Grants Management: Grantees' Concerns with Efforts to Streamline 
and Simplify Processes (28-JUL-06, GAO-06-566). 		 
                                                                 
At least 26 federal entities distribute grants, often with	 
differing administrative requirements. As a result, grantees may 
be diverting resources from program objectives to comply with	 
varying administrative requirements. Congress, attempting to	 
reduce this inefficiency, passed the Federal Financial Assistance
Management Improvement Act of 1999, commonly referred to as P.L. 
106-107. It required the Office of Management and Budget (OMB) to
ensure that agencies streamline processes, develop common	 
systems, and consult with grantees; it also required GAO to	 
evaluate the law's effectiveness. In response, this report	 
discusses aspects of grant administration that grantees 	 
identified as inadequate to meet the act's goals and on which	 
further action was needed. GAO reviewed grantee comments on	 
changes needed, obtained views from grantee associations and	 
users of the Web portal called Grants.gov, performed detailed	 
site visits at selected grantees, and obtained views of OMB.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-566 					        
    ACCNO:   A57623						        
  TITLE:     Grants Management: Grantees' Concerns with Efforts to    
Streamline and Simplify Processes				 
     DATE:   07/28/2006 
  SUBJECT:   Federal grants					 
	     Federal/state relations				 
	     Financial management systems			 
	     Grant administration				 
	     Grant monitoring					 
	     Interagency relations				 
	     Regulatory agencies				 
	     Reporting requirements				 
	     Standards						 
	     Websites						 
	     Grants Management Line of Business 		 
	     Office of Management and Budget			 

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GAO-06-566

     

     * Results in Brief
     * Background
     * Grantees Report That, Despite Federal Efforts to Streamline,
          * Lack of Standardization in Applying for and Managing Grants
               * Multiple Application, Reporting, and Payment Systems Remain
               * Lack of Standard Definitions and Formats for Grant Documents
          * Grantees Identified Areas Where Administrative Inefficiencie
               * Federal Processes Not Aligned with Grantee Business Processe
               * Inadequate Advance Information on Potential Grant Availabili
               * Delays and Uncertainties in Grant Award Process
          * Technology Issues Have Reduced the Benefits of Some Initiati
               * Grants.gov Find Capability
               * Grants.gov Apply Capability
     * Grantees Report That Inadequate Communication and Lack of a
          * Inadequate Communication with the Grantee Community
          * Grantees Are Unsure of Plans and Time Lines
     * Conclusions
     * Matter for Congressional Consideration
     * Recommendation for Executive Action
     * Agency Comments and Our Evaluation
     * Appendix I: Detailed Scope and Methodology
     * Appendix II: Examples of Specific Areas Grantees Identified
     * Appendix III: Some States Have Taken Actions That Address Th
     * Appendix IV: GAO Contact and Staff Acknowledgments
          * GAO Contact
          * Acknowledgments
               * Order by Mail or Phone

Report to Congressional Committees

United States Government Accountability Office

GAO

July 2006

GRANTS MANAGEMENT

Grantees' Concerns with Efforts to Streamline and Simplify Processes

GAO-06-566

Contents

Letter 1

Results in Brief 3
Background 4
Grantees Report That, Despite Federal Efforts to Streamline, Excessive
Administrative Burden Remains 12
Grantees Report That Inadequate Communication and Lack of a Clear Schedule
Have Resulted in Slow Progress 21
Conclusions 26
Matter for Congressional Consideration 27
Recommendation for Executive Action 27
Agency Comments and Our Evaluation 27
Appendix I Detailed Scope and Methodology 29
Appendix II Examples of Specific Areas Grantees Identified As Needing
Standardization and Streamlining 33
Appendix III Some States Have Taken Actions That Address Their Grant
Administration Issues 34
Appendix IV GAO Contact and Staff Acknowledgments 37

Table

Table 1: Description of Nonstate Grantees from Site Visits 30

Figures

Figure 1: Grant Life Cycle 7
Figure 2: P.L. 106-107 Initiatives Orgnization Chart 10

Abbreviations

DUNS Data Universal Numbering System OMB Office of Management and Budget

This is a work of the U.S. government and is not subject to copyright
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separately.

United States Government Accountability Office

Washington, DC 20548

July 28, 2006

The Honorable Susan M. Collins Chairman The Honorable Joseph I. Lieberman
Ranking Minority Member Committee on Homeland Security and Governmental
Affairs United States Senate

The Honorable Tom Davis Chairman The Honorable Henry A. Waxman Ranking
Minority Member Committee on Government Reform House of Representatives

About one-fifth of the federal budget-over $460 billion1-was distributed
in fiscal year 2004 in grants to various entities, such as state, local,
and tribal governments, nonprofit organizations, and colleges and
universities. Grantees, particularly those that obtain grants from
multiple federal agencies, must comply with the different requirements and
systems that agencies have established, which can result in directing
excessive resources to meeting varying administrative requirements rather
than toward the purpose of the program. While these requirements are
generally intended to ensure accountability, Congress became concerned
that these administrative requirements may be duplicative, burdensome, or
conflicting and could impede the cost-effective delivery of services at
the local level. In response, Congress passed Public Law 106-107, the
Federal Financial Assistance Management Improvement Act of 1999. The act
(commonly referred to by the grants community as P.L. 106-107) required
that federal grant-making agencies streamline administrative requirements
and engage and involve grantees in developing and implementing their

1As reported in the Consolidated Federal Funds Report at
http://www.census.gov/govs/www/cffr.html (downloaded Mar. 10, 2006).

reform goals and implementation plans.2 It specifically requires that the
Office of Management and Budget (OMB) work with agencies to establish
common applications and systems and uniform rules for federal grant
administration. The act is scheduled to sunset in November 2007.

P.L. 106-107 also directed GAO to assess the effectiveness of the reform
efforts and to obtain input from state, local, and tribal governments and
nonprofit organizations. In April 2005, we completed an evaluation that
focused on efforts federal grant-making agencies had made to streamline
and develop common processes for grantees and the extent of coordination
among OMB, the agencies, and potential grant recipients.3 This second
report examines how selected grantees view the federal streamlining
effort. Specifically, we will identify

           o  aspects of the various federal reform efforts and initiatives
           that grantees identified as inadequate to meet the goals of P.L.
           106-107, in particular simplifying federal financial assistance
           application and reporting requirements; and
           o  grantees' views on further action needed to standardize and
           streamline grant processes for grantees.

           To address our objectives, we reviewed P.L.106-107 to identify
           requirements and criteria for evaluating the effectiveness of
           agency and governmentwide reform efforts. We then reviewed the
           common plan developed initially by 26 grant-making agencies, and
           we obtained and reviewed the annual progress reports that the act
           required each agency to submit to OMB and Congress. We met with
           officials from OMB and with lead officials from the various
           cross-agency work groups to discuss ongoing reform and
           streamlining efforts. To get the perspective of grantees, we
           reviewed the public comments that were received in response to
           proposals for the initial, multiagencywide plan. We also
           interviewed staff from several associations representing different
           communities of grantees to identify issues that their memberships
           have expressed about federal grant management process reform and
           to identify states that were undertaking grant process management
           reforms of their own. We analyzed results from surveys of users of
           the Grants.gov Web portal, one of the initiatives implemented so
           far.

           To get a better working-level understanding of grant management
           issues, we visited and interviewed officials at 17 grantee
           organizations-4 state governments, 3 tribal governments, 2 county
           governments, 3 municipal governments, 2 nonprofit organizations, 2
           higher education institutions, and a nonacademic research
           institution. This selected set of grantees represented a range of
           grantee sizes, levels of administrative sophistication, and types
           of grants being applied for. These discussions enabled us to gain
           an in-depth perspective on the concerns of grantees from different
           communities of grant recipients, and to understand how grantees
           manage an array of grants from different programs and agencies, a
           perspective not obtained from individual program reviews. Although
           we cannot project these results to all grantees, the comments
           obtained help inform the issue of the type of difficulties that
           grantees must address. These discussions also enabled us to
           identify grant reform initiatives undertaken by selected states
           that could have potential to reduce grantee administrative
           burdens. For more on our methodology, see appendix I. We conducted
           our work in accordance with generally accepted government auditing
           standards from June 2005 through May 2006.

