Grants Management: EPA Needs to Strengthen Efforts to Address
Management Challenges (03-MAR-04, GAO-04-510T).
The Environmental Protection Agency (EPA) has long faced problems
managing its grants, which constitute over one-half of the
agency's annual budget, or about $4 billion. EPA uses grants to
implement its programs to protect human health and the
environment and awards grants to thousands of recipients,
including state and local governments, tribes, universities, and
nonprofit organizations. EPA's ability to efficiently and
effectively accomplish its mission largely depends on how well it
manages its grants resources. This testimony, based on GAO's
August 2003 report Grants Management: EPA Needs to Strengthen
Efforts to Address Persistent Challenges, GAO-03-846, focuses on
the (1) major challenges EPA faces in managing its grants and how
it has addressed these challenges in the past, and (2) extent to
which EPA's recently issued policies and grants management plan
address these challenges.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-510T
ACCNO: A09421
TITLE: Grants Management: EPA Needs to Strengthen Efforts to
Address Management Challenges
DATE: 03/03/2004
SUBJECT: Federal grants
Financial management
Grant monitoring
Budget administration
Grant administration
Grant award procedures
Strategic planning
******************************************************************
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GAO-04-510T
United States General Accounting Office
GAO Testimony
Before the Committee on Environment and Public Works, U.S. Senate
For Release on Delivery
Expected at 9:30 a.m. EST GRANTS MANAGEMENT
March 3, 2004
EPA Needs to Strengthen Efforts to Address Management Challenges
Statement of John B. Stephenson, Director Natural Resources and the Environment
GAO-04-510T
Highlights of GAO-04-510T, testimony before the Committee on Environment
and Public Works, U.S. Senate
The Environmental Protection Agency (EPA) has long faced problems managing
its grants, which constitute over one-half of the agency's annual budget,
or about $4 billion. EPA uses grants to implement its programs to protect
human health and the environment and awards grants to thousands of
recipients, including state and local governments, tribes, universities,
and nonprofit organizations. EPA's ability to efficiently and effectively
accomplish its mission largely depends on how well it manages its grants
resources.
This testimony, based on GAO's August 2003 report Grants Management: EPA
Needs to Strengthen Efforts to Address Persistent Challenges, GAO-03-846,
focuses on the (1) major challenges EPA faces in managing its grants and
how it has addressed these challenges in the past, and (2) extent to which
EPA's recently issued policies and grants management plan address these
challenges.
GAO made recommendations to the Administrator of EPA to strengthen the
agency's efforts to address persistent challenges in effectively managing
its grants. EPA agreed with GAO's recommendations and is in the process of
implementing them as part of its 5-year grants management plan.
March 3, 2004
GRANTS MANAGEMENT
EPA Needs to Strengthen Efforts to Address Management Challenges
EPA continues to face four key grants management challenges, despite past
efforts to address them. These challenges are (1) selecting the most
qualified grants applicants, (2) effectively overseeing grantees, (3)
measuring the results of grants, and (4) effectively managing grant staff
and resources. In the past, EPA has taken a series of actions to address
these challenges by, among other things, issuing policies on competition
and oversight, conducting training for project officers and nonprofit
organizations, and developing a new data system for grants management.
However, these actions had mixed results because of the complexity of the
problems, weaknesses in design and implementation, and insufficient
management attention.
EPA's recently issued policies and a 5-year grants management plan to
address longstanding management problems show promise, but these policies
and plan 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 oversight, but it does
not enable EPA to identify systemic problems in grants management. For
example, the policy does not incorporate a statistical approach to
selecting grantees for review so that EPA can project the results of the
reviews to all EPA grantees.
Issued in April 2003, EPA's 5-year grants management plan does offer, for
the first time, a comprehensive road map with objectives, goals, and
milestones for addressing grants management challenges. However, in
implementing the plan, EPA faces challenges in holding all managers and
staff accountable for successfully fulfilling their grants management
responsibilities. Without this accountability, EPA cannot ensure the
sustained commitment needed for the plan's success. While EPA has begun
implementing actions in the plan, GAO believes that, given EPA's
historically uneven performance in addressing its grants 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.
www.gao.gov/cgi-bin/getrpt?GAO-04-510T.
