Grants Management: EPA Needs to Strengthen Oversight and Enhance
Accountability to Address Persistent Challenges (01-OCT-03,
GAO-04-122T).
The Environmental Protection Agency (EPA) has faced persistent
challenges in managing its grants, which, at about $4 billion
annually constitute over one-half of the agency's total budget.
EPA awards grants to thousands of recipients to implement its
programs to protect human health and the environment. Given the
size and diversity of EPA's programs, its ability to efficiently
and effectively accomplish its mission largely depends on how
well it manages its grant resources and builds accountability
into its efforts. In our comprehensive report on EPA's management
of its grants, released last week, we found that EPA continues to
face four key grants management challenges despite past efforts
to address them--(1) selecting the most qualified grant
applicants, (2) effectively overseeing grantees, (3) measuring
the results of grants, and (4) effectively managing its grant
staff and resources. The report also discusses EPA's latest
competition and oversight policies and its new 5-year plan to
improve the management of its grants. This testimony, based on
our report, focuses on the extent to which EPA's latest policies
and plan address (1) awarding grants competitively, (2) improving
oversight of grantees, and (3) holding staff and managers
accountable for fulfilling their grants management
responsibilities.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-122T
ACCNO: A08635
TITLE: Grants Management: EPA Needs to Strengthen Oversight and
Enhance Accountability to Address Persistent Challenges
DATE: 10/01/2003
SUBJECT: Environmental monitoring
Federal grants
Grant award procedures
Grant monitoring
Internal controls
Competition
Financial management
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GAO-04-122T
United States General Accounting Office
GAO Testimony
Before the Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure, House of Representatives
For Release on Delivery Expected at 2:00 p.m. EDT
Wednesday, October 1, 2003 GRANTS MANAGEMENT
EPA Needs to Strengthen Oversight and Enhance Accountability to Address
Persistent Challenges
Statement of John B. Stephenson, Director, Natural Resources and Environment
GAO-04-122T
Highlights of GAO-04-122T, testimony before the Subcommittee on Water
Resources and Environment, Committee on Transportation and Infrastructure,
House of Representatives
The Environmental Protection Agency (EPA) has faced persistent challenges
in managing its grants, which, at about $4 billion annually constitute
over one-half of the agency's total budget. EPA awards grants to thousands
of recipients to implement its programs to protect human health and the
environment. Given the size and diversity of EPA's programs, its ability
to efficiently and effectively accomplish its mission largely depends on
how well it manages its grant resources and builds accountability into its
efforts.
In our comprehensive report on EPA's management of its grants, released
last week, we found that EPA continues to face four key grants management
challenges despite past efforts to address them-(1) selecting the most
qualified grant applicants, (2) effectively overseeing grantees, (3)
measuring the results of grants, and (4) effectively managing its grant
staff and resources. The report also discusses EPA's latest competition
and oversight policies and its new 5-year plan to improve the management
of its grants.
This testimony, based on our report, focuses on the extent to which EPA's
latest policies and plan address (1) awarding grants competitively, (2)
improving oversight of grantees, and (3) holding staff and managers
accountable for fulfilling their grants management responsibilities.
www.gao.gov/cgi-bin/getrpt?GAO-04-122T.
To view the full product, including the scope And methodology, click on
the link above. For more information, contact John B. Stephenson at (202)
512-3841 or [email protected].
October 1, 2003
GRANTS MANAGEMENT
EPA Needs to Strengthen Oversight and Enhance Accountability to Address
Persistent Challenges
Late in 2002, EPA launched new efforts to address some of its
long-standing grants management problems. It issued two policies-one to
promote competition in awarding grants and one to improve its oversight of
grants. Furthermore, in April 2003, EPA issued a 5-year grants management
plan to address its long-standing grants management problems. These
policies and plan focus on the major grants management challenges we
identified but will require strengthening, enhanced accountability, and
sustained commitment to succeed.
EPA's September 2002 competition policy should improve EPA's ability to
select the most qualified applicants by requiring competition for more
grants. However, effective implementation of the policy will require a
major cultural shift for EPA managers and staff because the competitive
process will require significant planning and take more time than awarding
grants noncompetitively.
