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Actions Needed to Strengthen Grants Management' which was released on 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

December 2011: 

Federal Motor Carrier Safety Administration: 

Additional Actions Needed to Strengthen Grants Management: 

GAO-12-158: 

GAO Highlights: 

Highlights of GAO-12-158, a report to congressional requesters. 

Why GAO Did This Study: 

In 2011, the Department of Transportation (DOT) determined that the 
Federal Motor Carrier Safety Administration (FMCSA) had violated 
federal appropriations statues in awarding some grants for 1 of its 10 
grant programs from fiscal years 2006 to 2010. This was caused in part 
by weaknesses in FMCSA’s internal controls and may have affected 
FMCSA’s ability to carry out its mission to reduce motor carrier 
(large truck and bus) accidents and fatalities. To the extent that 
these weaknesses existed in FMCSA’s other grant programs, it is 
possible that FMCSA also incorrectly awarded other grant funds. 

As requested, this report examines (1) internal control weaknesses in 
FMCSA’s other grant programs prior to fiscal year 2010 that could have 
increased the risk of irregularities in grant awards and (2) FMCSA’s 
actions to improve grants management, and remaining challenges. GAO 
analyzed FMCSA grants management documents related to internal 
controls over grants both before and after fiscal year 2010 and recent 
actions, and interviewed FMCSA officials. 

What GAO Found: 

Prior to fiscal year 2010, FMCSA’s internal controls over management 
of all of its grant awards were weak, which increased the risk that 
FMCSA awarded grants that violated laws or FMCSA policies. Internal 
controls like those related to workforce training and policies and 
procedures can help provide assurance that operations, including 
grants management, are efficient and transactions comply with laws. 
However, FMCSA had only limited formal grants management training, 
limited documentation of grants management policies and procedures, 
and, according to FMCSA grants management staff, did not require legal 
review to help ensure that all awards complied with governing laws and 
regulations. As a result, FMCSA could not be certain that staff were 
trained in managing grant awards or followed relevant policies and 
laws in awarding grants, increasing the risk for mismanagement. 

Since fiscal year 2010, FMCSA has taken a number of actions to 
transform its grants management practices, including planning to 
centralize oversight through a Grants Management Office, standardizing 
policies and procedures, developing grants management training, and 
implementing grants management systems to manage award processes and 
documentation. While these actions help address some existing internal 
control weaknesses—for example, clearly documented and standardized 
policies and procedures should help ensure that grants management 
staff follow policies when awarding grants—some challenges remain. 
Specifically, FMCSA has not conducted a strategic workforce analysis 
that could help it identify and fill gaps in expertise, as well as 
support its budget request to staff a Grants Management Office. Also, 
FMCSA’s grants management policies and procedures lack details on some 
grant program staff’s roles and responsibilities, and the agency does 
not have a system to easily track and ensure that staff complete 
required training. The agency also has not set metrics related to its 
grants management program or developed a method to measure progress in 
meeting those metrics. Further, since FMCSA has only recently 
implemented these actions, it is unclear how effective these new 
initiatives will be in improving its grants management. Regardless, it 
will be important that the agency have leadership in place that can 
continue to drive its transformation, as well as metrics to measure 
its progress in achieving its grants management goals. 

Figure: FMCSA’s Proposed Grants Management Office: 

[Refer to PDF for image: illustration] 

Administrator; Chief Counsel; Chief Financial Officer: 
Policy, directives, and compliance to Grants Management Office. 

Grants Management Office: 
* Establish standards and policy; 
* Develop training and job aids; 
* Administer grant systems; 
* Ensure compliance with regulation and legislation; 
Direct reporting to CFO. 

Grants Management Office: 
Communications; Monitoring; Training: directed to FMCSA grants
community. 

FMCSA grants community: 
* Program managers; 
* Field staff; 
* Grantees. 

Source: GAO analysis of FMCSA data. 

[End of figure] 

What GAO Recommends: 

GAO recommends that FMCSA (1) conduct a strategic workforce analysis 
for its grants management staff; (2) add details to its grants 
management policy manual; (3) improve its tracking of staff taking 
grants management training; and (4) set and track metrics related to 
grants management goals and objectives. DOT generally agreed with 
GAO’s recommendations and provided technical comments, which were 
incorporated as appropriate. 

View GAO-12-158. For more information, contact Susan Fleming at (202) 
512-2834 or flemings@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Internal Control Weaknesses Across FMCSA Grant Programs Increased the 
Risk of Mismanagement and Irregularities in Pre-Fiscal Year 2010 Grant 
Awards: 

FMCSA Has Taken Steps to Strengthen Internal Controls, but Additional 
Actions Are Needed to Ensure Continued Improvement: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: FMCSA Grant Programs: 

Table 2: Internal Control Standards for the Federal Government: 

Table 3: Summary of FMCSA Initiatives to Improve Grants Management: 

Figures: 

Figure 1: FMCSA Grants Management Stages: 

Figure 2: Planned GMO Responsibilities and Relationships with Other 
FMCSA Grants Management Positions: 

Abbreviations: 

FMCSA: Federal Motor Carrier Safety Administration: 

DOT: Department of Transportation: 

EPA: Environmental Protection Agency: 

OGD: EPA's Office of Grants and Debarment: 

NHTSA: National Highway Traffic Safety Administration: 

CVISN: Commercial Vehicle Information Systems and Networks: 

EDMS: Electronic Document Management System: 

GMO: Grants Management Office: 

OMB: Office of Management and Budget: 

SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation 
Equity Act: A Legacy for Users: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 13, 2011: 

The Honorable Patty Murray: 
Chairman: 
The Honorable Susan Collins: 
Ranking Member: 
Subcommittee on Transportation, Housing and Urban Development and 
Related Agencies: 
Committee on Appropriations: 
United States Senate: 

The Honorable Tom Latham: 
Chairman: 
The Honorable John W. Olver: 
Ranking Member: 
Subcommittee on Transportation, Housing and Urban Development and 
Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

According to the Federal Motor Carrier Safety Administration (FMCSA), 
in 2009, there were over 124,400 crashes in the United States 
involving large trucks and buses, leading to over 3,600 fatalities. As 
an agency in the Department of Transportation (DOT), FMCSA's mission 
is to reduce crashes, injuries, and fatalities related to motor 
carriers--large trucks and buses--and it relies heavily on 10 grant 
programs to achieve that mission. Of the $550 million Congress 
appropriated to FMCSA in fiscal year 2011, about $300 million went to 
states and other entities in the form of grants to help fund motor 
carrier safety efforts. For example, FMCSA's Motor Carrier Safety 
Assistance Program (MCSAP) provides funds to reduce commercial motor 
vehicle-involved accidents, fatalities, and injuries, through safety 
activities such as inspections. 

Effective internal controls over grants management can reduce the risk 
of mismanagement of grant awards by helping ensure that grants are 
awarded in accordance with law and FMCSA policy and in a way that 
advances agency objectives. In 2010 FMCSA discovered that it may have 
violated federal appropriations statutes in some Commercial Vehicle 
Information Systems and Networks (CVISN) grants from fiscal years 2006 
to 2010, including violations of the Antideficiency Act--which 
prohibits federal agencies from incurring obligations that exceed 
budget authority made available through appropriations or contract 
authority[Footnote 1]--and its authorizing statute, The Safe, 
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy 
for Users (SAFETEA-LU).[Footnote 2] In 2011, DOT determined that it 
had in fact violated federal appropriations statutes. These violations 
were caused in part by weak internal controls over FMCSA's management 
of CVISN grants, such as a lack of oversight and inadequate grants 
management training for FMCSA staff. In part in response to these 
problems, FMCSA has begun to transform its grants management practices 
with activities that it largely began implementing in or after fiscal 
year 2010, including proposing the creation of a centralized grants 
management office and creating standardized grants management policies 
and procedures. To the extent that the weak internal controls that 
contributed to irregularities in CVISN awards existed in FMCSA's other 
grant programs prior to fiscal year 2010, it is possible that FMCSA 
violated statutes in making other grant awards. 

It is important for FMCSA to award grant funds in accordance with laws 
and FMCSA policies in order to help ensure that limited dollars 
effectively support its national motor carrier safety goals. The 
economic downtown has created unprecedented fiscal constraints for 
states. State revenues have decreased in recent years--total state and 
local tax receipts fell nearly 5 percent from 2008 to 2009--putting 
increased fiscal pressure on state governments.[Footnote 3] This 
challenge increases the importance of federal funds--such as grants 
from FMCSA--for state governments. For example, in the case of CVISN 
awards, because some states received more funds than they were legally 
authorized, other states may not have received as much as they could 
have, adding unfairly to the fiscal pressures on those states and 
potentially impacting those states' commercial motor vehicle safety 
efforts. 

Given these concerns, you asked us to review: (1) the extent to which, 
prior to fiscal year 2010, FMCSA's other grant programs had internal 
control weaknesses that could have increased the risk for financial 
irregularities in grant awards and (2) actions FMCSA is taking to 
improve its grants management to reduce the risk for financial 
irregularities in awarding grants and the challenges that remain. 