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].
Mr. Chairman and Members of the Committee:
We are pleased to be here today to discuss the Environmental Protection
Agency's (EPA) management of its grants. My testimony is based on our
report on this topic issued last August.1
EPA has faced persistent challenges for many years in managing its grants,
which constitute over one-half of the agency's budget, or about $4 billion
annually. To support its mission of protecting human health and the
environment, EPA awards grants to a variety of recipients, including state
and local governments, tribes, universities, and nonprofit organizations.
There were 4,100 EPA grant recipients when we conducted our review.2 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.
Congressional hearings in 1996, 1999, and 2003, have focused on EPA's
problems in effectively managing its grants. We and EPA's Inspector
General have reported on a number of weaknesses throughout the grants
management process-from awarding grants to measuring grant results.3 EPA's
efforts to address its grants management problems have not fully resolved
them. To highlight these problems and hopefully focus greater attention on
their resolution, we designated EPA's grants management as a major
management challenge in our January 2003 EPA performance and
accountability report.4
Late in 2002, EPA issued two new policies to address some of its grants
management problems-one to promote competition in awarding grants and one
to improve its oversight of grants. In April 2003, EPA issued a
comprehensive 5-year grants management plan to address its longstanding
grants management problems.
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).
2As of September 30, 2002.
3See U.S. General Accounting Office, Environmental Protection Agency:
Problems Persist in Effectively Managing Grants, GAO-03-628T (Washington,
D.C.: June 11, 2003).
4U.S. General Accounting Office, Major Management Challenges and Program
Risks: Environmental Protection Agency, GAO-03-112 (Washington, D.C.:
January 2003).
Our testimony today describes the (1) major challenges EPA faces in
managing its grants and how it has addressed these challenges in the past,
and (2) extent to which EPA's recently issued policies and grants
management plan address these challenges.
To identify the challenges EPA faces in managing its grants and to examine
how it has addressed these challenges in the past, we (1) analyzed 93
reports on EPA's grants management, including our reports, EPA's Inspector
General reports, and EPA's internal management reviews conducted from 1996
through 2003, (2) systematically reviewed and recorded information from
the 1,232 records of calendar year 2002 indepth reviews of grantee
performance-from financial management to progress in achieving grant
objectives, and (3) interviewed EPA officials and reviewed documents
obtained from them.5 To determine the extent to which EPA's recently
issued policies and grants management plan address these challenges, we
(1) reviewed the new policies and plan and interviewed EPA officials
responsible for key aspects of the plan, (2) attended EPA's grants
management training courses, and (3) observed five EPA in-depth reviews of
grantees.6 This testimony is based on GAO's report for which audit work
was conducted from June 2002 through June 2003 in accordance with
generally accepted government auditing standards.
In summary, we found the following:
o EPA faces four key management challenges. 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. In the past, EPA has taken a series of
actions to address these challenges by, among other things, issuing
policies, conducting training, and developing a new data system for grants
management. However, these actions had mixed results because of the
complexity of the problems, weaknesses in design and implementation, and
insufficient management attention.
5Federal financial assistance includes grants, cooperative agreements,
loans, loan guarantees, scholarships, and other forms of assistance. For
this report, we focused on both grants and cooperative agreements, and for
simplicity, refer to both as "grants."
6For detailed methodology, see GAO-03-846, app.I.
o EPA's 2002 competition and oversight policies and 2003 grants
management plan focus on the major grants management challenges we
identified but will require strengthening, enhanced accountability, and a
sustained commitment to succeed.
We made recommendations in our report to the EPA Administrator to
strengthen grants management, specifically in overseeing grantees,
measuring environmental outcomes, incorporating accountability for grants
management responsibilities, considering promising practices, and
reporting on the progress of its efforts in its annual report to Congress.
EPA agreed with our recommendations and is in the process of implementing
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,7 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.
7According 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,8 while the regional program staff provide
technical and programmatic oversight of their grantees.