EPA's December 2002 oversight policy makes important improvements in
monitoring grantees, but it does not build in a process for effectively
and efficiently analyzing the results of its monitoring efforts to address
systemic grantee problems. Specifically, EPA does not (1) use a
statistical approach to selecting grantees for review, (2) collect
standard information from the reviews, and (3) analyze the results to
identify and resolve systemic problems with grantees. As a result, EPA may
not be using its oversight resources as efficiently as it could. With
improved analysis, EPA could better identify problem areas and assess the
effectiveness of its corrective actions to more efficiently target its
oversight efforts.
EPA's 5-year grants management plan recognizes the importance of
accountability, but it does not completely address how the agency will
hold all managers and staff accountable for successfully fulfilling their
grants management responsibilities. For example, the plan calls for
developing performance standards for staff overseeing grantee performance,
but it does not call for including grants management performance standards
in their managers' and supervisors' performance agreements. Unless all
managers and staff are held accountable for grants management, EPA cannot
ensure the sustained commitment required for the plan's success.
Our report, Grants Management: EPA Needs to Strengthen Efforts to Address
Persistent Challenges, GAO-03-846, details EPA's historically uneven
performance in addressing its grants management challenges. Over the
years, EPA's past actions to improve grants management have had mixed
results because of the complexity of the problems, weaknesses in policy
design and implementation, and insufficient management attention to
overseeing grants. While EPA's latest policies and new 5-year grants
management plan show promise, it is too early to tell if these will
succeed more than past actions. If EPA is to better achieve its
environmental mission, it must more effectively manage its grants. Our
report contains specific recommendations to address critical weaknesses in
EPA's new oversight policy and plan. EPA stated that it agreed with GAO's
recommendations and it will implement them as part of its 5-year grants
management plan.
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here to discuss the Environmental Protection Agency's
(EPA) management of its grants. My testimony is based on our report
released in September 2003, which was requested by the Chairman of the
House Committee on Transportation and Infrastructure and Representative
Anne Northup.1
To support its mission of protecting human health and the environment, in
fiscal year 2002, EPA awarded grants to a variety of recipients, including
state and local governments, tribes, universities, and nonprofit
organizations. Given the size and diversity of EPA's programs, its ability
to efficiently and effectively accomplish its mission largely depends on
how well it manages its grant resources and builds accountability into its
efforts. As of September 30, 2002, EPA had 4,100 grant recipients.
As you know, over the years, EPA has faced persistent challenges in
managing its grants, which at about $4 billion annually, constitute over
one-half of its total budget. In our June 2003 testimony before this
Subcommittee and in our report, we identified four key management
challenges EPA continues to face, despite past efforts to address them.2
These challenges are (1) selecting the most qualified grant applicants,
(2) effectively overseeing grantees, (3) measuring the results of grants,
and (4) effectively managing grant staff and resources. We also reported
that EPA's past efforts to improve its management had mixed results
because of the complexity of the problems, weaknesses in design and
implementation, and insufficient management attention. EPA must resolve
these problems in order to improve its management of grants.
Late in 2002, EPA launched new efforts to address some of its
long-standing grants management problems. Specifically, it issued two new
policies-one in September 2002 to promote competition in awarding grants
and one in December 2002 to improve its oversight of grants. Furthermore,
in April 2003, EPA issued a 5-year grants management plan
1U.S. General Accounting Office, Grants Management: EPA Needs to
Strengthen Efforts to Address Persistent Challenges, GAO-03-846
(Washington, D.C.: Aug. 29, 2003). This report is available at no charge
on the GAO Web site at htpp://www.gao.gov.
2U.S. General Accounting Office, Environmental Protection Agency: Problems
Persist in Effectively Managing Grants, GAO-03-628T (Washington, D.C: June
11, 2003). This report is available at no charge on the GAO Web site at
htpp://www.gao.gov.
to address its long-standing grants management problems. We found that
these policies and plan focus on the major grants management challenges we
identified but will require strengthening, enhanced accountability, and
sustained commitment to succeed.
For our testimony today, you asked us to comment on the extent to which
EPA's new policies and plan address the challenges concerning (1) awarding
grants competitively, (2) improving oversight of grantees, and (3) holding
staff and managers accountable for fulfilling their grants management
responsibilities. For our report, we, among other things, obtained and
analyzed EPA's 1,232 in-depth reviews of grantee performance conducted in
calendar year 2002 to identify the challenges EPA faces in managing its
grants. We also examined EPA's new policies and plan and interviewed EPA
officials responsible for key aspects of the plan.