           Results in Brief
			  
			  While some progress has been made, federal grantees continue to
           identify significant areas of grants administration where the
           goals and requirements of P.L. 106-107 have not yet been met.
           These concerns fall into two groups: (1) the continued lack of
           standardization and other inefficiencies in grant administration
           across agencies; and (2) the difficulties related to technological
           implementation of the Grants.gov Web portal, a Web site at which
           grantees can find grant opportunities across government agencies
           and can apply for many of them online. Grantees told us that
           federal grant-making agencies still use different application,
           reporting, and payment systems, and use different definitions on
           the grant application forms. Grantees also identified other
           inefficiencies that continue to limit the effectiveness of grant
           programs, particularly federal procedures that do not consider the
           manner in which grantees conduct their grant administration. For
           example, when federal processes are not aligned with typical
           grantee business practices, key documents do not flow back and
           forth from the federal grantor agency and grantees in an efficient
           manner. The most significant progress in the area of technology
           development has been the implementation of Grants.gov, but
           grantees report that the Grants.gov technology nevertheless has
           areas needing improvement. Specifically, grantees we interviewed
           were not satisfied with the performance and usefulness of the
           Grants.gov search, or find, function, which was intended to make
           it easier for them to identify grant opportunities. Some grantees
           told us that the Grants.gov find feature was not any better than
           previous methods of searching; others were unaware that Grants.gov
           had a find capability at all. Additionally, some grantees with
           experience using Grants.gov to apply for federal grants have had
           difficulties and reported their considerable frustration with its
           requirements, such as the complex and time-consuming process for
           registering to use the Grants.gov apply system. The Grants.gov
           program management office has worked at addressing some of these
           problems, for example by improving the search capability in
           December 2005, and has plans for further improvements.

           Grantees we interviewed were concerned that, while the federal
           cross-agency grant management reform initiatives were moving
           forward, progress to date has been inadequate. They identified
           management issues related to implementation of the P.L. 106-107
           initiatives that have contributed to the lack of progress. For
           example, they reported that they would like to have more
           communication with work groups before decisions about grant
           administration changes are made to better prioritize and implement
           initiatives. Grantees also said lack of both clear objectives and
           a public time line for the reform process sometimes prevented them
           from understanding the scope and timing of planned changes.

           We are suggesting that Congress consider reauthorizing P.L.
           106-107 to make certain that federal agencies have clear
           requirements to continue these efforts. We are also recommending
           that OMB ensure that the groups leading the streamlining efforts
           identify and implement approaches to obtaining grantees' input as
           policies and procedures are being developed. In commenting by
           e-mail on a draft of this report, OMB wrote that it will continue
           working with agencies to streamline grants administration and to
           make further progress toward achieving the P.L. 106-107 goals, and
           it will continue to seek input from the grant community.

           Background
				
			  The process of distributing federal assistance through grants is
           complicated and involves many different parties, both public and
           private, with different organizational structures and sizes as
           well as varying missions. Federal grants are disbursed and managed
           by 26 different federal agencies as well as by some smaller
           federal entities, and grants are used to implement about 1,000
           different federal programs. Grant programs have different
           objectives and strategies-reflected in the application, selection,
           monitoring, and reporting processes-that are intended to assure
           accountability to the federal agencies.

           The universe of potential applicants for grants is also large and
           varied. It includes governments from the smallest school district
           to the largest state. According to information from the Census
           Bureau and the Department of Interior, there are approximately
           88,500 units of government in the United States, including states,
           tribal governments and county governments, municipalities,
           townships, school districts, and various other special purpose
           governments.4 Grant recipients also include nonprofit
           organizations, described in one study as ranging from small
           organizations with annual budgets less than $25,000 to
           multi-million-dollar health organizations.5 We reported in 2005
           that over 460,000 nonprofit organizations filed tax forms in
           2002.6 Some grants are also provided to individuals.7 While not
           all of these entities actually apply for grants, they are
           potentially eligible and do reflect the considerable diversity of
           grant recipients. The grants process is further complicated
           because state agencies may act as both grantees soliciting federal
           grant resources and as grantors distributing federal funds to
           other grantees. Thus states redistribute significant amounts of
           the federal aid they receive to local governments and nonprofit
           agencies in their states.

           Moreover, the grants themselves come in a wide variety of types
           and sizes. Grant types cover a broad spectrum from those narrowly
           targeted to fund a program to those that are broadly targeted and
           allow the grantee to make decisions regarding how funds are used.
           Mandatory grants are awarded under a program where the authorizing
           statute requires the award to be made to each eligible entity
           under the conditions and in the amount (or based on the formula)
           specified in statute. Discretionary grants are those in which the
           federal awarding agency may select the recipient from among all
           eligible recipients, may decide to make or not make an award based
           on the programmatic, technical, or scientific content of an
           application, and can decide the amount of funding to be awarded to
           each recipient. Grants can be small, such as the $1,100 National
           Science Foundation Social, Behavioral, and Economic Sciences
           Grant, or large, such as California's $3.7 billion Temporary
           Assistance to Needy Families block grant.

           While there is substantial variation among grants, they generally
           follow a life cycle as shown in figure 1: announcement,
           application, award, postaward, and closeout. Once a grant program
           is established through legislation, which may specify particular
           objectives, eligibility, and other requirements, a grantor agency
           may impose additional requirements on it. For competitive grant
           programs, the public is notified of the grant opportunity through
           an announcement, and potential grantees must submit applications
           for agency review. In the award stage, the agency identifies
           successful applicants or legislatively defined grant recipients
           and awards funding. The postaward stage includes payment
           processing, agency monitoring, and grantee reporting, which may
           include financial and performance information. The closeout phase
           includes preparation of final reports, financial reconciliation,
           and any required accounting for property. Audits may occur
           multiple times during the life cycle of the grant and after
           closeout.

2As defined in the act, federal financial assistance includes grants,
cooperative agreements, loans, loan guarantees, insurance, interest
subsidies, and other forms of assistance. Pub. L. No. 106-107, S:4. The
current streamlining efforts have focused on grants and cooperative
agreements. In our evaluation we have also limited our assessment to
grants and cooperative agreements and, for simplicity, refer to them as
grants.

3GAO, Grants Management: Additional Actions Needed to Streamline and
Simplify Processes, GAO-05-335 (Washington, D.C.: Apr. 18, 2005).

4Census Bureau, 2002 Census of Governments GC02-1(P) (Washington, D.C.:
2002) and Department of Interior Quick Facts, http://www.doi.gov/facts
(downloaded Mar. 6, 2006).

5Lester M. Salamon, "The Resilient Sector: The State of Nonprofit
America," Snapshots, no. 25 (2002).

6GAO, Tax-Exempt Sector: Governance, Transparency, and Oversight Are
Critical for Maintaining Public Trust, GAO-05-561T (Washington, D.C.: Apr.
20, 2005). An entity that believes it meets the requirements set by
Congress must apply to the Internal Revenue Service to obtain tax-exempt
status. Entities that are not required to apply include those that are not
private foundations and that have gross receipts of less than $5,000 as
well as churches and church-affiliated entities. Churches are potentially
eligible for federal grants.

7See, for example, the National Endowment for the Arts's "Literature
Fellowships: Translation Projects" or the National Endowment for the
Humanities's Fellowships and Faculty Research Awards.

Figure 1: Grant Life Cycle

Grantees have different approaches for managing their grants across their
own internal subdivisions or departments. Grantees we visited had a
variety of grant administration structures and degrees of centralization
that were not dependent on the size of the organization or the number of
grants they received. In a more decentralized structure, each department
within the organization managed most aspects of its grants, including
financial accounting and reporting. For example, in a municipality the
police department might deal with federal Department of Justice grants;
the health department might deal with Environmental Protection Agency
grants; and the school administration might deal with Department of
Education grants. Conversely, a more centralized structure might have a
single grants office that coordinated all aspects of grant administration
across the organization, including final submission of applications and
general oversight of reporting and accountability compliance. Even for
grantees we visited with a decentralized structure, some amount of central
grant oversight was generally present.

P.L. 106-107 was passed in response to the complicated nature of the grant
process. To address these issues, the act required OMB to direct,
coordinate, and assist federal agencies in establishing common
applications, systems, and uniform rules to improve the effectiveness and
performance of federal grants with the goal of improved efficiency and
delivery of services to the public. For example, under P.L. 106-107

           o  OMB is required to direct, coordinate, and assist federal
           agencies in developing and implementing a common application and
           reporting system, including electronic processes with which a
           nonfederal entity can apply for, manage, and report on the use of
           funds from multiple grant programs that serve similar purposes but
           are administered by different federal agencies; and
           o  federal grant-making agencies are required to streamline and
           simplify their application, administrative, and reporting
           procedures and enable applicants to apply for and report on the
           use of federal grants funds electronically.

           As we reported previously, the federal government has undertaken
           several activities to implement P.L. 106-107.8 OMB has designated
           the Department of Health and Human Services as the lead agency
           responsible for assisting OMB in implementing the act. Activities
           are presently organized under two different groups-the Grants
           Policy Committee and the Grants Executive Board-who report to
           OMB's Office of Federal Financial Management and Office of
           E-Government and Information Technology, respectively (see fig.
           2). The Grants Policy Committee is currently responsible for
           formulating overall grant management reform policy and oversees
           the efforts of the cross-agency work groups. Work groups were
           organized shortly after the act was passed to develop policies for
           implementing the act's goals related to their respective areas:

           o  Pre-Award Work Group, responsible for streamlining policies and
           practices that occur while grantees find grants, apply for grants,
           and receive notification of award decision;
           o  Mandatory Work Group, responsible for streamlining policies and
           practices for mandatory grants;
           o  Post-Award Work Group, responsible for streamlining policies
           and practices that occur while grantees perform awards, complete
           required reporting, acquire payments, and during the federal
           monitoring of grantees;
           o  Audit Oversight Work Group, responsible for improving OMB's
           Circular A-133 single audit process; and
           o  Training and Oversight Work Group, responsible for addressing
           governmentwide issues concerning the grants management workforce.