As of June 2003, 109 grants 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 actions totaling about $4.2
billion.9 These awards were made to six main categories of recipients as
shown in figure 2.
8Program offices in regions 4, 5, 6, 9, and 10 award grants directly.
9Grant actions include new awards, 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.
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.
EPA's grantees are subject to the same type of financial management
oversight as the recipients of other federal assistance. Specifically, the
Single Audit Act requires grantees to have an audit of their financial
statements and federal awards or program-specific audit if they spend
$300,000 or more in federal awards in a fiscal year. 10, 11 Grantees
submit these audits to a central clearinghouse operated by the Bureau of
the Census, which then forwards the audit findings to the appropriate
agency for any necessary action. However, the act does not cover all
grants and all aspects of grants management and, therefore, agencies must
take additional steps to ensure that federal funds are spent
appropriately. In addition, EPA conducts in-depth reviews to analyze
grantees' compliance with grant regulations and specific grant
requirements.12 Furthermore, to determine how well offices and regions
oversee grantees, EPA conducts internal management reviews that address
grants management.
EPA's Inspector General testified before Congress in 1996 and again in
1999 that EPA did not fulfill its obligation to properly monitor grants.
Acknowledging these problems, EPA identified oversight, including grant
10The Single Audit Act Amendments of 1996, Pub. L. No. 104-156, 110 Stat.
1396 (codified at 31 U.S.C. S:S: 7501-7507).
11The Office of Management and Budget, as authorized by the act, increased
this amount to $500,000 in federal awards as of June 23, 2003.
12EPA refers to these in-depth reviews as advance monitoring.
closeouts, as a material weakness-an accounting and internal control
system weakness that the EPA Administrator must report to the President
and Congress.13 EPA's fiscal year 1999 Federal Managers' Financial
Integrity Act report indicated that this oversight material weakness had
been corrected, but the Inspector General testified that the weakness
continued. In 2002, the Inspector General again recommended that EPA
designate grants management as a material weakness. The Office of
Management and Budget (OMB) also recommended in 2002 that EPA designate
grants management as a material weakness. In its fiscal year 2002 Annual
Report,14 EPA ultimately decided to maintain this issue as an agency-level
weakness, which is a lower level of risk than a material weakness. EPA
reached this decision because it believes its ongoing corrective action
efforts will help to resolve outstanding grants management challenges.
However, in adding EPA's grants management to our list of EPA's major
management challenges in January 2003, we signaled our concern that EPA
has not yet taken sufficient action to ensure that it can manage its
grants effectively.
We identified four key challenges that EPA continues to face in managing
its grants. 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. In the
past,15 EPA has taken a series of actions to address these challenges by,
among other things, issuing policies on competition and oversight,
conducting training for project officers and nonprofit organizations, and
developing a new data system for grants management. However, these actions
had mixed results because of the complexity of the problems, weaknesses in
design and implementation, and insufficient management attention.
EPA has not selected the most qualified applicants despite issuing a
competition policy. The Federal Grant and Cooperative Agreement Act of
197716 encourages agencies to use competition in awarding grants. To
EPA Faces Four Key Grants Management Challenges, Despite Past Efforts to
Address Them
13See 31 U.S.C. S:3512.
14U.S. Environmental Protection Agency, Fiscal Year 2002 Annual Report,
EPA-190-R-03001 (Washington, D.C.: Jan. 31, 2003).
15EPA took these actions through early 2002.
16Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No. 95-224,
92 Stat. 3 (codified as amended at 31 U.S.C. S:S: 6301-6308).
encourage competition, EPA issued a grants competition policy in 1995.
However, EPA's policy did not result in meaningful competition throughout
the agency, according to EPA officials. Furthermore, EPA's own internal
management reviews and a 2001 Inspector General report found that EPA has
not always encouraged competition.17 Finally, EPA has not always engaged
in widespread solicitation of its grants, which would provide greater
assurance that EPA receives proposals from a variety of eligible and
highly qualified applicants who otherwise may not have known about grant
opportunities.
