United States Government Accountability Office

GAO Report to the Chairman, Subcommittee 

on Water Resources and Environment, 

Committee on Transportation and 

Infrastructure, House of 

Representatives 

GRANTS 

MANAGEMENT 

EPA Has Made 

Progress in Grant 

Reforms but Needs to 

Address Weaknesses 

in Implementation and 

Accountability 

May 2006 

 

GAO-06-625 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

May 2006

GRANTS MANAGEMENT 

EPA Has Made Progress in Grant 

Reforms but Needs to Address 

Weaknesses in Implementation and 

Accountability 

Highlights of GAO-06-625, a report to the 

Chairman, Subcommittee on Water 

Resources and Environment, Committee 

on Transportation and Infrastructure, 

House of Representatives

The Environmental Protection 

Agency (EPA) has faced challenges

for many years in managing its 

grants, which constitute over onehalf 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. 

What GAO Recommends

GAO’s recommendations are 

primarily directed toward 

establishing new performance 

measures and targets for ongoing 

monitoring, closeouts, and

environmental results. 

In commenting on a draft of this 

report, EPA stated that it generally

agreed with GAO’s 

recommendations and will 

incorporate them into its Grants

Management Plan, policies, and 

procedures. 

EPA has made important strides in achieving the grant reforms laid out in its 

2003 Grants Management Plan, but weaknesses in implementation and 

accountability continue to hamper effective grants management in four 

areas. First, EPA has strengthened its award process by, among other 

things, (1) expanding the use of competition to select the most qualified 

applicants and (2) issuing new policies and guidance to improve the 

awarding of grants. Despite this progress, EPA’s reviews found that staff do 

not always fully document their assessments of grantees’ cost proposals; 

GAO also identified this problem in one region. Lack of documentation may 

hinder EPA’s ability to be accountable for the reasonableness of the 

grantee’s proposed costs. EPA is reexamining its cost review policy to 

address this problem. 

Second, EPA has made progress in reviewing its in-depth monitoring results 

to identify systemic problems, but long-standing issues remain in 

documenting ongoing monitoring and closing out grants. EPA and GAO 

found that staff do not always document ongoing monitoring, which is 

critical for determining if a grantee is on track in meeting its agreement. 

Without documentation, questions arise about the adequacy of EPA’s 

monitoring of grantee performance. This lack of documentation occurred, in 

part, because managers have not fulfilled their commitment to improve 

monitoring documentation. In addition, grant closeouts are needed to ensure 

that grantees have met all financial requirements, provided their final 

reports, and returned any unexpended balances. For fiscal year 2005, EPA 

closed out only 37 percent of grants within 180 days after the grant project 

ended, as required by its policy. EPA also did not always close out grants 

properly in the regional files GAO reviewed. 

Third, EPA has initiated actions to obtain environmental results from its 

grants, but these efforts are not complete. For example, EPA’s 2005 

environmental results policy establishes criteria grants should meet to 

obtain results. However, EPA has not established a performance measure 

that addresses these criteria. Furthermore, EPA has not yet identified better 

ways to integrate its grant reporting systems. Finally, the Office of

Management and Budget’s 2006 assessment indicates that EPA needs to 

continue its concerted efforts to achieve results from grants. 

Finally, EPA has taken steps to manage grant staff and resources more 

effectively by analyzing workload, providing training, assessing the reliability 

of its grants management computer database, and holding managers and 

staff accountable for successfully fulfilling their grant responsibilities. 

Management attention is still needed because, among other things, EPA has 

just begun to implement its performance appraisal system for holding 

managers and staff accountable for grants management. 

www.gao.gov/cgi-bin/getrpt?GAO-06-625.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact John B. 

Stephenson at (202) 512-3841 or

stephensonj@gao.gov. 
Contents 

Letter 1

Results in Brief 3 

Background 6

EPA Has Strengthened the Award Process, but Lack of Key 

Documentation Raises Accountability Concerns 12 

EPA Has Improved In-depth Monitoring to Identify Agencywide 

Problems, but Weaknesses Remain in Ongoing Monitoring and in 

Closing Out Grants 19 

EPA Has Initiated Actions to Obtain Results from Grants, but Its 

Efforts Are Not Complete 36 

EPA Has Taken Steps to Manage Grants Staff and Resources More 

Effectively but Still Faces Major Management Problems 41 

Conclusions 47

Recommendations 48

Agency Comments and Our Response 49 

Appendix I: Scope and Methodology 51 

Appendix II: GAO Contact and Staff Acknowledgments 55 

Related GAO Products 56

Tables 

Table 1: EPA’s Performance Targets and Measures for Promoting 

Grants Competition, All New Grants and Nonprofit Grants, 

Fiscal Years 2002-2005 15 

Table 2: Use of Ongoing Monitoring Checklist in Region 1 and 9 

Grant Files for Two Programs 23 

Table 3: EPA’s Current Closeout Performance Target Compared 

with Percent EPA Reported as Meeting That Target, 

Reporting Fiscal Years 2003-2005 27 

Table 4: Minimum and Maximum Times Allowed under EPA’s 

Current Closeout Performance Measure 27 

Table 5: Percent of Grants Closed Out Agencywide and for 

Program and Regional Offices, by Length of Time to 

Closeout, Fiscal 2005 Reporting Year 28 

Page i GAO-06-625 Grant Reforms
Table 6: Comparison of EPA’s Performance against the Current 