8 GAO-05-335 .

Figure 2: P.L. 106-107 Initiatives Orgnization Chart

The Grants Executive Board consists of senior officials from federal
grant-making agencies. They provide strategic direction and oversight of
Grants.gov and the Grants Management Line of Business, which implement
technological aspects of P.L. 106-107. Grants.gov is a single Web portal
that enables users of all types to search for grants electronically.
Agencies are required to post all discretionary grant opportunities on
Grants.gov. Agencies are also able to provide the capability for potential
grantees to apply for grants through this Web site. A Grants.gov official
said that as of May 22, 2006, all but two agencies have provided this
capability and that both agencies plan to post applications on the site in
June 2006. Grants.gov continues to make improvements to its cross-agency
systems at which potential grantees can find and apply for grant
opportunities. A Grants.gov official told us they have started planning
and designing upgrades to the computer hardware to meet the processing
requirements as additional grant application packages and functions,
including improved search capabilities, are added to the site. Further, a
newly designed Grants.gov Web site was introduced in July 2006.

The Grants Management Line of Business is an initiative begun in spring
2004 that intends to provide end-to-end management (that is, over the
entire life cycle of a grant from announcement to closeout) of grants and
address how best to consolidate the administration and management of
grants across agencies. In 2005, the Department of Health and Human
Services and the National Science Foundation were selected by OMB to be
the managing partners to lead the Grants Management Line of Business
effort. They plan to implement a consortia-based approach that builds on
existing commercial systems and grants management systems in selected
agencies to develop those agencies and their systems into shared service
providers or centers of excellence to be used by other agencies. In late
2005, OMB and the Grants Executive Board chose three agencies-the National
Science Foundation, the Administration for Children and Families within
the Department of Health and Human Services, and the Department of
Education-to lead three consortia in defining requirements and agency
needs around a common end-to-end grants management system for members of
each consortium. OMB officials told us that they, the cochairs of the
Grants Management Line of Business, and the consortia leads have developed
a process for agencies to join a consortium and that the consortia leaders
are working with other agencies to discuss potential partnerships and
develop memorandums of understanding. A cochair of the initiative said OMB
may designate additional consortia based on agency interests in leading a
consortium. Detailed plans for the initiative indicate a goal of September
2011 for completing the movement of agencies to the common systems.

     Grantees Report That, Despite Federal Efforts to Streamline, Excessive
                         Administrative Burden Remains

While OMB and the federal agencies have various efforts under way at the
federal level to streamline grant administration, grantees continue to
identify areas in which the goals of P.L. 106-107 have not been met. Areas
grantees identified include the lack of standard forms and systems across
agencies, federal processes that do not take into account the manner in
which grantees conduct their grant administration, and technological
aspects of the changes that have presented problems for grantees.

Lack of Standardization in Applying for and Managing Grants

Grantees continue to express frustration with having to work with varying
systems to apply for and report on the use of grant funds, to respond to
different administrative requirements, and to use different payment
systems. They voiced objections to policies and procedures that differ by
agency, as the differences necessitate that grantees become familiar with
different application and reporting requirements. (App. II summarizes
specific areas grantees identified as needing standardization and
streamlining through the grant life cycle.)

  Multiple Application, Reporting, and Payment Systems Remain

Grantees commented that they continue to need to be familiar with multiple
electronic systems and paper processes of different agencies to apply for
grants. As federal agencies transition to using Grants.gov for their
application process, grantees find themselves submitting applications by
mail, through existing agency systems, and through Grants.gov. For
example, officials from one research institution told us that they had
recently submitted applications through Grants.gov, other federal agency
Web-based systems, and by mail. A few grantees mentioned that they had to
mail in parts of the application in addition to submitting parts online
for some agencies. Some grantees expressed a preference to be able to
continue to use particular existing agency systems because they were
familiar with these systems and they found useful some of the options that
they provided, such as tracking the status of applications.

Along with agencies' varying application processes, grantees described
varying agency procedures required to submit financial and progress
reports. When the cross-agency work groups sought public comments in 2001,
several grantees raised issues such as the need to develop uniform
reporting requirements, formats, guidelines, and submission frequencies,
and the need to obtain and submit reports online. Grantees we visited said
that the frequency with which progress and financial reports were required
varied across programs, making it difficult to keep track of when reports
were due. Progress reports are sometimes required quarterly, semiannually,
or annually. Due dates for quarterly financial reports also varied;
grantees reported that financial reports are due as few as 30 days and as
long as 90 days after the end of the quarter.

Grantees provided several examples of administrative requirements that
vary across grants and the resulting challenges. An official from one
nonprofit group we met with, which receives seven separate grants all
related to serving one special population, said reporting was the most
difficult part of managing federal grants for them. Reports require
information in different ways, and this requires that intake information
on their clients must be collected in different ways, such as by special
age-grouping categories. Grantees also described different systems to
submit reports. Some are submitted to agencies' online systems, while
others are submitted via paper hardcopy. One system that grantees
described required continual updating of activities as often as daily for
the purpose of generating performance reports. A P.L. 106-107 cross-agency
team representative explained that standard reports are being developed,
but have not been implemented yet. Grantees receiving many federal grants
also told us they would like to have the ability to track reporting
deadlines and submissions online. This capability for grant administrators
to conduct online tracking of when reports are due and which reports have
been submitted to and received by the federal grantor agencies would
decrease the confusion caused by various reporting schedules.

Some grantees we interviewed expressed a preference for a single grant
management system on which multiple users could perform concurrent tasks
and that would provide the data to conduct end-to-end management of grants
throughout the grants' life cycle, unlike Grants.gov, which only handles
the front end of the process (i.e., identifying and applying for grants).
Several grantees told us they have had experience using such systems.
However, without the capability for grantee staff to oversee the entire
grant process on one system, grantees cannot easily monitor when program
reports are due, whether these reports have been submitted and received,
and whether payments have been made. Not having this end-to-end grant
management capability makes it particularly challenging for central grant
management staff at larger grantees to oversee the grant process across
their organizations. P.L. 106-107 required the development of a common
system, including electronic processes, through which a grantee can apply
for, manage, and report on the use of funding. To date, such a system has
not been developed across federal agencies. However, the Grants Management
Line of Business initiative, if implemented as proposed in its business
plan, could eventually result in reducing the number of different systems.

Several grantees identified the multiple payment systems that they must
access to receive funds as a source of frustration. The existence of
multiple payment systems was one of the areas of greatest concern by those
grantees who commented on the initial plan, and grantees continue to
identify the need to reduce the number of payment systems. The National
Association of State Auditors, Comptrollers and Treasurers, commenting on
this situation, explained that it has continued to cause problems for the
states because of the continued use by some federal agencies of unreliable
and antiquated systems. Some of these systems are paper-based or phone
systems. Many grantees with whom we spoke described needing to understand
several payment systems-as many as six different systems in one
municipality. This creates problems as new employees need to be trained on
multiple systems. Grantees we interviewed said they preferred some
electronic systems more than others because of the ease of use and the
ability to track balances and print reports. They also expressed concern
that as systems were standardized, the grant management systems that they
believe are the most functional will not be selected and used as the
standard system.

In 1998, the Chief Financial Officers Council designated two payment
systems for use by federal civilian grant-making agencies and designated a
third payment system for use by the Department of Defense.9 As of November
2005, 16 civilian agencies have migrated to one of the civilian payment
systems, but agencies still continued to operate nine different systems.
As of May 2006, the Grants Policy Committee's Post-Award Work Group was
seeking information on agencies' current payment systems and their plans
for these systems in the future. Officials from neither the work group nor
the Grants Management Line of Business team could provide us with
information on payment systems that would be used under the Line of
Business consortia approach. They said these details had not yet been
decided.

  Lack of Standard Definitions and Formats for Grant Documents

Grantees reported that they see differences across agencies in policies,
and the requirements and forms resulting from those policies. Grantees
reported that standard definitions do not exist for some terms, and as a
result, grantees must track and report expenses in different ways. For
example, expenses such as particular employee-related costs are
categorized differently across agencies, which requires recalculating
expenses into new categories, a time-consuming step.

9The two civilian systems are the Automated Standard Applications for
Payment System, operated by the Department of the Treasury's Financial
Management Service, and the Payment Management System, operated by the
Department of Health and Human Services.