In summary, we found the following:
o EPA's September 2002 competition policy should improve EPA's ability
to select the most qualified applicants by requiring competition for more
grants. However, effective implementation of the policy will require a
major cultural shift for EPA managers and staff because the competitive
process will require significant planning and take more time than awarding
grants noncompetitively.
o EPA's December 2002 oversight policy makes important improvements in
monitoring grantees, but it does not build in a process for effectively
and efficiently analyzing the results of its monitoring efforts to address
systemic grantee problems. Specifically, EPA does not (1) use a
statistical approach to selecting grantees for review, (2) collect
standard information from the reviews, and (3) analyze the results to
identify and resolve systemic problems with grantees. As a result, EPA may
not be using its oversight resources as efficiently as it could. With
improved analysis, EPA could better identify problem areas and assess the
effectiveness of its corrective actions to more efficiently target its
oversight efforts.
o EPA's April 2003 grants management plan recognizes the importance of
accountability but it does not completely address how the agency will hold
all managers and staff accountable for successfully fulfilling all their
grants management responsibilities. For example, the plan does not call
for including grants management performance standards in managers' and
supervisors' performance agreements. Unless all managers and staff are
held accountable for grants management, EPA
cannot ensure the sustained commitment required for the plan's success.
We made recommendations in our report to the EPA Administrator to
strengthen grants management by more systematically overseeing grantees
and by holding all managers and staff in headquarters and the regions
accountable for fulfilling their grants management responsibilities. We
also recommended that EPA report on the progress of its efforts in its
annual report to Congress. EPA agreed with our recommendations and stated
it will implement them as part of its 5-year grants management plan.
Background EPA administers and oversees grants primarily through the
Office of Grants and Debarment, 10 program offices in headquarters,3 and
program offices and grants management offices in EPA's 10 regional
offices. Figure 1 shows EPA's key offices involved in grants activities
for headquarters and the regions.
3According to EPA officials, two headquarters' offices, EPA's Office of
General Counsel, and the Office of the Chief Financial Officer, conduct
limited grant activity.
Figure 1: EPA's Key Offices Involved in Grant Activities
The management of EPA's grants program is a cooperative effort involving
the Office of Administration and Resources Management's Office of Grants
and Debarment, program offices in headquarters, and grants management and
program offices in the regions. The Office of Grants and Debarment
develops grant policy and guidance. It also carries out certain types of
administrative and financial functions for the grants approved by the
headquarters program offices, such as awarding grants and overseeing the
financial management of these grants. On the programmatic side,
headquarters program offices establish and implement national policies for
their grant programs, and set funding priorities. They are also
responsible for the technical and programmatic oversight of their grants.
In the regions, grants management offices carry out certain administrative
and financial functions for the grants, such as awarding grants approved
by the regional program offices,4 while the regional program staff provide
technical and programmatic oversight of their grantees.
As of June 2003, 109 grant specialists in the Office of Grants and
Debarment and the regional grants management offices were largely
responsible for administrative and financial grant functions. Furthermore,
1,835 project officers were actively managing grants in headquarters and
regional program offices. These project officers are responsible for the
technical and programmatic management of grants. Unlike grant specialists,
however, project officers generally have other primary responsibilities,
such as using the scientific and technical expertise for which they were
hired.
In fiscal year 2002, EPA took 8,070 grant actions5 totaling about $4.2
billion.6 These awards were made to six main categories of recipients as
shown in figure 2.
4Program offices in Regions 4, 5, 6, 9, and 10 award grants directly.
5Grant actions include new awards and increase and decrease amendments.
The 8,070 grant actions involving funding were composed of 4,374 new
grants, 2,772 increase amendments, and 924 decrease amendments. In
addition, EPA awarded 1,620 no cost extensions, which did not involve
funding, in fiscal 2002.
6GAO did not verify EPA's budget data.