Closeout Measure and the 180-Day Standard, Fiscal 2005 

Reporting Year 29 

Table 7: Length of Time It Took Grantees to Deliver Final Financial 

and Technical Reports for Two Grant Programs in Regions 

1, 5, and 9 30 

Table 8: Length of Time Elapsed for Grants Management Offices to 

Close Out Grants after Grantee Provides Final Reports for 

Two Grant Programs, Regions 1, 5, and 9 32 

Table 9: Extent to Which EPA Met Its Target for the Percent of 

Grant Workplans with Environmental Outcomes, 2003-

2005 37 

Table 10: Combined OMB PART Ratings of EPA Grant Programs, 

2004-2006 40

Table 11: OMB PART Scores for All Components of the Combined 

Rating, Fiscal Year 2006 41 

Table 12: Number of Active and Closed Wetland and Nonpoint 

Source Grants from January 1, 2004, through June 30, 

2005, in the Universe and the Number of Grants GAO 

Reviewed in Three Regions 53 

Figures 

Figure 1: EPA’s Key Offices Involved in Grant Activities 6 

Figure 2: States Covered by EPA’s 10 Regional Offices 7 

Figure 3: Percentage of EPA Grant Dollars Awarded by Recipient 

Type, Fiscal Year 2005 9 

Abbreviations 

EPA Environmental Protection Agency 

OMB Office of Management and Budget 

PART Program Assessment Rating Tool 

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Page ii GAO-06-625 Grant Reforms
United States Government Accountability Office

Washington, DC 20548 

May 12, 2006

The Honorable John J. Duncan, Jr. 

Chairman 

Subcommittee on Water Resources and Environment 

Committee on Transportation and Infrastructure 

House of Representatives 

Dear Mr. Chairman: 

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. To support its mission of 

protecting human health and the environment, EPA awards grants through 

93 programs to a variety of recipients, including state and local 

governments, tribes, universities, and nonprofit organizations. As of 

September 30, 2005, EPA was administering grants through headquarters 

and regional offices to 4,075 grant recipients. Given the size and diversity 

of EPA’s grant programs, its ability to efficiently and effectively 

accomplish its mission depends to a large extent on how well it manages 

its grant resources and builds accountability for results into its efforts. 

In response to concerns about its ability to manage grants effectively, EPA 

issued its Grants Management Plan.

1 In this plan, EPA for the first time 

presented goals, objectives, milestones, and performance measures with 

targets for tackling the agency’s long-standing grants management 

problems. The 5-year plan was comprehensive in that it set forth five 

major goals that the agency sought to achieve. These goals addressed 

major concerns we had identified in our 2003 report on grants

management.2

 EPA has also issued a series of policies to implement the 

plan and other grant reforms.3

 The plan’s goals are to (1) strengthen the 

award of grants by using competition to select grantees for certain awards 

 1

EPA, Grants Management Plan, 2003-2008. EPA-216-R-03-001 (Washington, D.C.: April 

2003). 

2

GAO, Grants Management: EPA Needs to Strengthen Efforts to Address Persistent 

Challenges, GAO-03-846 (Washington, D.C.: Aug. 29, 2003.

3

For this report, grant reforms include EPA’s Grants Management Plan, policies issued 

just prior to and after the issuance of the plan, and related efforts.

Page 1 GAO-06-625 Grant Reforms
to ensure that the best applicants are chosen; (2) monitor grants to ensure 

that grantees are making progress toward their objectives and, at the end

of the project period, to ensure that recipients have provided all financial

and technical reports before closing out the grants; (3) obtain results from

grants by identifying and measuring their environmental and public health

outcomes; (4) enhance the skills of EPA personnel involved in grants 

management; and (5) leverage technology to improve program 

performance. Each of these goals is challenging, especially measuring the

outcomes of environmental activities, but EPA needs to demonstrate the 

results achieved through its $4 billion annual investment in grant 

programs. EPA is currently revising this plan to reflect accomplishments 

achieved and to address remaining issues. 

You asked us to assess EPA’s progress in implementing its grant reforms 

for (1) awarding grants, (2) monitoring grantees, (3) obtaining results from 

grants, and (4) managing grant staff and resources. 

To address these issues, we conducted our work at EPA’s headquarters 

and regional offices. EPA conducts its grant activities through its Office of

Grants and Debarment—the office primarily responsible for grant 

policies—and program offices, located in both headquarters and 10 

regional offices—offices primarily responsible for implementing the grant

policies. At EPA headquarters, we reviewed EPA documents, including the 

Grants Management Plan, policies and guidance, internal reviews of 

management operations,4

 and annual post-award monitoring plans.5 We 

also interviewed Office of Grants and Debarment officials. In addition, we 

interviewed officials and obtained information from EPA’s Office of Water,

one of the program offices involved with grants. We reviewed EPA’s Office 

of Inspector General reports as well as the Office of Management and 

Budget’s (OMB) Program Assessment Rating Tool (PART).6

 We also 

reviewed prior GAO reports. 