In order to address the extent to which, prior to fiscal year 2010, 
FMCSA's other grant programs had internal control weaknesses that 
could have increased the risk of grant award irregularities, we 
reviewed Internal Control Evaluation reviews of FMCSA's grants 
management procedures and practices and related external auditor 
reports and interviewed grants management staff in FMCSA headquarters, 
as well as a selected number of field office staff and state grant 
recipients.[Footnote 4] We did not review internal controls over CVISN 
prior to fiscal year 2010 given that we recently reported on internal 
control weaknesses in that program.[Footnote 5] We reviewed GAO's 
internal control standards for the federal government[Footnote 6] to 
determine those standards most relevant to grants management[Footnote 
7] and reviewed relevant FMCSA grants management documentation to 
determine the extent to which relevant internal controls were in place 
for each grant program prior to fiscal year 2010. In order to 
determine the extent to which actions FMCSA is taking to improve its 
grants management reduce the risk for financial irregularities in 
awarding grants, and the challenges that remain, we reviewed 
documentation related to these efforts such as FMCSA's Grants 
Management Program Roadmap and Grants Management Manual. We analyzed 
these documents and information obtained during interviews and 
compared them with GAO's internal control standards to determine the 
extent to which they address the internal controls deficiencies we 
identified at FMCSA. We also interviewed FMCSA management about these 
efforts. Finally, we interviewed grants management officials at the 
Environmental Protection Agency (EPA) and the National Highway Traffic 
Safety Administration (NHTSA) and analyzed relevant grants management 
documents to determine how those agencies manage their grant programs 
and how their grants management practices may be relevant to FMCSA. We 
selected these agencies because they, like FMCSA, devote at least 50 
percent of their budgets to grants and have a safety focus. 

We conducted this performance audit from April 2011 to December 2011 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. Appendix I 
provides additional information on our objectives, scope, and 
methodology. 

Background: 

FMCSA's primary mission is to reduce crashes, injuries, and fatalities 
involving large trucks and buses.[Footnote 8] In order to meet this 
mission FMCSA, among other things, establishes commercial motor 
carrier regulations, educates motor carriers, drivers, and the public, 
and partners with stakeholders such as state governments on efforts to 
reduce motor carrier crashes. FMCSA uses 52 division offices--one in 
each state as well as Washington, D.C. and Puerto Rico--and four 
regional service centers to help carry out its efforts. In order to 
undertake these activities, FMCSA received appropriations of 
approximately $550 million for fiscal year 2011 and obligated about 
$300 million of that for grant awards.[Footnote 9] 

FMCSA manages 10 grant programs that span a range of areas and 
provides funding to states, localities, and others to improve 
commercial motor vehicle safety (see table 1). Nine of the 10 grant 
programs are discretionary--that is, FMCSA decides, through a 
competitive process based on a review of the merits of applications, 
which applicants to award funds. FMCSA considers its MCSAP Basic and 
Incentive program, which accounts for over one-half of FMCSA's grant 
funding, to be a formula grant program as FMCSA awards funds through a 
predetermined formula set by FMCSA based on, among other factors, a 
state's population and highway miles.[Footnote 10] 

Table 1: FMCSA Grant Programs: 

Program: Motor Carrier Safety Assistance Program (MCSAP) Basic and 
Incentive[A]; 
Fiscal year 2011 funding: $165 million; 
Key objectives: To assist states in developing or implementing 
programs to improve commercial motor vehicle safety and reduce the 
number and severity of accidents through consistent, uniform, and 
effective commercial motor vehicle safety programs. 

Program: Border Enforcement; 
Fiscal year 2011 funding: $32 million; 
Key objectives: To assist states that share a land border with another 
country in carrying out border commercial motor vehicle safety 
programs and enforcement activities. 

Program: New Entrant Safety Audit; 
Fiscal year 2011 funding: $32 million; 
Key objectives: To reduce commercial motor vehicle crashes, 
fatalities, and injuries through safety audits on new entrant 
interstate carriers (all new entrant carriers must undergo a safety 
audit within 18 months of beginning operations). 

Program: Commercial Drivers License Program Improvement; 
Fiscal year 2011 funding: $30 million; 
Key objectives: To support states' Commercial Driver's License 
programs in order to reduce the number and severity of commercial 
motor vehicle crashes by ensuring that only qualified drivers receive 
commercial driver's licenses. 

Program: Commercial Vehicle Information Systems and Networks (CVISN); 
Fiscal year 2011 funding: $25 million; 
Key objectives: To provide funding to states to support improved 
information technology exchanges between government agencies and the 
motor carrier industry to enhance motor carrier safety and other 
efforts. 

Program: Motor Carrier Safety Assistance Program (MCSAP) High Priority; 
Fiscal year 2011 funding: $15 million; 
Key objectives: To support national projects, including public 
education, that increase public awareness and education, demonstrate 
new technologies, and reduce commercial motor vehicle accidents. 

Program: Performance and Registration Information Systems Management 
(PRISM); 
Fiscal year 2011 funding: $5 million; 
Key objectives: To reduce commercial motor vehicle accidents by using 
commercial vehicle registration systems to determine the safety of 
motor carriers before issuing license plates and by motivating 
carriers to improve safety. 

Program: Safety Data Improvement Program; 
Fiscal year 2011 funding: $3 million; 
Key objectives: To support collection of accurate, complete, and 
timely data on commercial truck and bus crashes. 

Program: Commercial Motor Vehicle Operator Safety Training; 
Fiscal year 2011 funding: $1 million; 
Key objectives: To expand the number of commercial driver's license 
holders with enhanced safety training to reduce crashes and to assist 
economically distressed regions through workforce training for 
commercial motor vehicle operators. 

Program: Commercial Drivers License Information System; 
Fiscal year 2011 funding: $0[B]; 
Key objectives: To support state commercial driver's license 
information systems modernization efforts. 

Source: GAO analysis of FMCSA data. 

[A] FMCSA awards MCSAP Basic and Incentive grants based on a formula 
using four factors: highway miles, all vehicle miles traveled, 
population, and fuel consumption. States that demonstrate improvement 
in certain motor carrier safety initiatives such as a reduction in 
motor vehicle crashes are eligible to receive MCSAP incentive grants. 
FMCSA officials noted that the agency was authorized a total of $209 
million in contract authority for MCSAP grants, which includes funding 
for discretionary grants--$32 million for New Entrant Safety Audit 
grants and $15 million MCSAP High Priority grants--leaving $162 
million for MCSAP Basic and Incentive formula grants. 

[B] FMCSA officials noted that because of the progress of the CDLIS 
Modernization effort from previous grants, and the diminishing need 
from states for dedicated grant funding for this purpose, FMCSA 
requested in FY 2011 that Congress apportion funding to the Commercial 
Driver's License Program Improvement and the New Entrant Safety 
Assurance grant instead of the CDLIS grant program. 

[End of table] 

FMCSA currently manages its grants using the Office of Management and 
Budget's (OMB) five phases of grants management (see figure 1). The 
first three phases are most relevant to awarding grant funds, the 
focus of this report. These five phases broadly outline all steps that 
an agency needs to undertake in awarding and managing grants, 
including planning the grant program, soliciting and reviewing 
applications, awarding funds, overseeing grant recipients, and closing 
out grants. For example, management of grant application reviews and 
the award process includes creating a grant announcement, accepting 
and reviewing applications, making funding decisions, and obligating 
those funds to selected grant recipients. 

Figure 1: FMCSA Grants Management Stages: 

[Refer to PDF for image: illustration] 

Phase 1: Grant planning and opportunity announcement. 

Phase 2: Application review. 

Phase 3: Post-selection award process. 

Phase 4: Grant and reporting oversight. 

Phase 5: Grant closeout. 

Source: GAO analysis of FMCSA data.         

[End of figure] 

Generally speaking, grants management staff in FMCSA headquarters are 
responsible for managing the first three phases of grants. Once FMCSA 
awards grants to states, staff in FMCSA's 52 division offices, headed 
by Division Administrators, generally assume responsibility of 
managing the grants, including oversight of the grantee and grant 
closeout. The four regional service centers also provide grants 
management support and oversight to each of the division offices. 
FMCSA has a small number of grant awards that are provided to national 
organizations, and these grants are managed entirely by FMCSA staff in 
headquarters. 

Internal controls are mechanisms that help an organization, such as a 
federal agency, provide reasonable assurance that it is meeting its 
objectives, that operations are effective and efficient, and that the 
agency is in compliance with all applicable laws and regulations. We 
have issued standards for internal control in the federal government, 
and these standards provide an overall framework for establishing and 
maintaining internal controls and identifying and addressing major 
performance and management challenges, as well as areas at greatest 
risk of fraud, waste, abuse, and mismanagement.[Footnote 11] Effective 
internal controls, which include the plans, methods and procedures to 
meet agency goals and objectives, can assist in managing change to 
cope with shifting environments and evolving demands and priorities. 
As a result, internal controls play a significant role in helping 
managers achieve agency goals.[Footnote 12] 

We have previously reported that there are five standards for internal 
control (see table 2) that define the minimum level of quality 
acceptable for internal control in government and can be applied to 
all aspects of an agency's operations. The standards are: (1) 
establishing a control environment, in which an agency creates an 
environment that sets a positive and supportive attitude toward 
internal controls such as management's commitment to competence and 
setting an ethical tone within the agency; (2) conducting risk 
assessment, in which an agency assesses both internal and external 
risks associated with achievement of agency objectives; (3) engaging 
in control activities, which helps management ensure that its 
directives, such as policies and procedures, are carried out; (4) 
disseminating information and communications to management and others; 
and (5) monitoring performance over time and ensuring that audit 
findings are addressed and promptly resolved. In the context of grants 
management, internal controls are the mechanisms that help an agency 
ensure that its grant programs are effectively and efficiently managed 
and that its grant awards comply with laws and regulations. 