Grantees said that the lengthy and differing terms and conditions that are
part of the award agreements are difficult to grasp. They generally said
standard terms and conditions would be very helpful in identifying
significant differences between requirements of different agencies. As of
March 2006, the Grants Policy Committee's Pre-Award Work Group was
drafting a standard award notice and standard terms and conditions. It
would include a standard section, but would also identify award-specific
terms and conditions, including points related to the program and to the
specific grantee, if needed. After the draft is complete, it will be
reviewed by the Grants Policy Committee, reviewed by the agencies, sent to
OMB for approval, and published in the Federal Register for a period of
public comment. The goal for publication is early 2007.

Grantees reported that for each grant awarded, they are required to review
and sign a set of multiple certifications and assurances forms, though
these forms do not vary widely from grant to grant, even across agencies.
These forms attest that the policies and procedures of a grantee
organization are in accordance with federal requirements. Grantees are
typically asked to avow that they will not use funds for lobbying purposes
and that they will provide a drug-free workplace, among other assurances.
Grantees noted that these types of policies are unlikely to change
frequently, and that it seems unnecessary to reconfirm their adherence to
them on a continual basis. Nevertheless, grantees receiving many federal
grants must get essentially the same forms signed many times by executive
level managers and submit these forms to agencies, a process they say is
duplicative and time-consuming. In addition, frequently, certifications
and assurances require original signatures, and must be submitted in
hardcopy, even at times when the application is submitted electronically,
adding additional burden. Grantees suggested that there should be a
mechanism to submit any required certifications and assurances annually,
in a format which is accessible and accepted governmentwide. This would
relieve them of this additional burden and reduce the amount of paperwork
required.

Grantees Identified Areas Where Administrative Inefficiencies Continue to Exist

In addition to the lack of standardization in procedures and systems
across agencies, grantees mentioned other areas where inefficiencies in
grant administration and excess administrative burden on grantees exist.
These included not aligning federal grant processes with typical grantees'
business processes, inadequate advance information on potential grant
availability, and unexplained delays in grant awards. OMB officials with
whom we discussed these issues were generally unaware of them but
acknowledged that further investigation might be warranted into how to
best alleviate the problems.

  Federal Processes Not Aligned with Grantee Business Processes

Federal grant administrative systems, particularly those being developed
under streamlining initiatives, do not always seem to take into account
the manner in which grantee organizations conduct the business of grant
administration. For example, grantees told us that federal agencies
generally only send award notifications to one person in the organization,
frequently at the executive level (for example, the mayor of a city),
although several contacts are listed in the application. By sending the
notification by paper or e-mail to a single contact who is authorized to
sign off on grant applications for the organization but is not directly
involved with applying for the grant, federal agencies might inadvertently
leave the grantee's program manager and financial staff out of the
communication chain. It can take some time for organizations to filter the
information through, and grantees said that notifications were frequently
lost in their organizations. For instance, if a letter or e-mail is sent
to the mayor of a city, it could be some time before that information is
reviewed and passed along to the appropriate person. Grantees would prefer
that notifications go to multiple people in the organization.

Additionally, grantees told us when they receive a bank wire transfer
report from their bank indicating that a payment has been credited to
their account, they sometimes cannot identify the grant program for which
it is providing funds because the bank report does not provide helpful
information. When funds from federal agencies are deposited, grantee
financial staff are notified of a deposit to the grantee's account, which
is notated with coding on a wire transfer report. Grantees explained that
these codes are complicated alphanumeric sequences which have little or no
information about which grant or program the money is for. The grantee
accountants may be unaware that the funds are coming, sometimes because
grantee program staff have drawn down funds and have not notified them and
sometimes because the deposit was not expected. Financial staff said that
even if they are aware of the request, they match transactions primarily
by dollar amount because the codes are difficult to decipher. Grantees
said that it would be helpful to have more information, such as a payment
transaction number or Catalogue of Federal Domestic Assistance number, on
the wire transfer report.10 However, if that is not possible, they
suggested that some type of notice from the agency describing the deposit
made would be helpful.

  Inadequate Advance Information on Potential Grant Availability

Grantees reported to us that they generally do not have adequate time
between when federal agencies post grant opportunity announcements and
application deadlines to adequately develop application documentation and
obtain the necessary internal approvals. They explained that, in an
environment of increasing reliance and emphasis on partnerships in grant
project management, grantees have difficulty developing a well-conceived
project plan, lining up partnerships, and getting through the necessary
internal approval processes in the period normally allotted. They said
that they sometimes have insufficient time to obtain approvals from
internal authorities such as city councils and county boards, who meet
infrequently, yet such approvals are often required by local officials
before submitting applications. If lengthening the application period is
not feasible for a given grant or program, one grantee suggested that
federal agencies provide better forecasting of opportunities they expect
to be available, funds permitting. This would allow grantees to begin
developing projects well in advance. Some agencies, such as the Department
of Education, already provide forecasts on their Web sites of funding
opportunities.11

Grantees also stated that it is difficult from the multitude of grant
opportunities available to readily identify those for which they are most
competitive. Grantees noted that there is inadequate information in
opportunity announcements for them to make a fully-informed assessment of
the appropriateness of their project for the grant program. They said that
the eligibility requirements do not always make it clear whether their
organization is likely to be considered. Grantees said that the program
may be designed for a specific type of organization in mind, such as a
particular level of government, and that more information about these
would allow them to make better decisions about whether or not to apply.
To improve their ability to parse through announcements, grantees said it
would be helpful to have information about previously successful
applications, which could include a list of awardees or project abstracts.
This would allow grantees to make better decisions about whether or not
the project they have in mind is in line with the federal agencies'
expectations for that grant opportunity.

10The Catalogue of Federal Domestic Assistance is a governmentwide
compendium of federal programs, projects, services, and activities that
provide assistance or benefits to the American public.

11 http://www.ed.gov/fund/grant/find/edlite-forecast.html (downloaded June
1, 2006).

  Delays and Uncertainties in Grant Award Process

Grantees said delayed grant awards and uncertainty about award time frames
create significant burden on them and limit their ability to plan for and
efficiently execute funded grant programs. Grantees noted that they often
have no way to check on the status of their applications after they are
submitted. Further, they often receive award notifications significantly
later than they had anticipated, sometimes months after the expected award
date provided in the opportunity announcement. These uncertainties and
delays cause significant problems in planning for and executing grant
projects. Some grantees experience problems related to the seasonal nature
of their work, and delayed awards could mean that the project must be
delayed a full year before beginning in certain fields such as
environmental research. Additionally, grantees noted prolonged uncertainty
makes it difficult to maintain partnerships with other organizations and
that they may need to quickly find another partner once the grant has been
awarded. Grantees suggested that agencies should award grants in a more
timely way or provide more precise information on when an award could be
expected.

Technology Issues Have Reduced the Benefits of Some Initiatives

Grantees with whom we spoke expressed concerns about difficulty using
features of the Grants.gov site, the key effort completed so far in
response to P.L. 106-107. Of those who were aware of Grants.gov's find
capability, several told us it was not helpful in identifying appropriate
grant opportunities for them. Grantees also expressed frustration with
technological issues related to the apply capability of Grants.gov,
including steps required to register before a user can submit an
application.

  Grants.gov Find Capability

Although Grants.gov's find capability was designed to provide information
on federal grant-funding opportunities at a single Web site, several
grantees told us that it has not provided a better alternative to
traditional methods of finding federal grant opportunities. Some grantee
officials were unaware of Grants.gov's ability to help identify grant
opportunities. The site enables potential applicants to search for grant
opportunities by several characteristics, such as the type of activity
funded and the agency providing funds. Grants.gov can also notify
potential applicants by e-mail of new opportunities that meet certain
parameters the potential applicants have preidentified.

During our visits with grantees in the fall of 2005, we heard several
comments that the keyword search did not work correctly and returned
irrelevant grants, resulting in some grantees deciding that such searches
were too time-consuming and generally unproductive. Some also said that
grant opportunities they knew were open were not included in results when
searching for relevant key words. They preferred using other approaches to
identifying grant opportunities, such as using paid subscriptions to
grant-finding services and searching individual agencies' Web sites as
they have in the past.

Grants.gov Program Management Office officials told us in early December
2005 that the search engine had not been working properly, and that an
update planned for later that month would address issues that had created
problems for users. They reported to agency stakeholders in early 2006
that the search engine had been modified and improved. However, our
interviews with selected grantees raised the issue that some grantees may
have already dismissed the Grants.gov find keyword search function as a
useful tool and abandoned this approach to identifying relevant funding
opportunities. We also reviewed results of Grants.gov's online survey
presented to a random sampling of site visitors and found that the
responses indicated users' views have not improved markedly since the
December 2005 change. Moreover, a question posed on the survey after the
update asking about the search format enhancements showed mixed results.12

  Grants.gov Apply Capability

The technological solutions chosen for Grants.gov's capability to apply
online for grant opportunities at federal grant-making agencies-the apply
capability-has also caused problems for grantees. Grantees cited many
examples to us of the system not being functional enough and easy to use.
Some complained of slow performance on the system, particularly at peak
usage times. Some complained of the system being shut down. A few
expressed a desire to have the capability to test the apply function
before they were actually ready to submit, given the pressure experienced
just prior to deadlines. Others expressed frustration that existing
systems for agencies that incorporated all aspects of grant management
from the application to closeout phases were not used instead of the
newly-developed Grants.gov system, which could only address identifying
and applying for grants.