 4

EPA’s internal grants management reviews consist of (1) comprehensive grants

management reviews of headquarter and regional offices conducted periodically by the 

Office of Grants and Debarment; (2) grants performance measure reviews performed

annually by the Office of Grants and Debarment, using documentation in the agency’s 

grants databases; and (3) periodic grants management self-assessments conducted by EPA 

program and regional offices.

5

EPA policy requires that offices provide annual post-award monitoring plans that address

how the offices plan to manage their monitoring activities for the upcoming year. 

6

OMB’s PART is a diagnostic tool meant to provide a consistent approach to evaluating 

federal programs. 

Page 2 GAO-06-625 Grant Reforms
In conducting our work, you asked us to address the implementation of 

EPA’s grant reforms at the regional level for Clean Water Act programs. 

We selected Wetland Program Development Grants (wetland grants) 

because it is a discretionary grant program—that is, EPA decides who 

receives the award and its amount, and the program is subject to 

competition. We selected Nonpoint Source Management Program Grants 

(nonpoint source grants) because it is a type of formula-based grant 

program—grants that are often awarded on the basis of formulas 

prescribed by law or agency regulation.7

 We reviewed EPA’s progress at 

the regional level by selecting grants in 3 of EPA’s 10 regional offices: 

Region 1 (Boston), Region 5 (Chicago), and Region 9 (San Francisco). We

selected these regions, in part, because, collectively, they represent a 

significant share of regional grant funding for the two programs we 

reviewed and geographic dispersion. At the regional offices, for these two 

grant programs, we reviewed grant files, and interviewed EPA grant 

specialists—who are responsible for overseeing the grantees’ 

administrative and financial activities—and EPA project officers—who are 

responsible for overseeing the grantees’ programmatic and technical 

activities. Our regional work provides insights into regional grant activities 

in the two Clean Water Act programs in the three regions we visited, but it 

is not generalizable to all grants in all regions because we (1) selected only 

two of the programs conducted in these offices and (2) incorporated 

nonprobability sampling into our grant selection process. In conducting 

our review, we did not assess the implementation of some of EPA’s 

policies because they had been issued too recently. Finally, we obtained

EPA data used in this report from the agency’s grants computer databases 

(Grants Information and Control System and the Integrated Grants 

Management System), which have not had a complete data reliability 

review. However, we determined that the data elements we used in this 

report were sufficiently reliable for our purposes in this report. (App. I 

provides a more detailed description of our scope and methodology.) We 

performed our work between February 2005 and April 2006, in accordance

with generally accepted government auditing standards. 

EPA has made progress in achieving the grant reforms laid out in its 

Grants Management Plan, but weaknesses in implementation and 

accountability continue to hamper effective grants management in four 

Results in Brief 

 7

EPA has two types of formula-based programs, nondiscretionary and continuing 

environmental programs, which is hybrid of nondiscretionary and discretionary grant 

programs. The nonpoint source grant program is a continuing environmental program. 

Page 3 GAO-06-625 Grant Reforms
areas. First, EPA has strengthened its award process by, among other 

things, expanding the use of competition to select the most qualified 

applicants. EPA also issued new policies and guidance to improve the 

awarding of grants. For example, EPA now requires that certain nonprofit

organizations document that they have administrative and financial 

systems to manage grants. While EPA has made notable progress, its 

internal reviews in program and regional offices have found that staff do 

not always fully document their reviews of grantees’ cost proposals. We 

also found this problem in one of the three regions we visited. This 

documentation problem may hinder EPA’s ability to be accountable for 

the reasonableness of the grantees’ estimated costs for performing the 

proposed work. Because of the continuing problems with documenting 

cost reviews, EPA is reexamining its cost review policy for grants. 

Second, EPA has improved some aspects of monitoring, but long-standing 

problems in documentation and grant closeouts remain. Specifically, EPA 

has begun to review the results of its in-depth monitoring to identify 

systemic grantee problems, but staff do not always document whether 

grantees have taken corrective actions. Similarly, EPA and we found that 

grant specialists and project officers do not always document ongoing 

monitoring. Ongoing monitoring is critical because, at a minimum, EPA 

conducts it on every grant at least once a year throughout the life of the 

grant and uses the results to determine whether the grantee is on track in 

meeting the terms and conditions of the grant. A lack of documentation 

raises questions about the adequacy of the project officers’ and grant 

specialists’ ongoing monitoring of grantee performance. This lack of 

documentation occurred, in part, because managers have not fulfilled their 

commitment to ensure adequate documentation. Concerning grant 

closeouts, EPA uses closeouts to ensure that (1) grant recipients have met

all financial requirements and have provided final reports and (2) any 

unexpended balances are returned to the agency. EPA’s policy states that 

closeouts should occur within 180 days after the grant’s project end date. 