Figure 2: Percentage of EPA Grant Dollars Awarded by Recipient Type,
Fiscal Year 2002
EPA offers two types of grants-nondiscretionary and discretionary:
o Nondiscretionary grants support water infrastructure projects, such as
the drinking water and clean water state revolving fund programs, and
continuing environmental programs, such as the Clean Air Program for
monitoring and enforcing Clean Air Act regulations. For these grants,
Congress directs awards to one or more classes of prospective recipients
who meet specific eligibility criteria; the grants are often awarded on
the basis of formulas prescribed by law or agency regulation. In fiscal
year 2002, EPA awarded about $3.5 billion in nondiscretionary grants. EPA
has awarded these grants primarily to states or other governmental
entities.
o Discretionary grants fund a variety of activities, such as
environmental research and training. EPA has the discretion to
independently determine the recipients and funding levels for grants. In
fiscal year 2002, EPA awarded about $719 million in discretionary grants.
EPA has awarded these grants primarily to nonprofit organizations,
universities, and government entities.
The grant process has the following four phases:
o Preaward. EPA reviews the application paperwork and makes an award
decision.
o Award. EPA prepares the grant documents and instructs the grantee on
technical requirements, and the grantee signs an agreement to comply with
all requirements.
o Postaward. After awarding the grant, EPA provides technical
assistance, oversees the work, and provides payments to the grantee; the
grantee completes the work, and the project ends.
o Closeout of the award. EPA ensures that all technical work and
administrative requirements have been completed; EPA prepares closeout
documents and notifies the grantee that the grant is completed.
As part of its oversight of grantee performance, EPA conducts in-depth
reviews to analyze grantees' compliance with grant regulations and
specific grant requirements.7 EPA conducts two types of in-depth reviews.
Administrative reviews, conducted by the grants management offices, are
designed to evaluate grantees' financial and administrative capacity. In
contrast, programmatic reviews, conducted by the program offices, are
designed to assess the grantees' activities in five key areas: (1)
assessing progress of work, (2) reviewing financial expenditures, (3)
meeting the grant's terms and conditions, (4) meeting all programmatic,
statutory, and regulatory requirements, and (5) verifying that equipment
purchased under the award is managed and accounted for. Both
administrative and programmatic reviews are conducted either at the
grantee's location (on-site) or at EPA's office or another location
(off-site). Furthermore, to determine how well offices and regions oversee
grantees, EPA conducts internal management reviews of headquarters and
regional offices.
7EPA refers to these in-depth reviews as advance monitoring.
EPA's Competition Policy Shows Promise but Requires a Major Cultural Shift
EPA Needs A More Systematic Approach to Strengthen Oversight
EPA's September 2002 competition policy requires that most discretionary
grants be competed. These grants totaled about $719 million of the $4.2
billion in grants awarded in fiscal year 2002. The policy applies to most
discretionary grant programs or individual grants of more than $75,000.8
The policy also promotes widespread solicitation for competed grants by
establishing specific requirements for announcing funding opportunities
in, for example, the Federal Register and on Web sites. EPA has also
appointed a grant competition advocate to coordinate this effort.
EPA's competition policy faces implementation barriers because it
represents a major cultural shift for EPA staff and managers, who
historically awarded most grants noncompetitively and thereby have had
limited experience with competition, according to the Office of Grants and
Debarment. The policy requires EPA officials to take a more planned,
rigorous approach to awarding grants. That is, EPA staff must determine
the evaluation criteria and ranking of these criteria for a grant, develop
the grant announcement, and generally publish it at least 60 days before
the application deadline. Staff must also evaluate
applications-potentially from a larger number of applicants than in the
past-and notify applicants of their decisions. These activities will
require significant planning and take more time than awarding grants
noncompetitively. Office of Grants and Debarment officials anticipate a
learning curve as staff implement the policy and will evaluate the
policy's effectiveness in 2005, including the $75,000 threshold level.
While the policy and subsequent implementing guidance have been in effect
for a number of months, it is too early to tell if the policy has resulted
in increased competition over the entire fiscal year. EPA officials
believe that preliminary results indicate that the policy is increasing
the use of competition.
