
same way it is submitted. All that standardization is going to 
help everybody. It's required on every grant. It's just 
required in different formats. So if it could be all put in the 
same format, I believe it would be beneficial.
    Mr. Putnam. You mentioned, Commissioner Miller, about the 
need for some universal approach to it. Mr. Parnes did as well; 
and you did as well, Ms. Crosby. So everybody agrees that there 
ought to be common definitions, common standards. But you also 
made reference to the success of the University of Michigan and 
that some people have grant writers on staff and some don't. 
Have we reached a point where we're not necessarily rewarding 
the most innovative programs or the most efficient programs but 
we're rewarding the folks who have mastered the nuance of the 
grant language?
    Ms. Miller. I think that easily is what happens. I believe 
that the needs are as great in those counties that don't have 
the grant writers or whatever. They just don't know where to go 
to even try to apply for a grant. Once they find that there is 
grant money available, it scares them to death looking at the 
proposal and trying to figure out how to do it.
    I just had a fire district working on homeland security 
grants. It's a volunteer fire department. I sent them to the 
regional planning commission because at least there they know 
how to do that. They can guide them. I believe that you're 
right, if you have money and you can afford to hire these 
people, you have a better shot at getting more money. So those 
that don't have money that probably need it worse are the ones 
that are being left out; and that is rural America, from my 
perspective.
    Mr. Putnam. Mr. Parnes, you advocated OMB putting muscle 
behind the common standard. How do you sanction or disincent 
rogue systems or failure to comply? How do you do that without 
punishing the people at the end?
    You said OMB should put muscle behind the common standard. 
What about those agencies who don't comply? What do you do 
about that?
    Mr. Parnes. I don't know if I have an answer to that in 
terms of what pressure could be brought to bear, so I really am 
not sure I'm kind of capable of speaking to that point in 
particular.
    We do believe, in reference to the last question, in peer 
review in terms of substantive content of grants. In that 
respect, we recognize a lot of difference. But it is the 
administrative shell, the common business elements where I 
think pressure should be brought on those agencies.
    I do recognize the dilemma, is that there are limited means 
to do that. One is funding. We don't want to impact the grant 
recipients down the line by reducing funding in areas of need 
because the administrative compliance with this act isn't 
present, but I don't know what other tools are available other 
than looking at the funding for the administrative component 
perhaps separately from the substantive granting component in 
some of these agencies.
    The question asked earlier of what is the cost of grants 
management and is there some way of looking at how much is 
being expended on unique systems that might better be used in 
developing some of these common systems would be an approach.
    Mr. Putnam. You have $500 million a year in Federal money. 
Are the obstacles to getting that money appropriate for $500 
million, and is the oversight of that $500 million throughout 
the life of that grant appropriate?
    Mr. Parnes. I think there is a lot of appropriate oversight 
of the funds universities receive. I think many of the agencies 
are very active and have developed mechanisms for really 
tracking how those funds are being used and, as I said, holding 
us accountable. I think there are probably administrative 
efficiencies in how that is done that would save both the 
agencies and the Federal Government as well as universities 
time and money. A lot of this goes back again to having 
simpler, single systems. I think the act envisions that. I 
support the act and the effort to implement it.
    In terms of obstacles to getting those funds, it's hard for 
me to understand the question entirely. Obviously, the 
obstacles are worth overcoming. Whether we want to put our 
energy into overcoming obstacles instead of doing better and 
more research that can be put to use for public good, I think 
it is ensuring that is where our effort goes, is into research, 
training, public service and not into kind of administrative 
hurdles that are more than necessary for purposes of 
equitability and accountability.
    Mr. Putnam. You're satisfied with the amount of oversight, 
though, on the back end?
    Mr. Parnes. Yes.
    Mr. Putnam. We have representatives from for-profit, not-
for-profit, public, private here. In your viewpoint, are grants 
appropriately distributed among public, private, for-profit, 
not-for-profit, faith-based? Do we have an even distribution, 
an appropriately even distribution? What are your thoughts if 
there are differences on who best manages or best handles those 
human-services-type Federal grants?
    Ms. Crosby mentioned the business approach. They are 
particularly good at getting these things because they have an 
ability, they have a history, they have a tradition of being 
able to draw down those grants. What are your thoughts on the 
balance there between the larger organizations and the smaller 
or more rural groups and the different attitudes they bring to 
the table based on either faith-based, profit, nonprofit, 
public, private?
    Ms. Karen Miller. All I have is the experience of my own 
county, but I know that as a local elected official, we don't 
have enough money in our budget to be able to meet that need, 
and it takes the combination of the churches, the not-for-
profits, the Salvation Armies, the whole works to be able to 
serve the needs of the most needy in our community through 
those human service grants.
    So, I mean, I believe that from my perspective it's working 
fairly well. I mean, we're all getting a piece of it, and we're 
meeting the need by partnering. I believe that any time we can 
encourage partnerships with the local governments and the not-
for-profits, it's encouraging. I wish grants would require, or 
give preference to those that partner with other agencies to 
better do a job instead of compete against each other, as 
cities and counties do all the time.
    If the legislation was written in such a way to incentivize 
partnerships, I think we would serve our citizens much better 
than we do today.
    Mr. Putnam. Ms. Crosby.
    Ms. Crosby. I think that there are probably a couple of 
interesting things in what you said. Who is the best might not 
be the point system I'd want to enter into. Nonprofits 
generally operate on a human services mission that does not 
include infrastructure building that we would expect our 
municipalities to address, nor the academic research and 
intense training levels of the university. In other words, we 
each have our niche.
    Having said that, you're looking at three different OMB 
circulars that we operate under, too, and those cost principles 
mean, every time you want to enter into a collaboration, 
somebody is going to have to be very savvy and love to read all 
three of them, because in taking the fiscal responsibility for 
that collaboration and sharing the responsibility, there's 
going to be three different sets of rules to match.
    So if we're going to gain at the local level, small 
communities as well as large, some efficiency, it probably is 
another important piece to address in improving the grant 
system that there's a greater uniformity in those systems.
    Mr. Putnam. Very good.
    Ms. Watson, any final comments?
    Ms. Watson. Mr. Chairman, apparently Representative Clay 
has been delayed further, and he would like to have his 
statement be included in the record.
    Mr. Putnam. Certainly. Without objection, we will enter 
that in the appropriate place in the record.
    [The prepared statement of Hon. Wm. Lacy Clay follows:]



    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Putnam. And we thank you for being here, and we thank 
Mrs. Miller, and we thank our panelists as well as our first 
panel. Obviously, we have much work to do in terms of grants 
management. We will continue to monitor the progress of OMB in 
bringing forward an effective E-Grants approach and a 
simplified and streamlined approach that is successful for both 
the grantees and the citizens who benefit from the funds that 
are expended on their behalf.
    So, with that, the hearing stands adjourned.
    [Whereupon, at 12:01 p.m., the subcommittee was adjourned.]

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