However, agency officials do not always comply with this policy. 

Specifically, for fiscal year 2005, EPA (1) closed out only 37 percent of the 

grants within the 180 days and (2) did not always properly close out grants

in the regional files we reviewed. EPA has formed a work group to review 

its monitoring and closeout polices and plans to revise these policies in 

2006. 

Third, EPA has initiated actions to obtain environmental results from its 

grants, but its efforts are not complete. EPA has included a performance 

measure in its Grants Management Plan for identifying expected 

environmental results from grants. In addition, EPA issued an 

Page 4 GAO-06-625 Grant Reforms
environmental results policy, effective in January 2005. This policy, for the

first time, requires EPA staff to ensure that grant workplans specify welldefined environmental results, which enables EPA to hold grantees 

accountable for achieving them. To assess the agency’s effectiveness in 

implementing its environmental results policy, EPA identified seven 

criteria that grant agreements should meet. However, EPA’s current 

performance measure does not take into account the new criteria for 

identifying and measuring results from grants established by the policy. 

Furthermore, EPA acknowledges that it has not identified better ways to 

integrate its systems for reporting on the results of grants. While EPA has 

taken positive steps, OMB’s evaluation of EPA grant programs in 2006 

indicate that EPA must continue its concerted efforts to achieve results 

from its grants. 

Finally, EPA has taken steps to manage grants staff and resources more 

effectively by analyzing workload, providing training, assessing the 

reliability of data from the agency’s grants computer database, and holding 

managers and staff accountable for successfully fulfilling their grant 

responsibilities. Nevertheless, management attention to these issues is still 

needed because, among other things, EPA has not completed its data 

reliability assessment of the database and has just begun to implement its 

performance appraisal system for holding managers, supervisors, and staff 

accountable for grants management.

EPA is currently revising its Grants Management Plan. In doing so, the 

agency now has an opportunity to address the problems in documentation, 

grants closeout, and environmental results presented in this report. We are 

making recommendations in these areas. 

Page 5 GAO-06-625 Grant Reforms
EPA administers and oversees grants primarily through the Office of 

Grants and Debarment in the Office of Administration and Resources 

Management, 10 program offices in headquarters, and program offices and 

grants management offices in EPA’s 10 regional offices.8

 Figure 1 shows 

the key EPA offices involved in grants activities for headquarters and 

regions, and figure 2 shows the states covered by the 10 regional offices. 

Background 

Figure 1: EPA’s Key Offices Involved in Grant Activities

Assistant 

Administrator for 

Administration and 

Resources

Management

Assistant 

Administrator for 

Air and Radiation

Office of the 

Administrator 

Office of Grants

and Debarment

Assistant 

Administrator for 

Enforcement and 

Compliance 

Assurance

Assistant 

Administrator 

for 

International 

Affairs

Assistant 

Administrator 

for 

Environmental 

Information

Assistant 

Administrator for 

Prevention, 

Pesticides, and 

Toxic 

Substances

Assistant 

Administrator for 

Research and 

Development

Assistant 

Administrator for 

Solid Waste and 

Emergency 

Response

Assistant 

Administrator 

for Water

Region 1 

Boston

Region 2 

New York

Region 3 

Philadelphia

Region 4 

Atlanta

Region 5 

Chicago

Region 6 

Dallas

Region 7 

Kansas City

Region 8 

Denver

Region 9

San Francisco

Region 10 

Seattle

EPA Administrator

Source: GAO analysis of EPA information.

 8

In addition, EPA’s Office of the Chief Financial Officer conducts limited grant activity. 

Page 6 GAO-06-625 Grant Reforms
Figure 2: States Covered by EPA’s 10 Regional Offices 

AK

HI

AL

AZ AR

CA

CO

GA

ID

IL

IN

IA

KS

LA

ME

MI

MN

MO

MT

NE NV

NM

NY

ND

OK

OR

PA

SC

SD

TN

KY

OH

TX

UT

VA

WA

WV

WI

WY

FL

MS

NC

VT

NH

CT RI

MA

Seattle

San Francisco

Dallas

Denver

Atlanta

New York

Boston

Chicago Philadelphia

Kansas City

10

5

10

9

8

6

7

4

3

2

1

9

MD DE

DC

Source: EPA.

The Office of Grants and Debarment develops national grant policy and

guidance. This office also carries out certain types of administrative and 

financial functions for the grants approved by program offices, such as 

awarding headquarter grants and overseeing the financial management of

program office and regional grants. On the programmatic side, national 

program managers are responsible for establishing and implementing 

national policies for their grant programs, for setting funding priorities, 

and for identifying specific environmental results from grant programs. 

They are also responsible for technical and programmatic oversight of 

Page 7 GAO-06-625 Grant Reforms
headquarter grants. Regional grants management offices provide 

administrative management for regional grants, while regional program 

offices provide technical and programmatic oversight. Both headquarters 

and regional program offices conduct grant competitions. EPA has 

designated officials—referred to as senior resource officials—who are 

typically deputy assistant administrators in program offices and assistant 

regional administrators. These senior resource officials are in charge of 

strengthening agencywide fiscal resource management while also ensuring 

compliance with laws and regulations and are responsible for effective 

grants management within their units. 