12The survey asked respondents to rate Grants.gov on a variety of Web site
characteristics such as content, navigation, and functionality. Our
analysis covered the period from June 2005, when the survey administered
by the current contractor was initiated, through early March 2006. We
examined the responses to online survey questions asking Grants.gov
visitors to rate on a scale from 1 ("poor") to 10 ("excellent") such
things as the usefulness and organization of search results, how they are
presented, and the capability to narrow the results to find the desired
information. The average respondent ratings, although falling between 6
and 7 on the scale, showed no significant positive shift upward subsequent
to the December search engine updates. Regarding the question posed after
the update on search format enhancements, 20 percent of the grantee
respondents indicated that it was "better," another 21 percent said it was
"on par," 12 percent said "worse" and the rest chose the "didn't notice"
(29 percent) or "didn't use search" (16 percent) response categories.
(Figures do not total 100 percent due to rounding and a small number of
respondents not answering this item. See app. I for detail on our analysis
of these data.)

The Grants.gov officials have worked at addressing some of these problems.
They said they had, for example, upgraded hardware and increased capacity
for peak application periods as agencies continue to increase the number
of grant opportunities requiring that applications be submitted through
Grants.gov. According to the Grants.gov officials, future plans also
include improving the Web site to provide the capability for users to
practice applying for grants and test options. Grants.gov users who
responded to the online survey questions related to the apply function
gave generally neutral responses. Grantee survey respondents did show a
greater degree of endorsement to the question of how likely it was that
they would use Grants.gov to submit an application.13

One issue that some grantees raised was that Grants.gov's apply feature
requires the use of software that works only on the Windows operating
system. For example, research institutions that use Macintosh computers
cannot use this software to submit applications on Grants.gov. Grants.gov
officials report that as of June 2006 more than 20 organizations had the
capability to use a system-to-system approach that directly links
Grants.gov to their own internal computer system. However, this requires
significant programming and financial investment to use. In addition, in
December 2005, Grants.gov instituted a temporary solution to allow users
of Macintosh systems to complete and submit applications using the
electronic forms software. Grants.gov officials anticipate that a final
solution will be available in November 2006.

13When asked to rate the grant application process on a scale from 1
("very difficult") to10 ("very easy"), the average rating by grantee
respondents over the period we analyzed was 5.69, which suggests a
generally neutral position with regard to the ease or difficulty of the
application process. On the question of how likely it was that they would
use Grants.gov to submit an application, with a scale from 1 ("not very
likely") to 10 ("very likely"), the average rating was 7.63. On both
items, however, the average rating after the December upgrades were
implemented showed no significant improvement over the average rating
prior to the upgrades.

One particularly difficult problem for grantees using the apply feature
has been the initial registration process. Grantees experienced
difficulties with registering through the Central Contractor
Registration-a requirement to use Grants.gov-as well as the time it takes
to complete the process. They stated that the registration process was
complicated and difficult. Much of the confusion has centered on the use
of Data Universal Numbering System (DUNS) numbers, which are used to track
grantees. States, as well as other grantees, sometimes have more than one
DUNS number and stated that it is unclear which number should be used for
the registration. Grantees also stated that the process takes too long to
complete. The Grants.gov online survey also asked site visitors to rate
both the clarity of instructions for registering and the ease of
registering. No significant positive shifts in the average ratings to
these items were observed after the Web site was upgraded in December
2005.14

Grantees Report That Inadequate Communication and Lack of a Clear Schedule Have
                           Resulted in Slow Progress

Grantees we interviewed were concerned that, while the three cross-agency
grants management reform initiatives related to P.L. 106-107 are moving
forward, progress to date has been inadequate. Grantees identified two
specific areas where the management of P.L. 106-107 initiatives
contributed to the lack of progress: (1) inadequate ongoing communication
with grantees; and (2) insufficient information on the timing and
objectives of proposed changes, including a lack of clarity on the
responsibility for decisions involving both policy and technology issues.

Inadequate Communication with the Grantee Community

According to some grantees and grantee associations, insufficient ongoing
communication with the grantee community has resulted in poor
implementation and prioritization of initiatives and has limited grantees'
use and understanding of new functionality of electronic systems. P.L.
106-107 required that lead officials consult with representatives of
nonfederal entities during the development and implementation of the P.L.
106-107 initial plan. In 2005, we recommended to OMB that cross-agency
work groups solicit grantee input and provide coordination with grantees
on an ongoing basis.15 However, there has not been extensive communication
with all types of grantees on policy and technology development. For
example, one of the work groups told us that they obtained feedback from
grantees on a potential product during its development, but this has not
occurred on a wide scale.

14The Grants.gov online survey asked visitors to rate both the clarity of
instructions for registering and the ease of registering on a scale from 1
("poor") to 10 ("excellent"). The average rating provided by grantee
responders placed both items in the interval of 6 to 7 with no significant
shifts in these average ratings after the Web site was upgraded in
December 2005.

Our discussions with grantees about P.L. 106-107 initiatives that have
been implemented indicate that insufficient communication with the diverse
grantee community has hampered effective and efficient implementation of
the act, especially in the case of the technology implemented. As
discussed earlier, grantees experienced problems stemming from policies
and technologies that are inconsistent with grantees' business practices
and these have caused inefficiencies in their administration of grants.
These issues may have been addressed, or addressed sooner, if greater
communication, before implementation, existed between grantees and the
cross-agency work groups. For example, we found that some grantees could
not efficiently use the software needed to apply for grants on Grants.gov
as intended because internal information technology policies limit their
use and transfer of certain files or programs throughout the organization.

The Grants.gov staff felt that the needs of rural users merited the use of
an application that could be completed offline, rather than using a system
that involves completing forms while online, to reduce the time spent
online completing the application. They also stated that using online
fillable forms would require a greater investment in hardware to store
applications that were not complete and also maintain system performance.
However, some grantees we spoke with stated that it takes a long time to
submit applications to Grants.gov and they have experienced problems with
submission due to large file sizes. They stated that they prefer
completing forms online and that it would be easier for them to submit
applications using that method.

In addition, the lack of communication between the work groups and the
whole grantee community may have prevented the work groups from focusing
on initiatives that grantees found important. Grantees we spoke with
stated that there was a need to address postaward administration in
addition to addressing the find and apply phases that are completed on
Grants.gov. P.L. 106-107 requires a common electronic system that grantees
can use to apply for, manage, and report on federal financial assistance.
However, according to a coleader of the Grants Management Line of Business
initiative, no single common system exists for grantees to report on
grants from multiple agencies. That initiative should eventually meet the
need for a common system, but not by the law's sunset date. Had grantees
been consulted about their priority of needs, greater emphasis may have
been placed on implementing this initiative.

15 GAO-05-335 .

In some cases the lack of communication with grantees has limited their
ability to use and understand new technology implemented under P.L.
106-107. Some grantees stated that they had not heard of Grants.gov,
though they expressed some interest when we discussed it with them. Some
grantees also expressed concern about the lack of training they received
on the use of electronic systems, either Grants.gov or other agency
electronic systems used for grants management. Those that did use
Grants.gov expressed some serious concerns about its functionality as
well. For example, as discussed previously, many stated that the
Grants.gov keyword search did not yield grants that were relevant to the
search words. Some of these issues may have been resolved more quickly if
communication with grantees had been greater.

The lack of adequate communication between the federal government and
state grantees particularly affects progress in streamlining grant
administration because of the dual role that states play. States both
receive federal grants and provide grants to other levels of government
and nonprofit agencies, including some federal funds that pass through the
state. Subrecipients of federal grants must follow procedures established
by both federal agencies and state agencies, all of which can differ.
States must implement federal changes in their own state grant awards as
required by the federal agencies. In addition, federal efforts to reduce
administrative burden on grantees may also stimulate corresponding state
actions to examine requirements added by states. Some states are already
taking actions (discussed in more detail in app. III) that may reduce
administrative burdens on recipients of state grant awards. For example,
states we visited had initiated their own grant process management
reforms, including

           o  establishing central policies and procedures that provide
           consistency across all state agencies awarding funds to local
           governments and nonprofit agencies;
           o  establishing central state grants management offices that can
           provide mechanisms for statewide oversight of grants management;
           and
           o  developing new streamlined and standardized grants management
           systems that are similar in intent to the federal Grants.gov
           system.