EPA's December 2002 oversight policy makes important improvements in
monitoring grantees, but it does not enable the agency to identify and
address systemic problems with grant recipients. Specifically, EPA cannot
develop systemic information because the policy does not (1) incorporate a
statistical approach to selecting grantees for review; (2) require a
standard reporting format for in-depth reviews to ensure consistency and
clarity in reporting review results; and (3) identify needed data elements
or develop a plan for analyzing data in its grantee compliance database to
8The policy exempts individual grants only if they meet certain criteria,
such as national security interests. Exemptions require detailed, written
justification, and approval.
identify and act on systemic grantee problems. Therefore, EPA cannot use
data from these reviews to determine the overall compliance of grantees or
be assured that it is using its resources to effectively target its
oversight efforts. With a more rigorous statistical approach to selecting
grantees, standard reporting format, and a plan for using information from
in-depth and other reviews, EPA could identify problem areas and develop
trends to assess the effectiveness of corrective actions in order to
better target its oversight efforts.
EPA Needs to Incorporate a Statistical Approach to Selecting Grantees for
Review
EPA's new policy allows each office to determine what criteria it will use
to select at least 10 percent of its grant recipients for in-depth review.
However, because this policy does not employ a statistical method to
selecting grantees for review, it limits the usefulness of these reviews
as a tool to determine the overall compliance of grant recipients.
Furthermore, EPA cannot determine whether 10 percent or any other
percentage is the appropriate number of reviews. With a statistical
approach, EPA could increase the efficiency and effectiveness of its
oversight of grantees by (1) adjusting the number and allocation of its
in-depth reviews to match the level of risk associated with each type of
grant recipient and (2) projecting the results of its reviews to all EPA
grantees.
EPA Needs to Require a Standard Reporting Format for In-depth Reviews
EPA's in-depth reviews can provide valuable information that the agency
can use to identify problems and implement corrective actions. However,
EPA does not have a standard reporting format to ensure consistency,
clarity, and usefulness in reporting review results. Consequently, EPA is
not able to effectively and efficiently analyze these data to determine
systemic grantee problems.
Although EPA was requiring offices to conduct in-depth review of grantees
in 2002, it did not systematically collect and analyze information from
these reviews as part of its oversight efforts. We requested that EPA
provide us with its in-depth reviews conducted in 2002 so we could do the
analysis. Many of the documents EPA provided were, not in fact, in-depth
reviews, but various types of other oversight documents. We sorted through
these documents to identify the in-depth reviews using a data collection
instrument. Through this approach, we identified 1,232 in-depth reviews.
Using a data collection instrument, we collected and analyzed information
from each of these in-depth reviews on, among other things, problems with
grantees, and significant actions taken against grantees. The full results
of our analysis are presented in our report.
According to our analysis of EPA's 1,232 in-depth reviews in 2002, EPA
grant specialists and project officers identified 1,250 problems in 21
areas. Tables 1 and 2 show the most frequently identified problems for the
189 administrative and 1,017 programmatic reviews we examined. For
example, 73 of 189 administrative reviews found problems with grantees'
written procedures, while 308 of the 1,017 programmatic reviews identified
technical issues.
Table 1: Most Frequently Identified Problems, by Problem Area for
Administrative Reviews, 2002
Type of problem Number of reviews with reported problem
Written procedures
Procurement
Personnel/payroll
Accounting
Source: GAO analysis of EPA's in-depth reviews.
Table 2: Most Frequently Identified Problems, by Problem Area for
Programmatic Reviews, 2002
Type of problem Number of reviews with reported problem
Technical issues 308
Progress reports 167
Personnel/payroll
Quality assurance
Source: GAO analysis of EPA's in-depth reviews.
The differences in types of problems frequently identified, as shown in
tables 1 and 2, reflect differences in the focus of administrative and
programmatic reviews. Table 3 describes the nature of these problems.
Table 3: Description of Most Frequently Identified Problems in EPA's
In-depth Reviews
Problem
Types of problems included in EPA's in-depth reviews
Accounting Any failure of a grantee's financial management system or
shortcomings in the procedures it used to ensure the proper accounting of
federal funds. For example, EPA found cases in which a grantee:
o could not compare budgeted amounts to actual expenditures,
o did not properly reconcile report balances to the general ledger, or
o did not separately track funds for different grants.
Personnel/payroll Problems varied depending on the type of review
conducted. Administrative reviews included cases in which a grantee did
not track the amount of time its employees spent on specific grant
activities. Programmatic reviews included cases in which grantees did not
have sufficient staff resources to perform the grant activities.