As of September 30, 2005, 119 grant specialists in the Office of Grants and 

Debarment, and the regional grants management offices, were largely 

responsible for administrative and financial grant functions. Furthermore, 

2,064 project officers were actively managing grants in headquarters and

regional program offices. These project officers are responsible for the 

technical and programmatic management of grants. Unlike grant 

specialists, however, project officers also have nongrant responsibilities, 

such as using the scientific and technical expertise for which they were 

hired. 

In fiscal year 2005, EPA took 6,728 grant actions involving funds totaling 

about $4 billion.9

 These awards were made to six main categories of 

recipients, as shown in figure 3. 

 9

Grant actions involving funding include new awards, and increase and decrease 

amendments. The 6,728 grant actions involving funding were composed of 3,583 new

grants, 2,628 increase amendments, and 517 decrease amendments. In addition, in fiscal 

year 2005, EPA awarded 3,042 no cost extensions, which did not involve funding. 

Page 8 GAO-06-625 Grant Reforms
Figure 3: Percentage of EPA Grant Dollars Awarded by Recipient Type, Fiscal Year 

2005 

Source: EPA.

74.9%

9.8%

State $3,047.4 

(grant actions 2,165)

Local government $400.4

(grant actions 988) 

University $162.1 (grant 

actions 703)

Nonprofit $294.8

(grant actions 1,260)

3.5%

Native American tribes $140.2

(grant actions 1,118)

0.6%

Other $23.0 (grant actions 494)

7.3%

4%

Dollars in millions

Note: Percentages may not add up to 100 due to rounding. 

EPA offers three types of grants—discretionary, nondiscretionary, and 

continuing environmental grants: 

• Discretionary grants fund a variety of activities, such as environmental 

research and training. EPA has the discretion to independently determine 

the recipients and funding levels for these grants. EPA has awarded these 

grants primarily to state and local governments, nonprofit organizations, 

universities, and Native American tribes. In fiscal year 2005, EPA awarded 

about $644 million in discretionary grants. 

• Nondiscretionary grants are awarded primarily to state and local 

governments and support water infrastructure projects, such as the 

drinking water and clean water state revolving fund programs. For these 

grants, Congress directs awards to one or more classes of prospective 

recipients who meet specific eligibility criteria, or the grants are often 

awarded on the basis of formulas prescribed by law or agency regulation. 

In fiscal year 2005, EPA awarded about $2.4 billion in nondiscretionary 

grants. 

Page 9 GAO-06-625 Grant Reforms
• Continuing environmental program grants contain both nondiscretionary 

(formula) and discretionary features. These grants are nondiscretionary in

the sense that (1) they are awarded noncompetitively to the same 

government units to support ongoing state, tribal, and local programs that 

do not change substantially over time, and (2) allotments of funds are 

initially made on the basis of factors contained in statute, regulation, or 

agency guidance. These grants are also discretionary in the sense that 

allotments are not entitlements, and EPA exercises judgment in 

determining what the final award amount should be. In fiscal year 2005,

EPA awarded about $1 billion in grants for continuing environmental 

programs. 

In this report, we focused on two EPA programs under the Clean Water 

Act: 

• Wetland Program Development Grants (Wetland grants) Wetlands are 

areas where water covers the soil, or is present either at or near the 

surface of the soil throughout the year or for various portions of the year, 

including during the growing season. Wetlands, such as bogs, swamps, and 

marshes, support a number of valuable functions—controlling floods, 

improving water quality, and providing wildlife habitat, among other 

things. The wetland grants provide applicants with an opportunity to carry 

out projects to develop and refine comprehensive wetland programs. The 

authority for the program is under section 104(b) (3) of the Clean Water

Act.10 Grant funding must be used to improve the wetlands program by 

conducting or promoting the acceleration of research and studies relating 

to the causes, effects, and other aspects of water pollution. Wetland grants

provide states, tribes, local governments, interstate agencies, intertribal 

consortia, nonprofits, and nongovernmental organizations an opportunity 

to carry out wetland projects and programs. Wetland grants are 

discretionary grants. 

• Nonpoint Source Management Program (Nonpoint source grants). 

Nonpoint source pollution is pollution that does not have a well-defined 

source but instead originates from a number of sources, such as acid mine

drainage, agricultural runoff, and roads and highways. Under section 

319(h) of the Clean Water Act, EPA makes grants to states, territories, and 

Indian tribes to support a wide variety of activities, including technical and 

financial assistance, education, training, technology transfer, 

 1033 U.S.C. § 1254(b)(3). 

Page 10 GAO-06-625 Grant Reforms
demonstration projects, and monitoring.11 Nonpoint source grants are 

continuing environmental program grants. 

