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Highlights

The Environmental Protection Agency (EPA) has faced challenges for many years in managing its grants, which constitute over one-half of the agency's budget, or about $4 billion annually. EPA awards grants through 93 programs to such recipients as state and local governments, tribes, universities, and nonprofit organizations. In response to concerns about its ability to manage grants effectively, EPA issued its 5-year Grants Management Plan in 2003, with performance measures and targets. GAO was asked to assess EPA's progress in implementing its grant reforms in four key areas: (1) awarding grants, (2) monitoring grantees, (3) obtaining results from grants, and (4) managing grant staff and resources. To conduct this work, GAO, among other things, examined the implementation of the reforms at the regional level for two Clean Water Act programs in 3 of EPA's 10 regional offices.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of ongoing monitoring by developing a performance measure and a performance target for ongoing monitoring.
Closed - Implemented
In our May 2006 report "Grants Managements: EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability", GAO found that without adequate documentation of ongoing monitoring, EPA cannot be fully assured that grantees are on track to fulfilling the terms and conditions of their grants. Furthermore, the agency's lack of documentation indicates weaknesses at all levels: staff do not always document their monitoring, supervisors do not always review grant files, and managers are not always meeting their commitments to address known problems. Despite the importance of ongoing monitoring, EPA had not created a performance measure and target for documenting monitoring, which elevate the importance of monitoring to the agency. Based on GAO's recommendation, EPA issued its "Grants Management Plan, 2009-2013" in October 2008 which incorporates a performance measure and target for ongoing monitoring--referred to within EPA as baseline monitoring.
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by establishing a standard for the timely closeout of grants and ensure that EPA's monitoring and other policies are consistent with that standard.
Closed - Implemented
In response to our May 2006 report "Grants Management: EPA Has Made Progress in Grants Management but Needs to Address Weaknesses in Implementation and Accountability", EPA's Office of Grants and Debarment reconsidered its closeout standard and took action to eliminate inconsistencies in closeout policy. Specifically, EPA eliminated the 180-day standard for grant closeout because it was insufficient period of time to close out grants. For example, research grants required peer review before the grant could be closed out which could not be completed within the 180 days. EPA created a new closeout policy in its September 2007 "Policy on Compliance, Review and Monitoring" (effective January 2008) which replaced a 1992 policy and the existing monitoring policy which contained the 180-day standard, making its policies consistent, as GAO recommended. Furthermore, as a result of our report, EPA placed new emphasis on achieving its performance measure that 90 percent of grants in the current fiscal year must be closed out by the end of succeeding fiscal year. In fiscal years 2006 and 2007, EPA exceeded its performance target, achieving over 96 percent closeout of grants.
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of environmental results by developing a performance measure and target that better reflects the new environmental results policy.
Closed - Implemented
In our report, "Grants Management:EPA Has Made Progress in Grant Reforms but Needs to Address Weaknesses in Implementation and Accountability" (May 2006), we found that EPA's new results policy was a positive step, but its current performance measure for the results policy did not take account the new criteria for identifying and measuring results. We recommended that EPA develop a performance measure and target that better reflects the new environmental results policy. In response to recommendation, EPA determined that it had internal controls to address all criteria. Specifically, EPA stated that it would conduct a comprehensive program review that included assessing the extent to which EPA was achieving the the results policy, which substantially meets our recommendation. In April 2010, EPA completed its comprehensive program review and found that about 94% of final progress reports reviewed were consistent with EPA's results policy.
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of ongoing monitoring by considering requiring project officers and grant specialists to document ongoing monitoring in the agency's grants database so that the managers can monitor compliance agencywide.
Closed - Implemented
In response to GAO's recommendation, EPA issued a policy that required EPA staff to document ongoing monitoring in the agency's grants database. Specifically, in September 2007, EPA's Office of Grants and Debarment issued a "Policy on Compliance, Review and Monitoring" (effective January 2008) to require project officers and grants specialists to document ongoing monitoring in the agency's database. According to an EPA official, as a result of this policy, managers can monitor compliance with documentation requirements agencywide.
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by developing a performance measure and target for the grant closeout standard.
Closed - Implemented
According to an EPA Office of Grants and Debarment official, EPA considered GAO's recommendation and instead of developing a new performance measure, EPA decided to focus more management attention on those units that were not closing out grants in a timely way. As a result of this focus, EPA significantly improved its performance, exceeding its performance target of 90 percent. In fiscal years 2006 and 2007, EPA closed out over 96 percent of grants. This effort effectively met the intent of our recommendation.
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by developing a strategy for addressing grantees' late submission of required final documentation.
Closed - Implemented
In response to GAO's recommendation, EPA has developed a strategy for grant closeout including a strategy for addressing grantee's late submission of grants. Specifically, EPA's Office of Grants and Debarment issued a "Policy on Compliance, Review, and Monitoring" (effective January 2008) that requires that each office performing below stated performance goals in closing out grants by more than 5 percent in a fiscal year will be required to submit a closeout strategy. The purpose of the strategy is to identify problems in closeout, outline a plan to correct the problems, and increase future closeout performance. According to an EPA official, these problems would include problems with late submission of required final documentation that GAO identified in its report. This policy substantially meets the intent of our recommendation.
Environmental Protection Agency As EPA revises its Grants Management Plan, the agency has an opportunity to strengthen the management of its grants. The Administrator of EPA should direct the Office of Grants and Debarment to take action in the area of grant closeout by issuing revised policies and procedures to ensure proper closeout of grants.
Closed - Implemented
In our report,"Grants Management:EPA Has Made Progress In Grants Reforms but Needs to Address Weaknesses in Implementation and Accountability" (May 2006), GAO found that EPA grants specialists were not always closing out grants properly. Specifically, in the three regions we visited, we found instances where appropriate documentation was missing from the closeout files. EPA guidance states that inadequate file documentation, among other things, violates EPA's file management requirements and creates the appearance of poor grants administration. In response to our recommendation, in September 2007, EPA issued a "Policy on Compliance, Monitoring and Review" (effective January 2008) that addressed proper closeout of grants. Specifically, the policy identified the specific steps that all staff must follow in closing out grants (see section 7.0 , p. 11)). Furthermore, in May 2010, EPA conducted a comprehensive program review including a review to ensure that grants have been properly closed out and found that 87 percent of grants were closed out in compliance with its closeout policies.

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