Procurement Grantees lacked documentation to support sole-source
contracts, and grantees did not report their efforts to encourage
procurement from minority- and woman-owned businesses.
Progress reports A grantee's progress report was missing, late, or did not
include all the necessary information.
Quality assurance A grantee needed to revise its quality assurance plan,
which is required to ensure the quality of data collected during the grant
work.
Technical issues A grantee was behind in the progress of his or her work.
Written procedures A grantee's written policies or procedures were either
missing or inadequate.
Source: GAO analysis of EPA's in-depth reviews.
Despite the importance of standard information, our analysis of EPA's 2002
in-depth reviews shows that EPA officials across the agency report in
various formats that do not always clearly present the results of the
review. For example, some EPA officials provided a narrative report on the
results of their reviews, while others completed a protocol that they used
in conducting their review. In 349 instances, the project officer or grant
management specialist did not clearly explain whether he or she had
discovered a problem.
EPA Needs to Develop a Plan for Using Information in Its Grantee
Compliance Database
EPA has recognized the importance of the information in its in-depth
reviews by establishing a grantee compliance database to store the
reviews, forming a database work group, and collecting a limited amount of
data from its in-depth reviews. However, as of August 29, 2003, EPA had
not yet developed data elements or a plan for using data from all its
oversight efforts-in-depth reviews, corrective actions, and other
compliance efforts-to fully identify systemic problems and then inform
grants management officials about oversight areas that need to be
addressed.
As our analysis of EPA's 2002 in-depth reviews showed, valuable
information could be collected from them for assessing such issues as the
(1) types of grantees having problems, (2) types of problem areas needing
further attention, (3) types of reviews-on-site or off-site-that provide
the best insights into certain problems areas, and (4) corrective actions
required or recommended to resolve problems.
A Systematic Approach to Collection and Analysis of Compliance Information
Would Enhance Oversight
With a statistical approach to selecting grantees for review, standard
reporting format, and a plan for using information from in-depth and other
reviews, EPA could identify problem areas and develop trends to assess the
effectiveness of corrective actions to better target its oversight
efforts. In particular, according to our analysis of EPA's 2002 in-depth
reviews, administrative reviews identify more problems when conducted on
site, while the number of problems identified by programmatic reviews does
not differ by on-site or off-site reviews. However, nearly half of the
programmatic reviews, which constituted more than 80 percent of the 2002
reviews, were conducted on-site. Since on-site reviews are resource
intensive because of travel costs and staff used, a systematic analysis
could enable EPA to better target its resources. Similarly, EPA could
incorporate other information into its grantee compliance database, such
as Inspector General reports, to identify problem areas, and target
oversight resources. In addition, EPA could use the database to track the
resolution of problems.
EPA Faces Challenges to Enhancing Accountability
Successful implementation of EPA's 5-year grants management plan requires
all staff-senior management, project officers, and grant specialists-to be
fully committed to, and accountable for, grants management. Recognizing
the importance of commitment and accountability, the plan has as one of
its objectives the establishment of clear lines of accountability for
grants oversight. The plan, among other things, calls for (1) ensuring
that performance standards established for grant specialists and project
officers adequately address grants management responsibilities in 2004;
(2) clarifying and defining the roles and responsibilities of senior
resource officials, grant specialists, project officers, and others in
2003; and (3) analyzing project officers' and grant specialists' workload
in 2004.
In implementing this plan, however, EPA faces challenges to enhancing
accountability. First, although the plan calls for ensuring that project
officers' performance standards adequately address their grants management
responsibilities, agencywide implementation may be difficult.
Currently, project officers do not have uniform performance standards,
according to officials in EPA's Office of Human Resources and
Organizational Services. Instead, each supervisor sets standards for each
project officer, and these standards may or may not include grants
management responsibilities. It could take up to a year to establish and
implement a uniform performance standard, according to these officials.
Instead, the Assistant Administrator for the Office of Administration and
Resources Management is planning to issue guidance this month including
grants management responsibilities in individual performance agreements
for the next performance cycle beginning in January 2004. Once individual
project officers' performance standards are established for the
approximately 1,800 project officers, strong support by managers at all
levels, as well as regular communication on performance expectations and
feedback, will be key to ensuring that staff with grants management duties
successfully meet their responsibilities.