Table 2: Internal Control Standards for the Federal Government: 

Internal control: Control Environment; 
Internal control standards: 
* An organizational environment that sets a positive attitude toward 
internal control and management; 
* A commitment to competence including providing personnel with a 
level of competence allowing them to accomplish their duties; 
* Organizational structure, framework, and delegation of authority for 
agency operations in order to achieve agency objectives; 
* Appropriate policies for training staff. 

Internal control: Risk Assessment; 
Internal control standards: 
* The identification and analysis of risks associated with achieving 
agency objectives. 

Internal control: Control Activities; 
Internal control standards: 
* Policies, procedures, techniques, and mechanisms that enforce 
management's directives; 
* Human capital management to ensure that skill needs are continually 
assessed and that the agency has a workforce with the skills needed to 
achieve success; 
* Segregation of duties to reduce the risk of error or fraud and 
proper execution of transactions; 
* Appropriate documentation of all transactions and significant events. 

Internal control: Information and Communications; 
Internal control standards: 
* Information should be communicated to those within the agency who 
need it in a manner and time frame that allows them to carry out their 
responsibilities; 
* Communications within the agency should be relevant, reliable, and 
timely and be broadly based and flow down, across, and up the agency. 

Internal control: Monitoring; 
Internal control standards: 
* Assessing the quality of performance over time; 
* Ensuring that the findings of audits and other reviews are promptly 
resolved. 

Source: GAO. 

[End of table] 

FMCSA's Internal Control Senior Assessment Team[Footnote 13] oversees 
FMCSA's internal controls program, which includes, among other 
actions, annual internal control evaluations conducted by an external 
auditor to test the effectiveness of internal controls. The 
evaluations test a number of internal control areas at FMCSA, 
including grants management.[Footnote 14] In conducting the internal 
control evaluations, the external auditor uses an Internal Control 
Evaluation Tool to assess the effectiveness of internal control 
activities--which it does by interviewing key staff and testing 
controls to determine their effectiveness--and assigns an 
effectiveness rating to each control activity reviewed, and determines 
the relative significance of internal control deficiencies identified 
during the evaluations.[Footnote 15] Although past reviews found 
internal control deficiencies related to grants management--including 
inadequate grants management oversight--the external auditor did not 
make an overall determination of FMCSA's internal controls over grants 
management. In response to findings made in each review, the Internal 
Control Senior Assessment Team, in conjunction with subject matter 
staff at FMCSA, develops corrective action plans that include 
information on planned actions and time frames for addressing the 
finding. Once all actions have been implemented by FMCSA and then 
tested by the auditor, the auditor can close the corrective action 
plans. 

SAFETEA-LU authorized funding for all of FMCSA's grant programs and 
established funding restrictions for the CVISN program. In May 2010, 
DOT and FMCSA determined that FMCSA might have violated statutory 
requirements in obligating CVISN awards. After FMCSA's Chief Financial 
Officer and Office of the Chief Counsel staff noticed irregularities 
with CVISN awards, including potential statutory violations, in spring 
2010, DOT established an analysis team supported by Deloitte 
Consulting LLP (Deloitte), to review the CVISN program and determine 
the extent of the problem. Using the results of Deloitte's review and 
its own follow-up assessment, FMCSA found widespread problems with 
CVISN grant awards, and DOT concluded that it violated the 
Antideficiency Act--which prohibits federal agencies from incurring an 
obligation that exceeds their available appropriation or contract 
authority amounts[Footnote 16]--and SAFETEA-LU. FMCSA found that many 
awards exceeded statutory caps and that, in some cases, FMCSA awarded 
total CVISN funds in excess of the annual contract authority 
available. Specifically, FMCSA found that it committed 47 statutory 
violations between fiscal years 2006 and 2010 totaling about $23 
million. In response, FMCSA temporarily shut down the CVISN program in 
May 2010 to determine the problems and to prevent exacerbating any 
problems. According to FMCSA officials, the agency reopened the CVISN 
program in June 2011 and plans to award fiscal year 2012 CVISN grants. 
FMCSA awarded $17 million in grants in fiscal year 2011 to states that 
the agency determined had not previously received an improper CVISN 
grant award. 

In May 2011, we reported on a number of internal control weaknesses 
that contributed to CVISN award violations including: problems with 
grants management policies and procedures, such as an erroneous 
internal policy FMCSA issued that provided incorrect guidance 
regarding the extent to which states were available to receive certain 
CVISN funds, as well as a lack of written policies and procedures; a 
failure to track CVISN grants awarded by the Federal Highway 
Administration, which managed CVISN before FMCSA,[Footnote 17] thus 
contributing to cumulative statutory cap violations for CVISN awards; 
insufficient FMCSA oversight over the CVISN program, including the 
lack of legal review by FMCSA's Office of the Chief Counsel to ensure 
that all awards complied with relevant laws; and a lack of training 
provided to FMCSA staff on how to manage the CVISN program.[Footnote 
18] We did not make any recommendations at that time, pending 
completion of this broader review of FMCSA's grant awards. 

Grants management is a key function at NHTSA and EPA--two agencies 
that, similarly to FMCSA, devote approximately one-half of their 
budgets to grants. EPA manages its grants through a single centralized 
office, while NHTSA manages its grants through two different offices--
one for formula grants and one for discretionary grants. EPA's mission 
is to protect human health and the environment, and it devotes about 
half of its budget to provide formula and discretionary grants to 
support this mission.[Footnote 19] These grant programs support a 
variety of efforts, including those that further the health of people 
and the environment. EPA's Office of Grants and Debarment (OGD) 
provides centralized grants management support, which includes general 
oversight of award competitions for discretionary grants and the 
development of uniform grants management policies and procedures for 
all of EPA's grant programs. Each of EPA's 10 regional offices also 
has a grants management office that provides its region with grants 
management support. NHTSA's primary mission, similar to FMCSA's, is to 
save lives, prevent injuries, and reduce the costs of motor vehicle 
traffic and crashes. NHTSA uses its grant programs, totaling about 
$744 million in fiscal year 2010, to help support that mission. NHTSA 
manages its formula grants through the Regional Operations and Program 
Delivery Office and discretionary grants through its Procurement 
Office, and has distinct grant award processes for each. In both 
cases, however, centralized staff provide administrative support and 
direction to programmatic grants management staff working on 
individual NHTSA grant programs. 

Internal Control Weaknesses Across FMCSA Grant Programs Increased the 
Risk of Mismanagement and Irregularities in Pre-Fiscal Year 2010 Grant 
Awards: 

Decentralized Grants Management and Limited Training Contributed to a 
Weak Control Environment: 

Prior to fiscal year 2010, FMCSA's control environment for managing 
grant awards was inadequate, and issues such as a lack of centralized 
oversight of policies and procedures and limited grants management 
training, increased the risk of irregularities and mismanagement of 
grant awards. Specifically, each grant program was managed 
independently by a grant program manager, which decentralized 
oversight of policies and procedures for those grant programs. FMCSA 
reported that its grants were also managed through its 52 division 
offices and 4 service centers throughout the country, which created 
inconsistencies as employees performed multiple tasks and roles. As a 
result, FMCSA management could not be sure that grant programs were 
being managed consistently and in line with a single agency policy. In 
addition, grants management staff told us that FMCSA did not provide 
adequate grants management training to staff as it did not require any 
of its grant program management staff to complete formal grants 
management training. Our internal control standards state that 
training should be aimed at developing and retaining needed employee 
skills. Staff received grants management training informally through 
on-the-job training, some external training, and FMCSA conferences, 
which did not specifically focus on grants management training. While 
some grant managers said they received grants management training from 
an external training provider, this training was not focused on 
managing FMCSA grants, and attendance was not required by FMCSA. 
Similarly, FMCSA's 2007 internal control evaluation reported that 
FMCSA grants management staff were not equipped with formal grants 
management training and recommended that FMCSA establish a team tasked 
with creating a formal grants management training program. These 
weaknesses in the control environment suggest that FMCSA grants 
management staff did not have the grants management training necessary 
to adequately employ policies, laws, or grants management procedures 
in awarding grants--increasing the risk for award irregularities and 
mismanagement. Furthermore, without establishing a strong control 
environment, it can be difficult to successfully implement other 
control standards. 