Grants from these two programs can be incorporated into the National 

Environmental Performance Partnership System, which was established in 

response to state needs for greater flexibility in using and managing their 

continuing grant funds.12 Under this system, states may enter Performance 

Partnership Agreements with EPA and into Performance Partnership 

Grants. The agreements set out jointly developed priorities and protection

strategies, including innovative solutions for addressing water, air, and 

waste problems. The partnership grants allow states to combine 

continuing environmental program grant funds to implement those 

solutions. States can also enter into Performance Partnership Grants 

without a Performance Partnership Agreement. Under traditional 

continuing environmental program grants, states received funds to 

implement particular waste, air, water or other program—such funding 

can only be spent on activities that fall within the statutory and regulatory

parameters of that program. Under Performance Partnership Grants, 

states can combine up to 21 separate grant programs into one award, and 

move funds from one media, such as air, to another. 

Both the wetland and nonpoint source grants are under the auspices of 

EPA’s Office of Water in headquarters, but grants under these programs 

are carried out by water program staff in regional offices. Moreover, in its 

national guidance, the Office of Water states that it is committed to 

accomplishing the goals that the Office of Grants and Debarment has 

identified in its Grants Management Plan. To do this, for example, the 

Office of Water provided regions with information on revised competition 

and environmental results policies. 

 1133 U.S.C. § 1329(h). 

12Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub. L. No. 104-134,

110 Stat. 1321, 1321-299. 

Page 11 GAO-06-625 Grant Reforms
EPA has strengthened its award process by, among other things, (1) 

expanding the use of competition to select the most qualified applicants 

and (2) issuing new policies and guidance to improve the awarding of 

grants. However, EPA’s internal reviews of program and regional offices 

have found weaknesses in documenting the review of grantees’ cost 

proposals. We also found this weakness in one of the three regions we 

visited. This documentation weakness may hinder EPA’s ability to ensure 

the reasonableness of its grantees’ expenditure of federal funds. Because 

of the continuing problems with documenting cost reviews, EPA is 

reexamining its cost review policy for grants. 

To promote widespread competition for grants, in September 2002, EPA 

issued a policy that for the first time required competition for many 

discretionary grants.13 Before 2002, even though EPA had a competition 

policy, it did not compete grants extensively or provide widespread 

notification of upcoming grant opportunities. 

EPA’s 2002 policy was designed to promote competition in awarding 

grants to the “maximum extent practicable” and to ensure that the 

competitive process was “fair and open.” This policy represented a major 

cultural shift for EPA managers and staff, requiring EPA staff to take a 

more planned, rigorous approach to awarding grants. Specifically, the 

policy 

EPA Has 

Strengthened the 

Award Process, but 

Lack of Key 

Documentation 

Raises Accountability 

Concerns 

EPA Has Expanded the 

Use of Competition to 

Select the Most Qualified 

Applicants 

• was binding on managers and staff throughout the agency; 

• required EPA staff to determine evaluation criteria for grant solicitations 

and publish a grant announcement at least 60 days before the application

deadline; and 

• created the position of a senior-level competition advocate for grants. The 

advocate oversees the policy’s implementation and compliance and 

evaluates its effectiveness. 

 13EPA, EPA Order 5700.5: Policy for Competition in Assistance Agreements, (Sept. 12,

2002). 

Page 12 GAO-06-625 Grant Reforms
According to EPA’s Inspector General, the 2002 policy was a “positive 

step” toward promoting competition, and competitions under the policy 

were generally fair and open.14

Specifically, for the 38 grants that the Inspector General reviewed, EPA 

had (1) published an announcement soliciting proposals, (2) written 

procedures to ensure an objective and unbiased process for reviewing and 

evaluating applications, and (3) selected recipients according to reviewers’ 

recommendations. 

In 2004, EPA’s grants competition advocate reviewed the policy, as 

required, and reported, among other things, that steps should be taken to 

improve justifications for not competing certain grants by (1) increasing 

review and approval requirements for exceptions to competition and (2) 

clarifying the language in the policy to ensure appropriate use of 

exceptions. The advocate also found that the threshold for requiring 

competition for grants of $75,000 or more in the 2002 policy was too high. 

In response, EPA issued a revised competition policy, effective January 

2005.

15 It enhanced competition by, among other things, 

• increasing review and approval requirements for justifying exceptions and 

clarifying the language to ensure appropriate use of these justifications; 

• reducing the threshold for competition from $75,000 to $15,000; and 

• strengthening requirements for documenting the competition process and 

results. 

In addition, EPA added (1) conflict-of-interest provisions to increase 

awareness of situations that could arise for applicants, reviewers, and 

others involved in competition matters; and (2) dispute procedures. 

In commenting on both the 2002 and 2005 policies, the Inspector General 

stated that the policies did not fully promote competition and 

recommended that EPA could further expand competition in the 2005 

policy by eliminating certain remaining exemptions and exceptions for 

 14EPA Office of Inspector General, EPA Needs to Compete More Assistance Agreements, 

Report no. 2005-P-00014 (Washington, D.C.: Mar. 31, 2005).

15EPA, EPA Order 5700.5A1: Policy for Competition of Assistance Agreements, 5700.5A1 

(Jan. 11, 2005). 