Although EPA's current performance management system can accommodate the
development of performance standards tailored to each project officer's
specific grants management responsibilities, the current system provides
only two choices for measuring performance- satisfactory or
unsatisfactory-which may make it difficult to make meaningful distinctions
in performance. Such an approach may not provide enough information and
dispersion in ratings to recognize and reward top performers, help
everyone attain their maximum potential, and deal with poor performers.
GAO has identified key practices that federal agencies can use to
establish effective performance management systems, which include making
distinctions in performance.9
Furthermore, it is difficult to implement performance standards that will
hold project officers accountable for grants management because (1) grants
management is often a small part of a wide range of project officers'
responsibilities, (2) some project officers manage few grants, and (3)
project officers' grants management responsibilities often fall into the
category of "other duties as assigned." To address this issue, EPA
officials are considering, among other options, whether the agency needs
to develop a smaller cadre of well-trained project officers to oversee
grantees, rather than rely on the approximately 1,800 project officers
with
9See U.S. General Accounting Office, Results-Oriented Cultures: Creating a
Clear Linkage Between Individual Performance and Organizational Success,
GAO-03-488 (Washington, D.C.: Mar. 14, 2003).
different levels of grants management responsibilities and skills. Some
EPA officials believe that having a cadre may help the agency more
effectively implement revised grants management performance standards
because fewer officers with greater expertise would oversee a larger
percentage of the grants.
Second, EPA will have difficulty achieving the plan's goals unless, not
only project officers, but all managers and staff are held accountable for
grants management. The plan does not call for including grants management
standards in all managers' and supervisors' agreements. Senior grants
managers in the Office of Grants and Debarment as well as other Senior
Executive Service managers have performance standards that address grants
management responsibilities,10 but middle-level managers and supervisors,
who oversee many of the staff that have important grants management
responsibilities, do not. According to Office of Grants and Debarment
officials, they are working on developing performance standards for all
managers and supervisors with grants responsibilities.
Third, it may be difficult to hold all managers and staff accountable
because the Office of Grants and Debarment does not have direct control
over many of the managers and staff who perform grants management
duties-particularly the approximately 1,800 project officers in
headquarters and regional program offices. The division of
responsibilities between the Office of Grants and Debarment and program
and regional offices will continue to present a challenge to holding staff
accountable and improving grants management, and will require the
sustained commitment of EPA's senior managers.
If EPA is to better achieve its environmental mission, it must more
effectively manage its grants programs-which account for more than half of
its annual budget. EPA's new policies and 5-year grants management plan
show promise, but they are missing several critical elements necessary for
the agency to address past grants management weaknesses. Specifically to
improve EPA's oversight of grantees, our report recommends that EPA' (1)
incorporate appropriate statistical methods to identify grantees for
review; (2) require EPA staff to use a standard reporting format for
in-depth review so that the results can be entered into
Conclusions
10The senior managers include the Director of the Office of Grants and
Debarment, the Director of the Grants Administration Division, and the
Grants Competition Advocate.
the grantee compliance database and analyzed agency wide; and (3) develop
a plan, including modifications to the grantee compliance database, to
integrate and analyze compliance information from multiple sources. These
actions would help EPA identify systemic problems with its grantees and
better target its oversight resources.
To enhance accountability, our report further recommends establishing
performance standards for all managers and staff responsible for grants
management and holding them accountable for meeting these standards. Until
EPA does so, it cannot be assured that is fulfilling its grants management
responsibilities.
While EPA's 5-year grants management plan shows promise, we believe that,
given EPA's historically uneven performance in addressing its grants
management challenges, congressional oversight is important to ensure that
EPA's Administrator, managers, and staff implement the plan in a
sustained, coordinated fashion to meet the plan's ambitious targets and
time frames. To help facilitate this oversight, our report recommends that
EPA annually report to Congress on its progress in improving grants
management.
Contacts and Acknowledgments
(360399)
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions that you or Members of the Subcommittee may have.
For further information about this testimony, please contact John B.
Stephenson at (202) 512-3841. Individuals making key contributions to this
testimony were Andrea Wamstad Brown, Carl Barden, Christopher Murray, Paul
Schearf, Rebecca Shea, Carol Herrnstadt Shulman, Bruce Skud, Kelli Ann
Walther, and Amy Webbink.
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