Limitations in Policies and Procedures, Legal Review, Workforce 
Planning, Demonstrate Control Activity Weaknesses: 

Prior to fiscal year 2010, FMCSA had limited documented policies and 
procedures guiding its grant programs. Our standards for internal 
control call for federal agencies to document their policies and 
procedures, which help managers exercise control over agency 
activities, including activities undertaken to manage and administer 
programs such as grant programs and help ensure that management 
directives are conveyed to staff and carried out. FMCSA released a 
Financial Management and Processing Manual for Grant Programs in 2006 
that focused on administrative functions related to processing grant 
transactions; however, it did not focus on broader grants management 
policies and procedures such as how to review applications and make 
award determinations, which would be critical for employees to 
properly carry out these activities. FMSCA did create some documented 
policies and procedures related to managing grant awards, though they 
were limited in scope and did not apply to all grant programs. For 
example, while FMCSA staff created policy memos that detailed some 
required policies and procedures, such as retaining grant award 
documents, these memos were created only for the MCSAP program. 
According to FMCSA officials, these memos were created and provided to 
staff generally on an as-needed basis--for example, when staff had 
questions about specific issues. In general, grants managers for a 
majority of FMCSA's grant programs told us that they received minimal 
direction on grants management policies and procedures from FMCSA. In 
terms of employees' roles and responsibilities, FMCSA documented these 
in program managers' performance plans and evaluated relevant staff 
through the agency's performance management system on their 
performance in meeting stated performance grants management 
expectations. However, FMCSA did not document roles and 
responsibilities details in one centralized document, for instance 
into existing grant related policies and procedures. As a result, 
grants management staff did not have access to a single set of 
comprehensive documented policies and procedures to guide them in 
awarding and managing FMCSA grants, and FMCSA management could not 
have reasonable assurance that applicable laws and FMCSA policies were 
followed. 

In addition, as was the case with CVISN grants,[Footnote 20] according 
to FMCSA grants management staff, prior to fiscal year 2010, FMCSA did 
not require and conduct a formal legal review of every grant award to 
ensure that awards adhered to laws and regulations. According to our 
internal control standards, transactions, such as grant awards, should 
be properly authorized and made in compliance with laws and 
regulations. FMCSA grants management officials told us that legal 
staff involvement in grant award review was limited to answering 
questions and providing support on issues such as whether grant 
recipients would be providing required matching funds. The absence of 
a required legal review to ensure compliance increases the risk that 
other FMCSA awards may have violated laws or regulations, as was the 
case with certain CVISN awards. 

Finally, FMCSA had not conducted a strategic workforce assessment to 
determine the skills and staffing levels needed to manage its grants 
programs. GAO's internal control standards for control activities 
maintain agencies should ensure that skill needs are continually 
assessed and that their workforces have the skills necessary to help 
the agency meet its goals. We have reported that strategic workforce 
planning is an integral part of human capital management and helps an 
agency, among other things, determine the critical skills and 
competencies that will be needed to achieve current and future 
programmatic results and then develop strategies tailored to address 
any gaps identified.[Footnote 21] As a result, FMCSA could not be sure 
if it had sufficient staff, as well as the needed skills and 
competencies, to manage its grant programs and make grant awards, 
increasing the risk of ineffectively and inefficiently run grant 
programs and award irregularities. 

Information and Communications Were Not Consistently Disseminated: 

Prior to fiscal year 2010, FMCSA had inconsistent practices related to 
retention of grant award documentation and dissemination of 
information to grants management staff. Our internal control standards 
state agencies need to record and communicate relevant and reliable 
information related to their operations. Grants management staff we 
interviewed generally kept hard copy folders of award documentation, 
and some also scanned and uploaded hard copies into FMCSA's Electronic 
Document Management System (EDMS)--FMCSA's official document 
repository for all grants management documentation. However, while 
FMCSA directed grants management staff to use EDMS for grant files 
beginning in 2006, some staff told us that FMCSA did not specify which 
grant award documents should be saved in EDMS or in hard copy files. 
An internal control evaluation also found that FMCSA's grant 
documentation was not stored consistently in EDMS. The inconsistent 
use of FMCSA's EDMS system to maintain grant documentation increases 
the risk that FMCSA management may not have had needed electronic 
access to grant documentation, such as grant applications and 
supporting documentation, when making grant award decisions, which 
could have contributed to poor decision making and award 
irregularities. 

In addition to issues related to the maintenance of grant 
documentation, according to FMCSA staff, the communication of 
information from management to grants management staff and among 
grants management staff was ad hoc and informal prior to fiscal year 
2010, providing limited assurance that grants management information 
was adequately disseminated to staff in a timely manner. FMCSA did not 
have a communications plan to guide the methods through which certain 
types of information should have been communicated amongst grants 
management staff. According to GAO's internal control standards, 
information should be communicated to management and other relevant 
agency officials in a timely manner and should be useful, reliable, 
and continuous. According to some grants management staff, FMCSA 
management often relied on regional service center staff to pass 
communications, such as grant announcements and grants policies and 
procedures, on to other field staff, including those who had key 
grants management responsibilities. However, by not directly 
communicating with other field staff, management could not be certain 
that all 52 Division Administrators passed on communications to all 
intended recipients or that the messages communicated were those FMCSA 
intended. Despite the lack of a formal communications strategy, some 
FMCSA grants management officials told us that they communicated well 
with one another as needed. 

Internal Control Monitoring Efforts Did Not Always Result in Timely 
Actions: 

While FMCSA conducted some internal control monitoring activities 
related to grants management prior to fiscal year 2010 by including 
grants management in its annual internal control evaluations, FMCSA 
did not always address findings of internal control reviews in a 
timely manner. Our standards for internal controls state that agencies 
should promptly address and resolve the findings of audits. The fiscal 
year 2005 internal control evaluation led to a corrective action plan 
calling for FMCSA to develop a grant program policies and procedures 
manual and to implement a centralized grant management oversight 
function. According to FMCSA management, FMCSA was able to close out 
this corrective action plan by releasing the Financial Management and 
Processing Manual for Grant Programs in 2006. However, some FMCSA 
grants management staff said that the 2006 manual was narrowly focused 
and that FMCSA management did not fully address this finding until the 
release of a more complete Grants Management Manual in the beginning 
of fiscal year 2010 (October 2009). Furthermore, the fiscal year 2005 
review led to a corrective action plan for FMCSA to implement a 
centralized grant management oversight function. However, FMCSA did 
not first formally propose a centralized function in the form of its 
proposed Grants Management Office (GMO) until fiscal year 2010. 
According to FMCSA officials, the agency did not address these 
findings in a more timely manner because it faced limited resources 
and wanted to take a sequential approach to transform its grants 
management. As a result, the agency did not want to design and propose 
the GMO until the foundation of the Grants Management Manual was in 
place. FMCSA's failure to act quickly to fully correct these 
weaknesses increased the time during which grant awards may have been 
mismanaged due to unaddressed internal control weaknesses. 

Inadequate internal controls applicable to FMCSA's grants management 
process, such as those noted above, increased the risk that 
mismanagement and financial irregularities could have potentially 
occurred in any of FMCSA's grant programs and not been detected in a 
timely manner. As noted earlier, an effective system of internal 
controls provides an agency with reasonable assurance that the 
objectives of internal controls--effective and efficient operations, 
reliable financial reporting, and compliance with applicable laws and 
regulations--are being achieved. Without effective controls, there is 
an increased risk that FMCSA's grant programs may not have been well 
managed, and funds may not have been awarded in accordance with law 
and FMCSA policy. However, with the exception of CVISN, FMCSA has not 
conducted a review of all award transactions in its other grant 
programs and, as a result, does not know if any appropriations law or 
other violations may have occurred in those programs. The Department 
of Transportation hired an outside auditor to conduct a review, 
including legal compliance reviews, of a sample of FMCSA grant awards 
(other than CVISN) and released the results of the review in July 
2011. This review looked at the grants management processes and 
internal controls of FMCSA's grant programs, assessed FMCSA's Grants 
Management Manual, and reviewed financial data and legislative 
compliance of a sample of 180 total obligations and 135 total 
disbursements covering each of FMCSA's grant programs other than CVISN 
from fiscal years 2005 to 2010. For those transactions tested, the 
review did not report any instance of noncompliance with laws and 
regulations.[Footnote 22] FMCSA officials said they were pleased that 
this audit did not find any legal compliance findings, and they are 
not aware of any serious systematic legal compliance issues in its 
grant programs other than CVISN. 

FMCSA Has Taken Steps to Strengthen Internal Controls, but Additional 
Actions Are Needed to Ensure Continued Improvement: 

FMCSA has Strengthened Internal Controls, but Some Challenges Remain: 

Since fiscal year 2010, FMCSA has taken a number of steps to 
standardize and improve internal controls over the agency's grants 
management. These actions are broadly outlined in the agency's April 
2011 Grants Management Program Roadmap, and include (1) centralizing 
grants management oversight and planning to create a centralized GMO 
to oversee and administer many grants management practices, (2) 
standardizing and documenting policies and procedures in its finalized 
Grants Management Manual mentioned above, (3) requiring legal reviews 
of all grant awards, (4) establishing a new grants management training 
program, (5) implementing new systems to manage and automate aspects 
of the grants management process and manage grant award documentation, 
and (6) improving its communications. Although these actions address 
some of FMCSA's internal control weaknesses previously described, such 
as having only limited policies and procedures and training for grants 
management staff, internal control weaknesses and some grants 
management challenges remain (see table 3). 