           The research community has established avenues of communication
           with relevant federal agencies through the Federal Demonstration
           Partnership, a cooperative initiative of 10 agencies and over 90
           research institutions that encourages streamlining the
           administration of federally-sponsored research. The research
           community has used the Federal Demonstration Partnership to
           provide input on the implementation of P.L. 106-107. This
           initiative, however, only encompasses the research community.
           State and local governments, tribal governments, and nonprofit
           organizations have had only limited success in organizing their
           efforts to share their views with federal streamlining initiatives
           in an ongoing and continual manner.

           The National Grants Partnership, an organization that brings
           together both government and nongovernment individuals with an
           interest in improving grants administration, believes it can serve
           as a similar avenue of communication with the cross-agency work
           groups. The National Grants Partnership's membership includes
           individuals from state, local, and tribal governments; federal
           agencies; nonprofits; and associations that represent particular
           sectors of the grant community. National Grants Partnership
           representatives told us that they have not been able to have
           significant interaction with the cross-agency initiatives before
           they are published in the Federal Register to obtain comments from
           the public. They feel that, at that point, they can have little
           influence. They believe to better represent the grantee community
           it is necessary to have greater communication with the
           cross-agency work groups on streamlining issues before proposals
           are published in the Federal Register for comment.

           Although no concrete plans had been made as of March 2006, the
           Grants Policy Committee has recognized the need for grantee
           feedback and discussed how to obtain it. Committee members told us
           that they may hold meetings in multiple geographical locations
           with specific topics for discussion. The National Grants
           Partnership representatives told us they would like to be
           consulted on how the Grants Policy Committee plans to conduct
           these meetings to ensure that their members' views are expressed
           on a wide variety of issues. As of January 2006, the Grants
           Management Line of Business, which is currently in development,
           had not solicited states' or other grantees' feedback on
           capabilities that they would like to see used by the consortia
           service centers.

           Grantees Are Unsure of Plans and Time Lines
			  
			  Plans and time lines for the P.L. 106-107 initiatives have not all
           been provided to grantees, leaving grantees unsure of what changes
           will be made and when. The initial cross-agency plan for
           implementing the act included some short-term time lines, but
           these were not explicitly updated in later governmentwide annual
           reports to Congress and OMB, which describe the cross-agency work
           groups' progress and update their initial plan. Similarly, most of
           the federal grant-making agency annual reports to Congress, which
           describe the progress of each agency, do not contain goals and
           time lines. These annual reports have listed any upcoming
           activities as "future plans" but have not provided time frames for
           completion. The lack of a publicly available schedule reduces both
           the individual agency and the cross-agency initiatives'
           accountability for making progress. In 2005, we recommended that
           OMB ensure that agency annual progress reports to Congress and OMB
           on implementation of P.L. 106-107 are prepared and contain
           information on their progress towards goals. However, 12 of the 26
           annual reports for the period ending May 2005 were not finalized
           and posted on the Web site for the public until after March 28,
           2006. In the same report, we also stated that the lack of clear
           goals and time lines for cross-agency work groups to complete
           tasks and for agencies to implement systems undoubtedly has
           contributed to the lack of progress in implementing these
           proposals. An OMB official told us that it has been challenging to
           develop a comprehensive schedule but they do have individual
           schedules for various initiatives coordinated through the Grants
           Executive Board.

           In some cases for which project time lines were provided, the
           goals set for the cross-agency initiatives are not being met or
           extend beyond P.L. 106-107's sunset date. For example, the goal of
           reducing payment systems was not achieved by the Chief Financial
           Officers Council's deadline and a workgroup chairman said that not
           all agencies will be using these systems before November 2007. As
           mentioned previously, the Grants Management Line of Business
           initiative plans for the consortia service centers indicate that
           all agencies will not complete migration to the centers until
           2011. As of May 2006, the lead agencies were reaching out to other
           grant-making agencies to discuss an approach and time line for
           consortia partnering. While this may be an appropriate time line
           for implementing these complicated electronic systems, it appears
           the lack of early attention placed on this initiative will prevent
           its completion by the law's 2007 sunset date. In addition, the
           milestones that the Grants Policy Committee provided to us in
           March 2006 indicate that some tasks may not be completed by the
           act's sunset date.

           Conclusions
			  
			  When Congress passed P.L. 106-107 in 1999, it was concerned that
           federal grant administration requirements could be duplicative,
           burdensome, and conflicting, and that this prevents the
           cost-effective delivery of services at the local level. Since
           then, individuals from many agencies have begun to work together
           to meet the act's goals of simplifying grant administration and
           improving the effectiveness of grants. They organized into work
           groups, proposed changes, and implemented some of them. Their job
           has not been a simple one; it involves reaching consensus and
           obtaining conformity among 26 agencies whose procedures have
           evolved independently to address varying program goals, agency
           systems, management styles, and individual initiatives over the
           years. Given the complexity of the P.L. 106-107 initiatives, it is
           vital to continue to integrate and coordinate their various
           components. However, despite all these efforts, estimates for
           completing these initiatives indicate that the goals of P.L.
           106-107 will not be met by the act's sunset in November 2007.
           Because of this, grantees will continue to need to work with
           different systems that often have different processes and
           procedures.

           Because additional work still needs to be done, it is important
           that the momentum established under P.L. 106-107 initiatives
           continues past the law's sunset and that agencies understand the
           importance of being active participants in the grants
           administration streamlining process. As a result of P.L. 106-107,
           agencies have begun to work together to develop common systems and
           processes. However, without the continued congressional oversight
           and accountability that the law brings, implementation of these
           initiatives may lose momentum when the act sunsets. As a result,
           opportunities to simplify grant administration for the grantee,
           and thus to deliver services more cost-effectively, could be
           missed.

           As we spoke with grantees, it was apparent that closer involvement
           with all types of grantees as policies and technologies have been
           developed may have both reduced the negative effect on grantees
           from some technological changes and could have identified other
           areas that are critical to grantees. The cross-agency teams are
           just beginning to establish a mechanism to get grantees' views
           through forums held across the nation. Grants.gov's ongoing
           systematic efforts to get system users' comments have helped keep
           it informed of grantees' concerns about its systems in place.
           However, it has no systematic way to get grantees' views as it
           develops and proposes changes. Plans to involve grantees as the
           newer Grants Management Line of Business initiative evolves have
           not yet been developed. It is particularly important that states,
           with large grant management systems of their own, be able to have
           input into, and knowledge of, potential changes at the federal
           level. If grantees remain isolated from the development of systems
           and policies that they will use or be affected by daily, the
           system and policies will remain ineffective and require more
           resources to use. As a result, grantees will direct resources from
           implementing programs to completing administrative duties.

           In our previous report, we recommended several areas in which OMB
           should take action to augment progress toward meeting the goals of
           P.L. 106-107.16 Action is still needed to ensure that adequate
           progress is made on streamlining grant administration. For
           example,

           o  clear goals with time lines for all the initiatives have not
           been set;
           o  efforts toward common grant-reporting systems are moving
           slowly;
           o  although most agencies have submitted their 2005 annual
           progress reports, many were not finalized and posted on the Web
           site until after March 2006; and
           o  grantees do not seem to be having adequate input early in the
           development of solutions.

           It appears that without additional oversight, P.L. 106-107's goals
           are not likely to be met in the short term.

           Matter for Congressional Consideration
			  
			  Given that the goals in P.L. 106-107 are not likely to be met by
           the sunset date of November 2007, Congress should consider
           reauthorizing the law to make certain that federal agencies have
           clear requirements to continue these efforts and the momentum for
           progress in streamlining grant administration continues. As part
           of the reauthorization process, Congress should consider ensuring
           that agencies and cross-agency teams are setting goals and making
           progress toward P.L. 106-107's objectives.

           Recommendation for Executive Action
			  
			  OMB should ensure that the Grants Executive Board and the Grants
           Policy Committee identify and implement approaches to obtaining
           grantees' input as policies and procedures are being developed by
           these lead groups.

           Agency Comments and Our Evaluation
			  
			  We provided a draft of this report to OMB for comment. OMB
           responded in an e-mail that it will continue working with agencies
           to streamline grants administration and to make further progress
           toward achieving the P.L. 106-107 goals. OMB added that it will
           also continue to seek input from the grant community, such as at
           regular stakeholder meetings, webcasts, and other methods as
           policies are developed.

           We are sending copies of this report to the Director of OMB. We
           will also make copies available to others on request. In addition,
           the report will be available at no charge on the GAO Web site at
           http://www.gao.gov .

           If you have any questions about this report, please contact me at
           (202) 512-6520. I can also be reached by e-mail at
           [email protected] . Contact points for our Offices of
           Congressional Relations and Public Affairs may be found on the
           last page of this report. GAO staff who made major contributions
           to this report are listed in appendix IV.