EPA has not always effectively overseen grant recipients despite past
actions to improve oversight. To address oversight problems, EPA issued a
series of policies starting in 1998. However, these oversight policies
have had mixed results in addressing this challenge. For example, EPA's
efforts to improve oversight included in-depth reviews of grantees but did
not include a statistical approach to identifying grantees for reviews,
collecting standard information from the reviews, and a plan for analyzing
the results to identify and act on systemic grants management problems.
EPA, therefore, could not be assured that it was identifying and resolving
grantee problems and using its resources more effectively to target its
oversight efforts.
EPA's efforts to measure environmental results have not consistently
ensured that grantees achieve them. Planning for grants to achieve
environmental results-and measuring results-is a difficult, complex
challenge. However, as we pointed out in an earlier report,18 it is
important to measure outcomes of environmental activities rather than just
the activities themselves. Identifying and measuring the outcomes of EPA's
grants will help EPA better manage for results. EPA has awarded some
discretionary grants before considering how the results of the grantees'
work would contribute to achieving environmental results.19 EPA has also
not developed environmental measures and outcomes for all of its
17EPA Office of the Inspector General, EPA's Competitive Practices for
Assistance Awards, Report No. 2001-P-00008 (Philadelphia, PA: May 21,
2001).
18U.S. General Accounting Office, Managing for Results: EPA Faces
Challenges in Developing Results-Oriented Performance Goals and Measures,
GAO/RCED-00-77 (Washington, D.C.: Apr. 28, 2000).
19U.S. General Accounting Office, Environmental Protection: Information on
EPA Project Grants and Use of Waiver Authority, GAO-01-359 (Washington,
D.C.: Mar. 9, 2001).
20
grant programs. OMB found that four EPA grant programs lacked
outcome-based measures-measures that demonstrated the impact of the
programs on improving human health and the environment-and concluded that
one of EPA's major challenges was demonstrating program effectiveness in
achieving public health and environmental results.21 Finally, EPA has not
always required grantees to submit work plans that explain how a project
will achieve measurable environmental results. In 2002, EPA's Inspector
General reported that EPA approved some grantees' work plans without
determining the projects' human health and environmental outcomes.22 In
fact, for almost half of the 42 discretionary grants the Inspector General
reviewed, EPA did not even attempt to measure the projects' outcomes.
Instead, EPA funded grants on the basis of work plans that focused on
short-term procedural results, such as meetings or conferences. In some
cases, it was unclear what the grant had accomplished. In 2003, the
Inspector General again found the project officers had not negotiated
environmental outcomes in work plans. The Inspector General found that 42
percent of the grant work plans reviewed-both discretionary and
nondiscretionary grants-lacked negotiated environmental outcomes.23
EPA has not always effectively managed its grants staff and resources
despite some past efforts. EPA has not always appropriately allocated the
workload for staff managing grants, provided them with adequate training,
or held them accountable. Additionally, EPA has not always provided staff
with the resources, support, and information necessary to manage the
agency's grants. To address these problems, EPA has taken a number of
actions, such as conducting additional training and developing a new
20U.S. General Accounting Office, Environmental Research: STAR Grants
Focus on Agency Priorities, but Management Enhancements Are Possible,
GAO/RCED-00-170 (Washington, D.C.: Sept. 11, 2000).
21The four EPA programs assessed were the Drinking Water State Revolving
Fund, Leaking Underground Storage Tanks, Nonpoint Source Grants, and
Tribal General Assistance programs. OMB evaluated these programs using its
Program Assessment Rating Tool, a questionnaire that evaluated four
critical areas of performance: purpose and design, strategic planning,
management, results and accountability. These assessments were included in
the President's 2004 budget submission.
22EPA Office of Inspector General, Surveys, Studies, Investigations, and
Special Purpose Grants, Report No. 2002-P-00005 (Philadelphia, PA: Mar.
21, 2002).
23EPA Office of Inspector General, EPA Must Emphasize Importance of
Pre-Award Reviews for Assistance Agreements, Report No. 2003-P-00007
(Washington, D.C.: Mar. 31, 2003).