Table 3: Summary of FMCSA Initiatives to Improve Grants Management: 

FMCSA initiative: Plans to create a GMO; 
Improvement over pre-2010 grants management: GMO centralized oversight 
would help eliminate inconsistencies and ensure that all staff have 
and are following correct policies and procedures; 
Remaining challenges and agency actions: Limited workforce analysis to 
support FMCSA's budget request for the GMO, or assess its broader 
workforce needs. 

FMCSA initiative: Standardizing policies and procedures in Grants 
Management Manual; 
Improvement over pre-2010 grants management: Documenting policies and 
procedures, which include added legal review and grants management 
staff roles and responsibilities, could reduce errors in grant awards 
by providing staff with clear policies and processes to follow for all 
grant programs; 
Remaining challenges and agency actions: Manual lacks details on some 
grant program staff's roles and responsibilities. 

FMCSA initiative: Required legal reviews of all grant awards; 
Improvement over pre-2010 grants management: Standardized legal 
reviews of all awards, following a legal checklist, should help ensure 
that awards comply with all applicable laws and regulations; 
Remaining challenges and agency actions: None. 

FMCSA initiative: GrantSolutions[A]: a new system to manage grant 
processes; 
Improvement over pre-2010 grants management: Requiring all grants 
management staff to use the same electronic system for the entire 
grants process helps ensure that all staff are following the same 
standardized policies and procedures and documenting the same 
information; 
Remaining challenges and agency actions: Some staff reported 
difficulties using GrantSolutions; 
FMCSA is working to address this. 

FMCSA initiative: Additional grants management training; 
Improvement over pre-2010 grants management: Additional training can 
help to reduce staff errors and increase the likelihood that staff 
follow policies and procedures; 
Remaining challenges and agency actions: No training tracking system 
to ensure staff complete required training. 

FMCSA initiative: Improved communications; 
* Adopted SharePoint[B]; 
* E-mail groups; 
* Communication plan; 
Improvement over pre-2010 grants management: Adding communications 
tools and formalizing a communications plan improves the ability of 
FMCSA management to effectively communicate grants management 
information with its staff; 
Remaining challenges and agency actions: Communication plan lacks 
details. However, the agency noted that the communications plan is 
sufficient at this time and will continue to refine its internal 
communications as needed. 

Source: GAO analysis of FMCSA information. 

[A] GrantSolutions is an electronic grants management system created 
by the Department of Health and Human Service's Center of Excellence 
for the review, evaluation, and selection of grant applications; award 
and monitoring of grants. FMCSA officials said they selected 
GrantSolutions from a short list of grant information systems provided 
by OMB, noting that GrantSolutions was the most mature of the systems. 

[B] SharePoint is a Web-based Microsoft program that allows users to 
share information. 

[End of table] 

Grants Management Office Should Help to Improve Oversight, but FMCSA 
Conducted Limited Analysis to Support Project Costs and Staffing Needs 
of the Office: 

FMCSA requested funding in its fiscal year 2011 and 2012 budget 
requests to establish a stand-alone GMO to strengthen oversight of 
FMCSA's grants management by centralizing many of its grant management-
specific duties, such as establishing standards and policies, 
developing training tools and job aids, and monitoring to help ensure 
compliance with regulations and legislation. (See fig 2.) For example, 
the GMO would oversee the development of training and job aids 
designed to help grants management staff understand and implement 
agency policies and procedures. However, FMCSA has not yet received 
funding to staff a GMO and thus has used existing FMCSA staff--such as 
the Chief Financial Officer (CFO)--and an FMCSA contractor to 
implement the GMO's functions. For example, since April 2011, the CFO 
has been in charge of establishing policies and procedures, and 
FMCSA's Chief Counsel has been responsible for conducting legal 
reviews. The GMO should help reduce the risk of grant award 
mismanagement by providing centralized and consistent oversight and 
reviews of all grant programs and holding all grant programs and grant 
managers to the same standard policies. In addition, according to some 
FMCSA officials we interviewed, by assuming administrative grant 
responsibilities now held by program staff, the GMO could ease the 
burden on those programmatic staff so they could focus on 
responsibilities related to their subject matter expertise. As a 
result, management should be in a better position to help ensure that 
grants are managed consistently and in line with policies and 
procedures, reducing the risk for award irregularities. 

Figure 2: Planned GMO Responsibilities and Relationships with Other 
FMCSA Grants Management Positions: 

[Refer to PDF for image: illustration] 

Administrator; Chief Counsel; Chief Financial Officer: 
Policy, directives, and compliance to Grants Management Office. 

Grants Management Office: 
* Establish standards and policy; 
* Develop training and job aids; 
* Administer grant systems; 
* Ensure compliance with regulation and legislation; 
Direct reporting to CFO. 

Grants Management Office: 
Communications; Monitoring; Training: directed to FMCSA grants
community. 

FMCSA grants community: 
* Program managers; 
* Field staff; 
* Grantees. 

Source: GAO analysis of FMCSA data. 

[End of figure] 

However, despite the GMO being central to the agency's grant 
management improvements, FMCSA has not conducted a workforce analysis 
that could help the agency identify and fill gaps in expertise, 
including those that might be needed for the proposed GMO. We have 
reported in the past that while the specific approach to strategic 
workforce planning varies by individual agencies based on needs and 
missions, such strategies should determine the workforce skills and 
competencies needed to achieve future results and develop strategies 
to address gaps to ensure the agency has the necessary skills and 
competencies.[Footnote 23] Such planning is especially important in 
times of budget constraints and organizational change, as FMCSA is 
undergoing its grants management transformation. FMCSA officials told 
us that the agency had considered conducting a workforce analysis that 
could systematically assess its grants management skill and staff 
needs, and then determine if it has these skills and staff, and if it 
does not, how to obtain them. Further, FMCSA stated in its fiscal year 
2011 budget request that it currently does not employ individuals that 
are trained in grants management. Yet the only action FMCSA has taken 
to assess its workforce was to create a model to assess the number of 
staff needed in the field--but not in headquarters--to meet 
requirements in grants management, program delivery, and oversight. 
According to FMCSA officials, in preparing its fiscal year 2011 budget 
request for $399,000 and three full-time equivalent employees for the 
GMO, they did more of an anecdotal assessment to determine GMO 
staffing needs, for instance noting that the agency's current 
attorneys had too heavy a workload to devote enough time to reviewing 
grants and concluding that the agency needed a dedicated grants 
attorney.[Footnote 24] FMCSA officials told us that while they are 
considering a strategic workforce analysis for their headquarters 
grants management staff, they have not yet done so in part because 
FMCSA may not have the resources to fund the staff levels that such an 
analysis might recommend. Further, they noted that it would be 
difficult to determine workload and staffing needs until they 
developed, implemented, and trained staff in new grants management 
processes. Until FMCSA conducts a thorough workforce analysis, it will 
not know if it has the staff and skills necessary to effectively 
manage its grant programs and support the proposed GMO, or if it 
requires additional resources as it continues its grants management 
transformation. 

Officials told us that if FMCSA does not receive funding to support 
the GMO, the agency will continue to use existing staff such as the 
CFO and an outside contractor to assume many of the intended GMO 
functions. FMCSA reported that these interim changes in staffing 
responsibilities create additional risks to the agency's grants 
management as they increase reliance on contractors and delay the 
agency's ability to implement changes that would enhance its 
employees' grants management skills. In other words, in the agency's 
opinion this alternate plan would do less to strengthen FMCSA's 
internal controls than would a GMO, potentially leaving FMCSA's grant 
awards at risk of mismanagement. 

Grants Management Manual Should Help Address Control Weaknesses but 
Still Lacks Details on Program Staff Roles and Responsibilities: 

One of the key internal control improvements that FMCSA has made is to 
standardize and document its grants management policies and 
procedures, in its Grants Management Manual, which were inconsistently 
documented prior to 2010. According to FMCSA, the Manual is designed 
to "establish strong internal controls in the form of grant process 
standardization and promote greater adherence to policies, processes, 
and procedures." FMCSA first issued the Manual in early fiscal year 
2010 and issued an update in January 2011. The Manual provides 
information on the roles and responsibilities of grants management 
staff and describes the steps in each stage of the grant process--from 
the grant announcement, to application review and award, and finally 
to closeout--as well as the steps that staff are expected to follow in 
each stage. In addition, the Manual publishes grants management 
staff's roles and responsibilities in one place, instead of across 
individuals' performance plans as was customary prior to 2010. 
Including these descriptions in a document that all grants management 
staff have access to helps ensure that all staff know their and 
others' roles and responsibilities, which should help increase 
accountability and the likelihood that all staff fulfill their 
documented responsibilities. Further, by documenting and setting 
consistent policies across all grant programs, the Manual should 
provide staff with the information needed to help ensure that grants 
are managed and awarded in line with FMCSA policies and with all 
relevant laws. 