           Stanley J. Czerwinski Director Strategic Issues

           Appendix I: Detailed Scope and Methodology
			  
			  To address our objectives, we reviewed P.L. 106-107 to identify
           requirements and criteria for evaluating the effectiveness of
           grant administration reform efforts. We also reviewed (1) the
           initial plan developed by teams with representation from
           grant-making agencies across the federal government in 2001 and
           its annual updates and (2) the individual agency progress reports
           on P.L. 106-107-related activities for 2005. We interviewed
           officials from OMB and from the various initiatives that are
           addressing P.L. 106-107 requirements-the Grants.gov Program
           Management Office, the Grants Management Line of Business leaders,
           and leadership from the Grants Policy Committee and its
           cross-agency teams. These officials updated us on the status of
           their initiatives.

           To obtain information on grantees' views on the streamlining that
           has occurred and additional efforts that they believe should be
           done, we used several approaches. We reviewed testimony related to
           deliberation of streamlining legislation. We also analyzed
           comments submitted by grantees on the initial plan. We interviewed
           representatives from several associations representing various
           sectors of grantees, such as states, counties, small
           municipalities, tribal governments, universities, and nonprofit
           organizations. We obtained information from them on their
           constituents' concerns regarding grant administration and the P.L.
           106-107 initiatives, and on states that were undertaking grant
           management reforms of their own.

           To obtain a better understanding of how grantees implement grants
           from multiple sources, and how they are affected by grant
           administration initiatives (including those responding to P.L.
           106-107), we purposefully selected a set of grantees who received
           federal funds from three or more different federal agencies. Our
           objective in selecting grantees was to obtain a diverse mix of
           grant recipients from grantee communities of different sizes1 and
           geographical areas of the United States. We used the Single Audit
           data for 2003, which included recipients of federal assistance who
           received more than $300,000 in that year, to develop a list of
           potential grantees from which to select.2 In addition, when
           determining which states to select, we focused on those states
           that had projects underway or implemented to improve their grant
           management and potentially reduce administrative burden on their
           grantees. We contacted grantee candidates who fit our selection
           criteria to learn more about their operations and their
           willingness to participate in our review.

           We then selected 17 grantees-4 state governments, 3 tribal
           governments, 2 county governments, 3 municipal governments, 2
           nonprofit organizations, 2 higher education institutions, and a
           nonacademic research institution. Table 1 shows the mix of
           nonstate grantees selected by size and geographical area.

           Table 1: Description of Nonstate Grantees from Site Visits

           Source: GAO.

           We visited each grantee and interviewed staff involved in grant
           administration. At the grantees, we met with individuals who
           prepared grant applications, financial and performance reports,
           and requests for payment. These included program, financial, and
           grant management staff. We obtained descriptions of their
           processes to administer grants, including the following steps:

           o  identifying relevant grant opportunities, including using
           Grants.gov's find capability;
           o  applying for grants, including using Grants.gov's apply
           capability and specific electronic application processes;
           o  being notified of grant awards;
           o  reviewing agencies' grant award documents and submitting
           necessary grant acceptance documents to agencies;
           o  submitting progress and financial reports;
           o  requesting payments;
           o  preparing for and undergoing the annual Single Audit to meet
           OMB's A-133 circular requirements; and
           o  closing out grant awards.

           In addition to their procedures, we discussed the effect of
           streamlining initiatives that have been implemented and are
           planned, as well as other aspects of grant administration where
           grantees would like to see improvements. While the views obtained
           from these grantees are not generalizable to the grantee community
           at large or grantees with multiple funding sources, their views do
           encompass the range of concerns that grantees obtaining funds from
           multiple sources have with regard to standardizing and
           streamlining the process and are generally in accord with the
           information obtained from other sources such as association
           representatives.

           To further examine grantee perspectives with regard to Grants.gov,
           we also obtained and analyzed response data to an online survey
           which was presented to a random sample of those viewing Grants.gov
           Web pages during the period from June 2005 to early March 2006.
           The survey contained items designed to obtain site visitors' views
           and satisfaction with different elements of the Web site, such as
           navigation, functionality, and quality of content. This period
           encompasses the time in December 2005 when updates to the site's
           functionality were performed. The timing of the presentation of
           the survey was designed to ensure that visitors receiving the
           survey varied in the number of Grants.gov Web pages they had
           viewed before the survey appeared.

           In order to examine the responses of visitors who were similar to
           those in the grantee communities we visited, we restricted our
           analyses to only those surveys where the respondents indicated on
           the survey that they were from the grant community with a specific
           sector affiliation.3 In all, there were 6,432 surveys included in
           our analyses. The response rate for the online survey (i.e., the
           proportion of visitors who completed the survey relative to the
           total number of times it was presented to visitors) generally
           ranged from 7 to 9 percent on average over the time period we
           examined. We compared the average ratings of survey respondents on
           selected survey items before and after the changes to the site in
           December 2005 to assess whether there had been any significant4
           shifts in users' views of the site. These survey respondents
           constitute a self-selected group whose grantee status is
           unverified. While their responses are sufficiently reliable for
           use as a supplemental source of information concerning grantee
           views of the Grants.gov Web site, they cannot be generalized to
           all those who were presented with the survey, all visitors to
           Grants.gov, or the grantee community at large.

           Source: GAO data.

           Appendix III: Some States Have Taken Actions That Address Their 
			  Grant Administration Issues Appendix III: Some States Have Taken
			  Actions That Address Their Grant Administration Issues
			  
			  In addition to identifying federal grant-making agencies'
           processes that can be administratively burdensome, the nonstate
           grantees we interviewed identified many of the same issues related
           to the state agencies that provide them with federal funds through
           state grants. A significant amount of federal grant funds is
           passed through the states to nonprofits and other levels of
           government. Similar to the federal government, states' different
           agencies can have different procedures and systems in use. For
           example, some have developed electronic systems while others
           continue to use paper processes.

           Grantees mentioned several specific areas in which state agencies
           lacked consistency in their administrative requirements. For
           example, grantees said application and reporting forms sometimes
           varied. They pointed out the need to use different systems to
           submit reports for different state grants. Some programs are
           managed through online systems, but sophistication of the systems
           varies within a state. One grantee cited a state agency system
           that allowed the grantees to access, complete, and submit reports
           online, but not save the form, meaning that later changes required
           them to complete the whole form again. Another said it would be
           helpful to have the forms mirror federal forms as the federal
           forms are standardized. They also said that terms and conditions
           vary across state agencies; and a few grant coordinators pointed
           out the difficulty of ensuring that their various program
           departments are complying because of the variations in the
           administrative requirements laid out in the terms and conditions.
           Further, payments are sometimes requested online and sometimes
           with mailed-in requests. Some grantees also noted that their state
           takes considerably longer than federal agencies to send out
           payments, in fact, as long as 4 months.

           Some states have established central policies and procedures that
           provide consistent grants management procedures across all state
           agencies awarding funds to local governments and nonprofit
           organizations. For example, Tennessee has a policy to streamline
           the reporting requirements for selected subrecipients of federal
           and state grant monies and to achieve cost savings to both
           subrecipients and state funding agencies.1 Prior to this policy,
           subrecipients were required to submit revenue, expenditure, and
           budget reports that were individualized and tailor-made to the
           needs of the various state agencies, causing subrecipients to
           prepare a variety of reports for each state agency to which it
           reported. In another example, Texas has established statewide
           Uniform Grant Management Standards. These standards were
           established to promote the efficient use of public funds by
           providing awarding agencies and grantees a standardized set of
           financial management procedures and definitions, by requiring
           consistency among state grantor agencies in their dealings with
           grantees, and by ensuring accountability for the expenditure of
           public funds. State agencies are required to adhere to these
           standards when administering grants and other financial assistance
           agreements with cities, counties, and other political subdivisions
           of the state.

           Several states have also established or are considering central
           offices that can provide mechanisms for statewide oversight of
           grants management. The Director of the Governor's Grants Office in
           Maryland chairs a committee of state agency representatives from
           each cabinet agency that meets several times during the year to
           improve inter-agency grants management coordination and to help
           manage the work of the Grants Office. This committee met in early
           February 2006 to discuss effects on state grants management
           operations from filing electronic grant applications on
           Grants.gov. In 2005, the Grants Office and local officials also
           identified as problems with state awards grantee requirements for
           more information on amount of funding, award criteria,
           eligibility, match requirements, and contact information in state
           notices of funding availability; a lack of standardized
           terminology, forms, and processes on state application forms; and
           inconsistent communication of federal, state, and local legal
           requirements. Texas established a State Grants Team in the Office
           of the Governor that coordinates statewide discussions of grants
           management issues. Other states are exploring establishment of
           similar central grants management offices or committees. In 2005,
           the Maryland Governor's Grants Office said nine states have
           contacted it to obtain more information about the office.