New Policies and Plan Show Promise but Require Strengthening, Enhanced
Accountability, and Sustained Commitment to Succeed
electronic grants management system. However, implementation weaknesses
have precluded EPA from fully resolving its resource management problems.
For example, EPA has not always held its staff- such as project
officers-accountable for fulfilling their grants management
responsibilities. According to the Inspector General and internal
management reviews, EPA has not clearly defined project officers' grants
management responsibilities in their position descriptions and performance
agreements. Without specific standards for grants management in
performance agreements, it is difficult for EPA to hold staff accountable.
It is therefore not surprising that, according to the Inspector General,
project officers faced no consequences for failing to effectively perform
grants management duties. Compounding the accountability problem, agency
leadership has not always emphasized the importance of project officers'
grants management duties.24
EPA's recently issued policies on competition and oversight and a 5-year
grants management plan to address its long-standing grants management
problems are promising and focus on the major management challenges, but
these policies and plan require strengthening, enhanced accountability,
and sustained commitment to succeed.
EPA's competition policy shows promise but requires a major cultural
shift. In September 2002, EPA issued a policy to promote competition in
grant awards by requiring that most discretionary grants be competed.25
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.
This policy should encourage selection of the most qualified applicants.
However, the competition policy faces implementation barriers because it
represents a major cultural shift for EPA staff and managers, who have had
limited experience with competition, according to EPA's 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-
24EPA Office of Inspector General, Report No. 2003-P-00007.
25The policy applies to most discretionary grant programs or individual
grants of more than $75,000.
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.
Oversight policy makes important improvements but requires strengthening
to identify systemic problems. EPA's December 2002 policy makes important
improvements in oversight, but it still does not enable EPA to identify
systemic problems in grants management. Specifically, the policy does not
(1) incorporate a statistical approach to selecting grantees for review so
EPA can project the results of the reviews to all EPA grantees, (2)
require a standard reporting format for in-depth reviews so that EPA can
use the information to guide its grants oversight efforts agencywide, and
(3) maximize use of information in its grantee compliance database to
fully identify systemic problems and then inform grants management
officials about oversight areas that need to be addressed.26
Grants management plan will require strengthening, sustained commitment,
and enhanced accountability. We believe that EPA's grants management
plan27 is comprehensive in that it focuses on the four major management
challenges-grantee selection, oversight, environmental results, and
resources-that we identified in our work. For the first time, EPA plans a
coordinated, integrated approach to improving grants management. The plan
is also a positive step because it (1) identifies goals, objectives,
milestones, and resources to achieve the plan's goals; (2) provides an
accompanying annual tactical plan that outlines specific tasks for each
goal and objective, identifies the person accountable for completing the
task, and sets an expected completion date; (3) attempts to build
accountability into grants management by establishing performance measures
for each of the plan's five goals;28 (4) recognizes the need for greater
involvement of high-level officials in coordinating grants management
throughout the agency by establishing a high-level grants
26The grantee compliance database, developed by the Office of Grants and
Debarment, is used to store EPA's in-depth reviews of grant recipients.
27For further details, see EPA Office of Grants and Debarment, Grants
Management Plan 2003 - 2008, Report No. EPA-216-R-03-001 (Washington,
D.C.: April 2003).
28The plan's five goals are: (1) promote competition in awarding grants,
(2) strengthen EPA's grants oversight, (3) support the identification and
achievement of environmental outcomes, (4) enhance the skills of EPA
personnel involved in grants management, and (5) leverage technology to
improve program performance.
management council to coordinate, plan, and set priorities for grants
management; and (5) establishes best practices for grants management
offices. According to EPA's Assistant Administrator for Administration and
Resources Management, the agency's April 2003 5-year grants management
plan is the most critical component of EPA's efforts to improve its grants
management.
In addition to the goals and objectives, the plan establishes performance
measures, targets, and action steps with completion dates for 2003 through
2006. EPA has already begun implementing several of the actions in the
plan or meant to support the plan; these actions address previously
identified problems. For example, EPA now posts its available grants on
the federal grants Web site http://www.fedgrants.gov. In January 2004, EPA
issued an interim policy to require that grant funding packages describe
how the proposed project supports the goals of EPA's strategic plan.