While the Manual strengthens FMCSA's internal controls, grant program 
staff's roles and responsibilities are still not sufficiently 
documented. For example, grants management positions detailed in the 
Manual include program manager, for the person in headquarters who 
manages all aspects of a specific grant program. However, there is a 
single list of roles and responsibilities for staff who manage grants 
in the field, including field administrators, service center 
directors, and state program managers. FMCSA officials told us that 
these individuals have different roles in the field, yet they have a 
single list of roles and responsibilities. In addition, a 2011 
external review of the agency's grants management found that the 
Manual did not clearly describe who has responsibility for managing 
grant award documentation or have clear explanations of two steps in 
the grant cycle--grant concurrence and approval. FMCSA officials told 
us that they believe that the grant concurrence and approval workflow 
diagrams displayed in the Manual depict the approval flow and clearly 
denote each reviewer in the process. In addition, FMCSA officials said 
that they provided more detailed information on these topics through 
training and job aids and that the agency intends to provide 
additional, possibly grant program specific information in standard 
operating procedure documents. However, in that case, details on all 
programs would not be located in one central place, and grants 
management staff might face challenges in keeping track of and 
following these various guidance documents. The review also noted that 
the Manual does not include a description for the financial program 
specialist, an individual who assists with financial oversight, and 
that work flow diagrams in the Manual are not clear, which may confuse 
staff on certain grants management roles and responsibilities. 

Required Legal Reviews of All Awards Should Help Ensure Compliance 
with Laws and Regulations: 

The Manual also describes a new requirement for all grants to be 
formally reviewed by the Office of Chief Counsel prior to award. FMCSA 
created checklists--one for each grant program--to guide these legal 
reviews to ensure that awards follow all applicable laws and 
regulations. Required and standardized legal reviews should reduce the 
risk that CVISN-type statutory violations occur in the future by 
providing a structured legal framework for attorneys to follow during 
legal reviews. EPA uses similar reviews and ensures that review 
checklists are updated annually to incorporate any new requirements 
and laws.[Footnote 25] Updating these checklists on a regular basis 
helps ensure that all relevant laws, regulations, and requirements are 
followed when awarding grants. 

The New Grants Management System Poses Some Challenges, but the System 
Should Help Standardize Process and Procedures: 

FMCSA implemented a new electronic grants management system, 
GrantSolutions, to manage the process for all phases of grant awards. 
While there have been some challenges in implementing the system, 
FMCSA officials noted that requiring all grants management staff to 
use the new system for the entire grants process helps ensure that all 
staff are following the same standardized policies and procedures and 
documenting the same information, which was not necessarily the case 
prior to 2010. In addition, the system helps ensure that certain tasks 
are completed by building them into the system's automated workflow. 
For example, the Financial Management Office will conduct its 
financial review as part of the funding and approval processes in 
GrantSolutions. 

FMCSA staff began using GrantSolutions to manage grant awards and as 
the official repository of grant-related documentation in fiscal year 
2011. Some grant managers we interviewed said that GrantSolutions was 
challenging to use, particularly at first. FMCSA officials told us 
that because GrantSolutions was developed for the Department of Health 
and Human Services, it is not customized for FMCSA's needs, making it 
challenging at times to use. FMCSA officials noted that they are 
working with GrantSolutions developers at the Department of Health and 
Human Services to customize the system to the extent possible and have 
had to supplement training on the system provided by the Department of 
Health and Human Services with FMCSA-provided training courses and 
materials. However, regardless of the challenges noted by some staff, 
FMCSA reported that GrantSolutions will help to ensure that all 
required grant documents are saved and stored in the system. Having a 
single system in which staff are required to store all relevant grant 
documentation will help ensure that documents are located together in 
one place when grant managers and other relevant individuals, such as 
those who serve on technical review panels, need to review them and 
make award decisions based on them. 

New Grants Management Training Helps Strengthen Controls, but Lacks an 
Adequate Tracking System: 

FMCSA implemented additional required training for grant managers, 
which should help to strengthen its controls over grants management. 
FMCSA began training staff on the contents of the Manual in spring 
2011 and plans to add more comprehensive 2-day grants management 
training in 2012.[Footnote 26] FMCSA officials told us the agency has 
contracted with outside training providers for training it cannot 
provide itself, including appropriations law training.[Footnote 27] 
FMCSA reported that training will help grants management staff better 
understand the FMCSA policies, as well as the laws and regulations 
that they should follow when managing grant awards. This is 
particularly important in light of the agency's Antideficiency Act 
violations in its CVISN program, which, as mentioned previously, 
occurred in part because staff did not fully adhere to the funding 
restrictions governing the program. According to FMCSA's Grants 
Management Program Roadmap, staff that attend this new 2-day training 
will be required to pass an exam before graduating from the course; 
however, FMCSA has not specified what will occur if staff do not pass 
the exam. 

Despite the improvements in the curriculum, FMCSA does not have a 
system for management to easily track employee training to ensure that 
staff complete required training and are continuing to keep their 
skills and knowledge up to date. FMCSA currently documents required 
training in employees' individual development plans. Separately, 
FMCSA's electronic training system lists courses and the names of 
staff who have completed them. According to FMCSA officials, the 
training system does not contain information from individual 
development plans,[Footnote 28] so it cannot identify employees who 
have not taken certain training courses. As such, FMCSA relies on, but 
does not require, supervisors to monitor staff training. Supervisors 
keep track of which employees have not completed required training by 
cross-referencing the requirements in the individual's development 
plan and the names of those who completed the requirements in the 
training system. Since the information is not all in one location, 
management may not know if staff fail to complete required training. 
The absence of a formal, centralized mechanism for tracking staff 
training increases the risk that a staff's failure to take a required 
course could go undetected, increasing the risk that staff do not have 
the knowledge needed to appropriately manage grant awards. 

In contrast, though EPA also requires regular training for grants 
management staff, it uses a system that identifies staff who have not 
taken required training, which allows management to contact those 
individuals to ensure that they complete it. EPA also ensures its 
grants management staff complete required training by limiting access 
to the agency's grants management system--a system staff need to 
perform their job functions--to only those staff that have completed 
the training required to become certified grant project officers. 
Grant project officers who do not take required training are unable to 
process grant awards. Moreover, staff must take a refresher course to 
maintain their certification every 3 years. Finally, EPA reviews its 
training periodically to identify new regulations or other information 
that grant management staff need to know and incorporates it into the 
training. NHTSA also has required training for grants management 
staff, including required refresher training every 2 years for 
managers of discretionary grants. NHTSA discretionary grants managers 
are required by OMB to take "Contracting Officer's Technical 
Representative" training. 

New System and Plan Improve Communications and Plan Continues to 
Evolve: 

FMCSA has improved its methods for communicating grants management 
information to staff and has created a communications plan to guide 
grants management communications. FMCSA hired contractors to implement 
SharePoint, a Web-based system developed by Microsoft, and began using 
it in October 2010. FMCSA uses SharePoint to share and disseminate 
grants management and other documents to internal staff. Currently, 
most of SharePoint is dedicated to the contents of the Manual, though 
FMCSA also uses it for grants management "frequently asked questions" 
and forums. Second, FMCSA set up e-mail groups for job categories, 
including grant Program Managers and Division Administrators, to help 
ensure that it can target communications to specific groups. Whereas, 
prior to 2010, FMCSA management in headquarters relied on Division 
Administrators to pass communications on to other field staff, 
management can now communicate directly with their intended 
recipients, thus increasing the likelihood that grant management staff 
receive the information management intended them to receive. Finally, 
in contrast to the ad hoc communications FMCSA relied on prior to 
fiscal year 2010, FMCSA created a communications plan in 2011 that 
outlines a strategy for communicating with stakeholders during its 
grants management transformation. A communication strategy is 
essential to an organization undergoing significant change, like 
FMCSA, which is transforming its grants management program. A 
communication strategy helps ensure consistency of message, encourages 
two-way communication, provides information to meet specific needs of 
employees, and facilitates more frequent communication.[Footnote 29] 
While FMCSA's strategy lacks some details--for example, specific 
information on the types of messages that will be communicated to 
staff--the agency noted that its communication plan is sufficient at 
this time and will continue to evolve as it identifies additional 
communication needs. 