           Several states are also developing and implementing new
           streamlined and standardized grants management systems which are
           similar in intent to the electronic system required by P.L.
           106-107. Michigan, for example, awarded a 3-year contract in
           October 2005 to build a statewide electronic grants management
           system which will streamline all phases of the process from
           notification of the state grant opportunity, application for state
           grants, processing of these applications, managing resulting grant
           awards, and closing out grants. The system will provide a portal
           that provides a single source for grant posting and grant
           searching across all state agencies and comprehensive information
           about all phases of the grants process. Applicants will be able to
           obtain information about the eligibility requirements of a grant,
           apply online, and check the status of their application. State
           staff will be able to manage the grant process electronically.

           Texas has also begun development of a Grants.gov type project. The
           state legislature directed in 2005 that the Department of
           Information Resources, in cooperation with the Office of the
           Governor's State Grants Team, develop an electronic system for
           state agency grants. Objectives of the project include (1)
           providing a single location for state agencies to post electronic
           summaries of state grant assistance opportunities with the state
           agencies; (2) enabling a person to search for state grant
           assistance programs provided by state agencies; (3) allowing, when
           feasible, electronic submission of state grant assistance
           applications; and (4) improving the effectiveness and performance
           of state grant assistance programs. Texas anticipates the project
           will streamline and simplify state grant assistance application
           and reporting processes through standard data elements and a
           common application form. A state official said the project
           database will include information on federal, state, and private
           funding opportunities.

           Stanley J. Czerwinski, (202) 512-6520, [email protected]

           In addition to the above contact, Faisal Amin, Thomas Beall,
           Alexandra Dew, Cynthia Grant, Robert Hadley, Ernie Hazera, Thomas
           James, Justin Jaynes, Hannah Laufe, Romonda McKinney, Kathryn
           O'Dea, Carol Patey, Paul Posner, Amy Rosewarne, and Katherine
           Wulff also made key contributions.

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Grantees Are Unsure of Plans and Time Lines

                                  Conclusions

                     Matter for Congressional Consideration

                      Recommendation for Executive Action

                       Agency Comments and Our Evaluation

16 GAO-05-335 , 27.

Appendix I: Detailed Scope and Methodology Appendix I: Detailed Scope and
Methodology

1For governmental entities, we categorized size by their population. For
nongovernmental entities, we categorized size by the amount of their
federal funds received as reported in Single Audit data.

2Nonfederal entities that expend $500,000 or more ($300,000 or more in
2003) of federal awards in a year are required to obtain an annual audit.
The Federal Audit Clearinghouse maintains data reported in the audit
reports on federal funds received. We used this data to guide in selecting
grantees for our visits.

                                Organization size   U.S. geographic area 
Grantee community          Small Medium Large     East        Central West 
City/town                          X                         X        
                                         X                             X 
                                               X                            X 
County                             X                                     X 
                                               X                       X 
Nonprofit (nonacademic)            X                         X        
                                               X        X                
Tribal                             X                                     X 
                                         X                             X 
                                               X                            X 
College/university                 X                                X 
                                               X        X                
Other research institution               X                   X        
Category totals                    5     3     5             5      4    4 

3The respondents included in our analyses chose one of the following as
the organization they represented: city government, county government,
state government, tribal organization, research institution (nonacademic),
academic institution (such as a college or university), faith-based
organization, nonprofit organization, public housing authority, or for
profit organization. We did not include respondents who chose the "other"
category or who indicated that they were representing themselves.

4p-value <  .05.

Appendix II: Examples of Specific Areas Grantees Identified As Needing
Standardization and Streamlining

                         Area identified as needing standardization or        
Grant phase           streamlining                                         
Find                  Need advance information on grant opportunities to   
                         allow more time to prepare application.              
                         Current grant finding tools do not filter out        
                         irrelevant grants well.                              
                         Access to information on previous awardees and past  
                         accepted abstracts would be helpful.                 
                         Eligibility requirements are unclear in the grant    
                         announcement.                                        
Apply                 Registration process on Grants.gov is difficult and  
                         time-consuming.                                      
                         Application time lines are too short and do not give 
                         the grantee enough time to adequately establish      
                         partnerships and get applications internally         
                         approved.                                            
                         Applications are not completely electronic; some     
                         still submitted in paper copy.                       
                         Unclear which Data Universal Numbering System (DUNS) 
                         number to use if the institution has multiple DUNS   
                         numbers.                                             
                         Application forms are not standardized across        
                         agencies.                                            
Notification of grant Late or delayed award notifications create more work 
award                 for grantees, and cause problems with implementing   
                         the program and setting up the budget.               
                         Would like information on rejections as soon as      
                         possible.                                            
                         No ability to check the status of applications       
                         online.                                              
                         Would like to receive application comments and       
                         review if rejected to better prepare future          
                         applications.                                        
                         Would like standard definitions for materials within 
                         award documents.                                     
                         There are substantial differences in the terms and   
                         conditions for different grants and they should be   
                         standardized.                                        
                         Certifications and assurances are required to be     
                         submitted too frequently. Grantees would prefer to   
                         submit once per year since these forms are generally 
                         the same.                                            
Payment               There are multiple payment systems used by the       
                         various grant-making federal agencies.               
                         Prefer electronic systems with payment tracking      
                         abilities.                                           
                         Wire transfers are difficult to identify because     
                         they contain complicated transaction codes that do   
                         not relate to the grant.                             
Reporting             Report and budget definitions differ from agency to  
                         agency making it difficult to create budgets and     
                         reports.                                             
                         Some agencies do not have an ability to track the    
                         status of reports. This includes the ability to see  
                         when they are due and if the agency has accepted the 
                         report.                                              
                         Report forms, formats, and instructions differ       
                         substantially from agency to agency, which causes    
                         confusion to grantees.                               

Appendix III: Some States Have Taken Actions That Address Their Grant
Administration Issues Appendix III: Some States Have Taken Actions That
Address Their Grant Administration Issues

1State of Tennessee, Department of Finance and Administration, Policy 03,
"Uniform Reporting Requirements and Cost Allocation Plans for
Subrecipients of Federal and State Grant Monies." (Nashville, Tennessee:
December 1997) The policy applies to all private not-for-profit entities
subject to accounting and financial reporting standards promulgated by the
Financial Accounting Standards Board, and governmental not-for-profit
entities that are subject to Governmental Accounting Standards Board
standards.

Appendix IV: A Appendix IV: GAO Contact and Staff Acknowledgments

                                  GAO Contact

                                Acknowledgments

(450393)

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Highlights of GAO-06-566 , a report to congressional committees

July 2006

GRANTS MANAGEMENT

Grantees' Concerns with Efforts to Streamline and Simplify Processes

At least 26 federal entities distribute grants, often with differing
administrative requirements. As a result, grantees may be diverting
resources from program objectives to comply with varying administrative
requirements. Congress, attempting to reduce this inefficiency, passed the
Federal Financial Assistance Management Improvement Act of 1999, commonly
referred to as

P.L. 106-107. It required the Office of Management and Budget (OMB) to
ensure that agencies streamline processes, develop common systems, and
consult with grantees; it also required GAO to evaluate the law's
effectiveness. In response, this report discusses aspects of grant
administration that grantees identified as inadequate to meet the act's
goals and on which further action was needed. GAO reviewed grantee
comments on changes needed, obtained views from grantee associations and
users of the Web portal called Grants.gov, performed detailed site visits
at selected grantees, and obtained views of OMB.

What GAO Recommends

OMB should ensure that grantees' views are obtained as approaches are
developed. Further, Congress should consider reauthorizing the act beyond
its November 2007 sunset date to ensure that cross-agency initiatives
progress. OMB said that it will continue working with agencies to further
streamline grant administration and seek grantees' input.

While some progress has been made since GAO issued its report last year on
interagency reform initiatives ( GAO-05-355 ), federal grantees continue
to identify areas where the goals of P.L. 106-107 have not yet been met.
These include continued lack of standardization and continued
inefficiencies in grant administration across agencies and technological
difficulties with implementing Grants.gov, the Web site where grantees can
find and apply for grants. Grantees report they continue to need to use
different application, reporting, and payment systems, and definitions
differ across agencies. Further, some inefficiencies continue to exist,
such as agency grant processes not aligning with typical grantee business
practices. In addition, problems using Grants.gov, such as search engine
problems and complex registration practices, have caused grantees
frustration as they have used the site for identifying and applying for
grant opportunities. The Grants.gov Program Management Office has taken
actions to address some of these problems and has plans for further
improvements.

Examples of Grantee Concerns Related to P.L. 106-107 Goals

Grantees GAO interviewed were concerned that, while the three federal
cross-agency initiatives underway to streamline grant
administration-Grants.gov, the Grants Management Line of Business, and the
cross-agency workgroups-were moving forward, progress to date has been
inadequate. Grantees identified two specific areas where the management of
P.L. 106-107 initiatives contributed to the lack of progress. They pointed
out that inadequate ongoing communication with grantees before decisions
on changes were made resulted in poor implementation and prioritization of
initiatives. Grantees also said lack of clear objectives and a public time
line for the reform process sometimes prevented them from understanding
the scope and timing of planned changes.
*** End of document. ***