Page 13 GAO-06-625 Grant Reforms
which the Inspector General believed competition is practicable. EPA 

responded, however, that further expansion was not practicable for 

reasons of congressional intent, regulatory limitations, and program 

effectiveness. 

EPA’s Grants Management Plan lays out goals, objectives, milestones, 

and performance measures with targets for promoting competition. For 

one of these objectives, EPA planned to improve the accuracy and 

specificity of information available to the public on the agency’s grant 

opportunities in the federal government’s Catalog of Federal Domestic

Assistance—a listing of available grants and other federal funding 

opportunities (available at www.CFDA.gov).16 However, as we reported in

2005, EPA was not consistently providing this information.17 Without such 

information, potential applicants might not apply, and EPA would not have 

the broadest applicant pool from which to select grantees. EPA officials 

were unaware of continuing problems with funding priorities and funding 

levels in the Catalog of Federal Domestic Assistance until we brought 

them to their attention during our review. In response to our 

recommendations, in April 2005, EPA implemented revised guidance for 

providing complete and accurate information in the Catalog of Federal 

Domestic Assistance. For example, EPA now strongly encourages its 

offices to provide information on the funding priorities on an ongoing 

basis, instead of annually, so that the public has up-to-date information in 

the Catalog of Federal Domestic Assistance. 

For the competition goal, the agency developed a performance measure 

for increasing the percentage of new grants subject to the competition 

policy that are actually competed and set increasing targets for achieving

this measure. According to EPA, about $249 million of the approximately 

$3.1 billion it awarded in new grants in fiscal year 2005 were eligible for 

competition. EPA exempts certain grant categories from competition, 

including all nondiscretionary grants, certain discretionary grants, and 

most continuing environmental programs grants. EPA also established a 

 16The General Services Administration and OMB’s Catalog of Federal Domestic Assistance 

is a governmentwide compendium of federal programs, projects, and activities that provide 

assistance or benefits to the American public. Assistance includes, but is not limited to, 

financial assistance such as grants and cooperative agreements. EPA uses other tools for 

announcing some grant programs, such as the Federal Register, and competitive funding 

opportunities are announced on www.grants.gov. 

17GAO, Grants Management: EPA Needs to Strengthen Efforts to Provide the Public with

Complete and Accurate Information on Grant Opportunities, GAO-05-149R (Washington,

D.C.: Feb. 3, 2005). 

Page 14 GAO-06-625 Grant Reforms
separate measure for nonprofit grantees. The first performance measure is

for all new eligible grants, including new grants to nonprofit recipients, 

and the second is only for new eligible grants to nonprofit recipients, as 

table 1 shows. EPA established a separate measure for competing grants 

to nonprofit organizations because it believes that selecting the most 

qualified nonprofit applicants through a competitive process could 

address concerns about the effectiveness of nonprofit grantees in 

managing grants. 

Table 1: EPA’s Performance Targets and Measures for Promoting Grants Competition, All New Grants and Nonprofit Grants, 

Fiscal Years 2002-2005 

All new grants New grants to nonprofit grantees 

Performance target Performance measure Performance target Performance measure

Fiscal year 

Percent of new grants 

competed

Reported percent of new

grants competed

Percent of new grants 

competed

Reported percent of 

new grants competed

2002 baseline Not applicable 27 Not applicable 24

2003 30 86 30 76

2004 60 91 55 85

2005 85 93 75 88

Source: EPA documents. 

As the table shows, EPA reports it now competes a higher percentage of 

eligible grants, up from 27 percent in fiscal year 2002 to 93 percent in fiscal 

year 2005, exceeding its targets for fiscal years 2003 through 2005.18 The 7 

percent of new grants that EPA reported it did not compete—which 

totaled about $10 million of the $249 million eligible for competition in 

fiscal year 2005—resulted from exceptions to the policy. EPA’s 

competition policy provides for exceptions that meet criteria specified in 

the policy, if supported by a written justification and approved by an 

appropriate official. Even after taking the exceptions into account, EPA 

exceeded the 85 percent target it set for new grants in 2005. It has also 

exceeded its target for new grants to nonprofit recipients in 2005. 

 18In fiscal year 2005, EPA competed 1,414 new grants or 93 percent of the 1,526 new grants 

eligible for competition. 

Page 15 GAO-06-625 Grant Reforms
To improve the award of grants, EPA issued additional policies and 

guidance. Specifically: 

• In January 2005, EPA issued a policy to improve the description of the 

grant in its grants database so that the description would be 

understandable to the public.19 EPA now presents this information on the 

Office of Grants and Debarment’s Web site—www.epa.gov/ogd—so that 

the public has improved access to grant information. 