Additional Actions Could Help Ensure Continued Grants Management 
Improvements: 

FMCSA has begun to initiate a number of improvements to internal 
controls over its grants management that should help reduce the risk 
for grant award irregularities and mismanagement, but there are 
additional challenges that could impact the agency's ability to 
continue to successfully transform its grants management. When 
undergoing such transformations, we have reported[Footnote 30] that it 
is important for agencies to undertake certain practices like (1) 
establishing a coherent mission guiding the transformation, (2) 
involving employees in the transformation, (3) establishing a 
communication strategy to report progress, (4) ensuring that agency 
leadership drives transformational change, and (5) establishing 
results-oriented goals and a strategy and timeline for tracking 
performance towards achieving them.[Footnote 31] 

FMCSA's ongoing initiatives reflect the agency's progress in 
implementing the first three of these practices, but it is unclear if 
the agency will be able to make progress in the other two--ensuring it 
has appropriate leadership and establishing goals to measure its 
progress. For example, the Grants Management Program Roadmap, 
previously described, provides a coherent framework and mission 
guiding FMCSA's grants management transformation. In addition, FMCSA 
employees were involved in developing both the Roadmap and the Manual 
and, as we previously noted, although its scope is limited, FMCSA 
created a communication plan. However, it is unclear if the agency 
will have sufficient leadership to drive this transformation in the 
future, as it may not receive funding for its centralized GMO in 
fiscal year 2012, and its CFO, who oversaw many of the new grants 
management initiatives and was designated as the individual to whom 
the GMO would report if it is created, left the agency in August of 
this year. We have previously reported that top leadership must set 
the direction, pace, and tone for agency transformation.[Footnote 32] 
It is important for FMCSA's next CFO to continue to provide such 
leadership given that officer's role in grants management. 

Further, FMCSA has not set metrics to measure its performance in 
meeting grants management goals. While the Grants Management Program 
Roadmap includes milestones, they are for implementation steps only, 
such as dates by which FMCSA will roll out grants management training. 
Performance metrics could help FMCSA identify the extent to which the 
changes it is making contribute to reducing the risk for financial or 
management mistakes. This information, in turn, could help inform 
FMCSA's decisions about which actions to continue and which need to be 
modified or discontinued. This information could also help FMCSA 
demonstrate to Congress that, despite its past violations, it is 
committed to improving its grants management. EPA's grants management 
plan, for example, includes a system for monitoring the implementation 
of its grants management changes and evaluating the extent to which 
they meet certain performance targets.[Footnote 33] For instance, one 
of the grants management goals under the plan is to "enhance the 
management process for grants policies and procedures," and one of the 
performance targets it will use to track its progress toward meeting 
this goal is to "offer training on 100% of new and revised policies at 
least 4 weeks before required implementation." In this way, EPA can 
measure its performance and progress in meeting grants management 
goals and determine additional improvements. 

Conclusions: 

The federal government and state governments are experiencing severe 
budgetary constraints, consequently it is essential that the federal 
government increase its attention to how federal grant funds are 
awarded and spent. FMCSA relies on states to deliver a number of motor 
carrier safety grant programs, and many states rely on FMCSA grant 
funds to help deliver these critical programs. In 2011, DOT determined 
that it had violated federal appropriations statutes, including the 
Antideficiency Act[Footnote 34] in awarding some CVISN grants from 
fiscal years 2006 to 2010. While these violations were specific to the 
CVISN program, some of the internal control weaknesses that 
contributed to those violations existed across FMCSA's additional nine 
grant programs. 

FMCSA's recent grants management initiatives, such as the Grants 
Management Manual and grants management training, appear to be 
positive steps in addressing internal control weaknesses that were 
prevalent in FMCSA's grant programs prior to fiscal year 2010, 
including those found to have contributed to statutory violations 
pertaining to CVISN awards. However, many of the initiatives are 
relatively new, and it is too soon to tell whether they will 
ultimately be successful in addressing internal control weaknesses. In 
particular, while FMCSA plans to staff a centralized Grants Management 
Office--an important component of its grants management 
transformation--the agency has yet to conduct a strategic analysis of 
its grants management workforce needs including resources needed for 
this office. For the initiatives that FMCSA has implemented, 
additional improvements could help ensure their success. For example, 
adding information to the Grants Management Manual on staff roles and 
responsibilities and adequately tracking required training will ensure 
grants management staff are equipped to effectively manage grant 
awards. Finally, setting goals and measures and tracking progress 
toward meeting those goals can help ensure that the agency continues 
to head in the right direction in its grants management 
transformation. Without implementing some of these additional efforts, 
FMCSA's grants management initiatives could fall short of their 
objective to achieve effective internal controls, and the agency's 
grant awards will continue to be at risk of financial irregularities. 

Recommendations for Executive Action: 

Given the importance of FMCSA's grants programs in helping meet the 
agency's goals, we recommend that the Secretary of Transportation 
direct the FMCSA Administrator to take the following four actions: 

* In order to better determine its staffing and skill needs for grants 
management, conduct a strategic grants management workforce planning 
evaluation, including an analysis of the needed staff resources for 
the proposed GMO. 

* To further improve grants management policies and procedures, add 
details regarding staff roles and responsibilities in the Grants 
Management Manual so that grants management staff are appropriately 
informed to manage each program. 

* To improve its tracking of grants management training, work with the 
appropriate DOT individuals to modify its training system to allow 
management to easily determine which staff have taken required 
training. 

* In order to track the progress of its grants management 
transformation, create a series of measurable grants management goals 
and objectives and timelines for completing them, as well as a series 
of metrics to measure progress in meeting these goals. FMCSA should 
detail these goals and metrics in its Grants Management Program 
Roadmap, track progress in meeting these goals over time, and report 
to Congress on its progress. 

Agency Comments and Our Evaluation: 

We provided a copy of our draft report to DOT for review and comment. 
DOT generally agreed with our recommendations and provided comments 
via e-mail that were primarily technical in nature, which we 
incorporated as appropriate. DOT did comment on two of the 
recommendations in our draft report. First, in response to our 
recommendation that FMCSA modify its training system, FMCSA officials 
noted that FMCSA uses a DOT-mandated Training Management System to 
track grants management training, and that they do not have control 
over the features or functionality of this system. As such, we 
modified the language in our report to recommend that FMCSA work with 
appropriate individuals at DOT to modify the training system. Second, 
our draft recommendation that FMCSA create grants management goals and 
objectives and report to Congress on their progress in meeting them 
stated that FMCSA should report to Congress annually. In response, 
FMCSA officials noted that the agency already updates Congress on its 
programs regularly and that an annual report on its grants management 
goals would be administratively burdensome. We agreed that FMCSA could 
keep Congress informed without submitting a separate annual report, 
and thus removed the reference to "annually" from our recommendation. 

We also provided a copy of our draft report to EPA for review and 
comment. EPA did not have any comments. 

We are sending copies of this report to the appropriate congressional 
committees, DOT, EPA, and other interested parties. The report also is 
available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at flemings@gao.gov or (202) 512-2834. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. Key contributors to this 
report are listed in appendix II. 

Signed by: 

Susan A. Fleming: 
Director, Physical Infrastructure Issues: 

List of Requesters: 

The Honorable Patty Murray 
Chairman 
The Honorable Susan Collins 
Ranking Member 
Subcommittee on Transportation, Housing and Urban Development and 
Related Agencies 
Committee on Appropriations 
United States Senate: 

The Honorable Tom Latham 
Chairman 
The Honorable John W. Olver 
Ranking Member 
Subcommittee on Transportation, Housing and Urban Development and 
Related Agencies 
Committee on Appropriations 
House of Representatives: 

[End of section] 

Appendix I Objectives, Scope, and Methodology: 

In order to address the extent to which, prior to fiscal year 2010, 
the Federal Motor Carrier Safety Administration's (FMCSA) grant 
programs had internal controls in place that reduce the risk of grant 
award irregularities, we reviewed GAO's Standards for Internal Control 
in the Federal Government to determine internal control standards 
relevant to the management of grant programs. In addition, we reviewed 
GAO's prior work on FMCSA's Commercial Vehicle Information Systems and 
Networks (CVISN) grant program to determine internal control 
weaknesses that contributed to financial irregularities with CVISN 
grant awards. We interviewed the grant program manager for each 
program other than CVISN prior to fiscal year 2010 to discuss how each 
grant program was managed at that time and the internal controls that 
were in place over the grant programs. We did not include CVISN in 
this review given the work we had already conducted on that grant 
program. We collected and analyzed relevant documentation, such as 
grant policy memos, related to internal controls over grants. We also 
interviewed FMCSA headquarters officials, including the Chief 
Financial Officer (CFO), regarding internal controls. 

We also interviewed FMCSA officials and FMCSA grant recipients from 
four states--Alabama, Alaska, Arizona, and Wisconsin. We selected 
these four states because they were among those identified by FMCSA as 
having received irregular CVISN awards and also received a number of 
non-CVISN grant awards, which allowed us to interview fiscal year 2011 
recipients of all of FMCSA's grant programs, aside from the Commercial 
Motor Vehicle Operator Safety Training Grant. We determined that not 
including interviewing any recipients of this grant was acceptable 
given its small size (a total of $1 million in awards) and that 
recipients are generally private training providers and educational 
institutions as opposed to state government agencies, which are the 
primary recipients of FMCSA's other grants. In each state we 
interviewed key grants management FMCSA staff at the Division Office--
primarily Division Administrators and State Program Specialists--
regarding their role in managing FMCSA grants as well as internal 
controls that were in place for managing those grants prior to fiscal 
year 2010. We also interviewed recipients of each grant in each state 
regarding their experiences with receiving FMCSA grants and of FMCSA's 
management of making grant awards. 