Successful implementation of the new plan requires all staff-senior
management, project officers, and grants specialists-to be fully committed
to, and accountable for, grants management. Recognizing the importance of
commitment and accountability, EPA's 5-year grants management 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 grants 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 grants specialists' workload
in 2004.
In implementing this plan, however, EPA faces challenges to enhancing
accountability. 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 not include grants management responsibilities. 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. Furthermore, it is difficult to
implement performance standards that will hold project officers
accountable for grants management because these officers have a variety of
responsibilities and some project officers manage few grants, and because
grants management responsibilities often fall into the category of "other
duties as assigned."
Although EPA's current performance management system can accommodate
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 meaningful
information and dispersion in ratings to recognize and reward top
performers, help everyone attain their maximum potential, and deal with
poor performers.
EPA will also have difficulty achieving the plan's goals if all managers
and staff are not held accountable for grants management. The plan does
not call for including grants management standards in managers' and
supervisors' agreements. In contrast, 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.29 However, middle-level managers and supervisors also
need to be held accountable for grants management because they oversee
many of the staff that have important grants management responsibilities.
According to Office of Grants and Debarment officials, they are working on
developing performance standards for all managers and supervisors with
grants responsibilities. In November 2003, EPA asked key grants managers
to review all performance standards and job descriptions for employees
involved in grants management, including grants specialists, project
officers, supervisors, and managers, to ensure that the complexity and
extent of their grant management duties are accurately reflected.
Further complicating the establishment of clear lines of accountability,
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
29The senior managers include the Director of the Office of Grants and
Debarment, the Director of the Grants Administration Division, and the
Grants Competition Advocate.
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-which account for more than half of its
annual budget. While EPA's new 5-year grants management plan shows
promise, given EPA's historically uneven performance in addressing its
grants management challenges, congressional oversight is important to
ensure that the Administrator of EPA, managers, and staff implement the
plan in a sustained, coordinated fashion to meet the plan's ambitious
targets and time frames.
To ensure that EPA's recent efforts to address its grants management
challenges are successful, in our August 2003 report, we recommended that
the Administrator of EPA provide sufficient resources and commitment to
meeting the agency's grants management plan's goals, objectives, and
performance targets within the specified timeframes. Furthermore, to
strengthen EPA's efforts we recommended
o incorporating appropriate statistical techniques in selecting grantees
for in-depth reviews;
o requiring EPA staff to use a standard reporting format for in-depth
reviews so that the results can be entered into the grant databases and
analyzed agencywide;
o developing a plan, including modifications to the grantee compliance
database, to use data from its various oversight efforts-in-depth reviews,
significant actions, corrective actions taken, and other compliance
information-to fully identify systemic problems, inform grants management
officials of areas that need to be addressed, and take corrective action
as needed;
o modifying its in-depth review protocols to include questions on the
status of grantees' progress in measuring and achieving environmental
outcomes;
o incorporating accountability for grants management responsibilities
through performance standards that address grants management for all
managers and staff in headquarters and the regions responsible for grants
management and holding managers and staff accountable for meeting these
standards; and
o evaluating the promising practices identified in the report and
implementing those that could potentially improve EPA grants management.
To better inform Congress about EPA's achievements in improving grants
management, we recommended that the Administrator of EPA report on the
agency's accomplishments in meeting the goals and objectives developed in
the grants management plan and other actions to improve grants management,
beginning with its 2003 annual report to Congress.
EPA agreed with our recommendations and is in the process of implementing
them as part of its 5-year grants management plan.
Mr. Chairman, this concludes my prepared statement. I would be happy to
respond to any questions that you or Members of the Committee may have.
Contacts and For further information, please contact John B. Stephenson at
(202) 5123841. Individuals making key contributions to this testimony were
CarlAcknowledgments Barden, Andrea W. Brown, Christopher Murray, Paul
Schearf, Rebecca Shea, Carol Herrnstadt Shulman, Bruce Skud, and Amy
Webbink.
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