Finally, we reviewed audits related to internal controls and grants 
management, including grants management internal control evaluations 
and corrective action plans for FMCSA for fiscal years 2007 through 
2010 and two audits conducted by an outside auditor (Deloitte) 
following the discovery by FMCSA of irregular CVISN awards to review 
findings made by other audits regarding grants management internal 
control weaknesses at FMCSA prior to fiscal year 2010. We also 
interviewed FMCSA staff, as well as representatives of FMCSA's 
independent internal control auditor. 

In order to determine actions FMCSA is taking to improve its grants 
management to reduce the risk for financial irregularities in awarding 
grants and the challenges that remain, we interviewed FMCSA management 
about the agency's efforts to improve grants management and reviewed 
documentation related to these efforts including the Grants Management 
Program Roadmap, Grants Management Manual, and documentation on 
FMCSA's proposed grants management office. We analyzed these documents 
and staff responses to determine the extent to which they addressed 
the internal control weaknesses we and others identified at FMCSA. We 
also analyzed these documents and interviews to identify any internal 
control weaknesses or challenges that persisted despite FMCSA's 
improvements. We also interviewed select FMCSA field office staff 
discussed earlier regarding their views on FMCSA's current grants 
management transformation initiatives. 

We also conducted a literature search and reviewed prior GAO work on 
grants management practices, particularly as it relates to internal 
controls over the awarding of grants. Finally, we met with grants 
management officials at the Environmental Protection Agency (EPA) and 
the National Highway Traffic Safety Administration (NHTSA) to discuss 
how those agencies manage their grant programs and analyzed relevant 
grants management documentation from those agencies. We selected these 
agencies because they, like FMCSA devote at least 50 percent of their 
budgets to grants, and have a safety focus. We interviewed EPA and 
NHTSA grants management officials to discuss how their agencies manage 
grants, what challenges they face in doing so, and what internal 
controls they employ over grants management. We reviewed relevant 
documentation related to grants management at both agencies such as 
EPA's grants management plan and NHTSA's discretionary grants 
management manual. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Susan A. Fleming, (202) 512-2834, or flemings@gao.gov: 

Staff Acknowledgments: 

In addition to the individual above, Sharon Silas, Assistant Director; 
Sarah Farkas; Tom James; Delwen Jones; SaraAnn Moessbauer; John J. 
Reilly; Matthew Rosenberg; and Crystal Wesco made key contributions to 
this report. 

[End of section] 

Footnotes: 

[1] GAO, The Department of Transportation Found That It Improperly 
Obligated Motor Carrier Grant Funds, [hyperlink, 
http://www.gao.gov/products/GAO-11-517R] (Washington, D.C.: May 5, 
2011). Contract authority is a form of budget authority that permits 
an agency to incur obligations in advance of appropriations, including 
collections sufficient to liquidate the obligation or receipts. 
Contract authority is unfunded, and a subsequent appropriation or 
offsetting collection is needed to liquidate the obligations. 

[2] Pub. L. No. 109-59, § 4126, 119 Stat. 1144, 1738 (Aug. 10, 2005). 

[3] GAO, State and Local Governments' Fiscal Outlook: April 2011 
Update, [hyperlink, http://www.gao.gov/products/GAO-11-495SP] 
(Washington, D.C.: Apr. 6, 2011). 

[4] We selected four states--Alabama, Alaska, Arizona, and Wisconsin--
that were identified by FMCSA as having received irregular CVISN 
awards and a number of non-CVISN grant awards, which allowed us to 
interview fiscal year 2011 recipients of all of FMCSA's grant programs 
aside from the Commercial Motor Vehicle Operator Safety Training 
Grant. We determined that not including interviews of recipients of 
this grant was acceptable given its small size (a total of $1 million 
in awards annually) and that recipients are generally private training 
providers and educational institutions as opposed to state government 
agencies, which are the primary recipients of FMCSA's other grants. 

[5] [hyperlink, http://www.gao.gov/products/GAO-11-517R]. 

[6] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[7] Although "risk assessment" is one of the internal controls, we did 
not review FMCSA's risk assessment controls over grants management 
activities as we determined that they were only minimally relevant to 
activities related to managing grant awards. 

[8] FMCSA defines large trucks as trucks with a gross vehicle weight 
rating of more than 10,000 pounds and buses as any motor vehicle 
designed, constructed, and or used for the transportation of 
passengers. 

[9] FMCSA is funded through contract authority and receives 
appropriations from the Highway Trust Fund to liquidate its 
obligations. 

[10] The formula FMCSA uses to award MCSAP Basic and Incentive grants 
is set by FMCSA regulation and is not set in statute. 

[11] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[12] The Government Performance and Results Act of 1993 (GPRA) has 
multiple purposes, including improving program effectiveness, 
accountability, and service delivery. Pub. L. No. 103-62, 107 Stat. 
285 (Aug. 3, 1993). Congress subsequently passed the Government 
Performance and Results Act Modernization Act of 2010 (GPRAMA) which 
establishes a new framework aimed at taking a more crosscutting and 
integrated approach to focusing on results and improving government 
performance. Pub. L. No. 111-352, 124 Stat. 3866 (Jan. 4, 2011). 

[13] This team is chaired by FMCSA's Chief Financial Officer and 
includes representatives of every FMCSA office responsible for a 
business practice subject to an internal control evaluation in any 
given year. FMCSA's internal controls program addresses requirements 
of the Federal Managers' Financial Integrity Act of 1982 (FMFIA), Pub 
L. No. 97-255, 96 Stat. 814 (Sept. 8, 1982), and the Office of 
Management and Budget's Circular A-123, revised Dec. 21, 2004, which 
provides the specific requirements for assessing the reporting on 
internal controls. 

[14] Other internal controls assessed include human resources, cash 
management, financial reporting, and travel management. While not all 
areas are reviewed every year, grants management has been included in 
FMCSA's internal control evaluations every year since fiscal year 2005. 

[15] Internal Control rating categories are effective, moderately 
effective, minimally effective, or ineffective. 

[16] 31 U.S.C. § 1341(a). 

[17] The Federal Highway Administration also administered the MCSAP 
Basic and Incentive and High Priority, PRISM, and the Commercial 
Drivers License Program Improvement grant programs prior to FMCSA. 

[18] [hyperlink, http://www.gao.gov/products/GAO-11-517R]. 

[19] We have conducted several reviews of EPA's grant management 
program in the past. See GAO, Grants Management: EPA Has Made Progress 
in Grant Reforms but Needs to Address Weaknesses in Implementation and 
Accountability, [hyperlink, http://www.gao.gov/products/GAO-06-625] 
(Washington, D.C.: May 12, 2006). 

[20] [hyperlink, http://www.gao.gov/products/GAO-11-517R]. 

[21] GAO, Human Capital: Key Principles for Effective Strategic 
Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11, 2003), and 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[22] This review observed other problems with award transactions, 
however. For example, the review observed that some grant agreements 
were missing required signatures and dates, and that FMCSA recorded 
some obligations before grant agreements were executed. 

[23] [hyperlink, http://www.gao.gov/products/GAO-04-39]. 

[24] In September 2010, FMCSA awarded a 3-year contract to an auditing 
firm to identify the skills and expertise needed for GMO staff 
positions, the accompanying job descriptions, and draft any policies 
needed. The auditing firm will not, however, conduct a workforce 
analysis for the GMO, which would include assessing FMCSA's current 
skills and abilities, identifying any gaps, and then creating job 
descriptions for those gaps only. 

[25] In addition to a legal checklist, EPA staff also use checklists 
for budget reviews. 

[26] FMCSA identified a need for this 2-day training through a review 
of its training curriculum conducted by an outside contractor. The 
contractor's review found that FMCSA could best meet the needs of its 
employees by using contractors such as the U.S. Department of 
Agriculture Graduate School, to conduct some of its training and 
developing its own training for topics specific to FMCSA employees. 

[27] According to FMCSA officials, the agency will offer 
appropriations law training twice in 2011 and will likely offer it 
three times per year starting in 2012. 

[28] Individual development plans document employees' roles and 
responsibilities. 

[29] GAO, Results Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, [hyperlink, 
http://www.gao.gov/products/GAO-03-669] (Washington, D.C.: July 2, 
2003). 

[30] [hyperlink, http://www.gao.gov/products/GAO-03-669]. 

[31] This is based on GPRA. To promote improved federal management and 
greater efficiency and effectiveness, GPRA instituted a government-
wide requirement that agencies set goals and report annually on 
performance, and encouraged federal agencies to conduct in-depth 
program evaluations to assess their program' impact or learn how to 
improve results. Performance information is critical for achieving 
results and maximizing the return on federal funds. 

[32] [hyperlink, http://www.gao.gov/products/GAO-03-669]. 

[33] For EPA's grants management plan, see United States Environmental 
Protection Agency, "Grants Management Plan 2009 -2013," [hyperlink, 
http://www.epa.gov/ogd/EO/finalreport.pdf]. For additional information 
on EPA's grants management, see [hyperlink, 
http://www.gao.gov/products/GAO-06-625]. 

[34] As stated above, the Antideficiency Act prohibits federal 
agencies from incurring an obligation that exceeds their available 
appropriation or contract authority. [hyperlink, 
http://www.gao.gov/products/GAO-11-517R]. 

[End of section] 

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