EPA Has Issued New 

Policies and Guidance to 

Improve Grant Awards 

• In March 2005, EPA issued a policy establishing additional internal 

controls for awarding grants to nonprofit organizations.20 The policy 

addresses both the programmatic capability of a nonprofit applicant to 

carry out a project and its administrative capability to properly manage 

EPA grant funds—problems EPA and the Inspector General have 

identified. Under the policy, EPA assesses programmatic capability for 

both competitive and noncompetitive grants. The policy also requires the

agency to conduct different types of administrative capability reviews 

based on the amount of the grant to the nonprofit organization. For grants

of $200,000 or more, applicants must complete a questionnaire and 

provide documents to show that they have administrative and financial

systems to manage grants. For grants below the $200,000 threshold, EPA 

staff must query the agency’s grants database for any findings of problems 

in the applicant’s administrative capability. If problems are identified in 

any of these reviews, the applicant must take corrective actions before 

receiving the grant. In 2005, EPA approved 75 of the 87 nonprofit 

organizations it reviewed; the remaining 12 nonprofit organizations are 

taking steps to address problems identified. 

• Also in March 2005, EPA issued a memorandum clarifying the criteria that 

must be documented to justify the use of a grant or a contract as the 

award mechanism.21 EPA issued this guidance in response to a 

 19EPA, Data Quality Standard for the Project Description Field in the Integrated Grants 

Management System, GPI-04-05, (Jan. 27, 2005). 

20EPA, EPA Order 5700.8: EPA Policy on Assessing Capabilities of Non-Profit Applicants

for Managing Assistance Awards, (Mar. 24, 2005). 

21EPA Office of Grants and Debarment, Memorandum: Written Justifications for Selecting 

Assistance Agreements, (Mar. 16, 2005). This memorandum was written as a supplement 

to EPA Order 5700.1 Policy for Distinguishing between Assistance and Acquisition 

(Mar. 22, 1994). 

Page 16 GAO-06-625 Grant Reforms
recommendation in our 2004 report to better document the justification 

for using grants rather than contracts.

22

• In April 2005, EPA issued a policy memorandum and interim guidance 

establishing a certification process that applies to certain discretionary 

grant programs (currently 58).23 The new policy and guidance instruct 

senior EPA officials—assistant administrators and regional 

administrators—to certify, among other things, that (1) certain grant 

awards and amendments identify environmental outcomes that further the 

goals and objectives in the agency’s strategic plan and (2) there is no 

questionable pattern of repeat awards to the same grantee. For 

competitive announcements, these officials must certify that the (1) 

expected outcomes from the awards under the proposed competitive 

announcement are appropriate and in support of program goals and (2) 

proposed competitive announcement is written in a manner to promote 

competition to the maximum extent practicable.

24 The Office of Grants and 

Debarment has assigned a grant specialist to conduct random spot checks 

of these certifications and provide assistance to program offices in 

implementing this new policy. 

While EPA has improved its award process, both EPA and we found 

weaknesses in the agency’s documentation of its cost reviews before 

awarding grants. EPA policy requires both the grants management and 

program offices to conduct a cost review for every grant before awarding 

it to ensure that the grantee’s proposed costs are necessary, reasonable, 

allowable, allocable, and adequately supported. These reviews are central

to ensuring that EPA carries out its fiduciary responsibilities. However, in 

2004 and 2005, in six of the seven program and regional offices it reviewed, 

the Office of Grants and Debarment either found no documentation of cost 

reviews or found that documentation was not sufficient.25 As a result of 

Lack of Cost Review 

Documentation Could 

Compromise 

Accountability 

 22GAO, Grants Management: EPA Needs to Better Document Its Decisions for Choosing

between Grants and Contracts, GAO-04-459 (Washington, D.C.: Mar. 31, 2004). 

23EPA, Review and Announcement of Discretionary Grants, (Apr. 5, 2005) and EPA, Interim Guidance for New Policy on the Review and Announcement of Discretionary

Grants, (Apr. 28, 2005).

24In response to the Government Performance and Results Act of 1993, EPA has developed

a strategic plan that is built around five goals to protect human health and the environment: 

(1) clean air and global climate change, (2) clean and safe water, (3) land preservation and 

restoration, (4) healthy communities and ecosystems, and (5) compliance and 

environmental stewardship. EPA, 2003-2008 Strategic Plan: Direction for the Future, 

EPA-190R-03-003 (Washington, D.C.: Sept. 2003). 

25The site visits occurred in 2004 and 2005, and reports were issued later. 

Page 17 GAO-06-625 Grant Reforms
these continuing documentation problems, EPA is reexamining its cost 

review policy for grants.

We also found problems with cost review documentation in one of the 

three regions we visited—Region 5. This region has a checklist to ensure 

that staff members who are responsible for each aspect of the cost review 

had completed and documented their review before awarding a grant. The 

checklist requires approval from both the grant specialist and the project 

officer on certain items and requires supervisors to review the checklist to 

ensure that any concerns raised by the project officer or grant specialist 

were addressed.26 While a project officer and grant specialist could initially 

disagree on some aspects of the checklist, the regional office expects them

to resolve their differences and document the final resolution on the 

checklist. However, for most of the 12 approved award files we reviewed, 

we found instances in which the resolution of the issues was not 

documented. Specifically, 

• the grant specialist and the project officer had both neglected to answer 

the same two questions on the cost review checklist, or 

• the grant specialist and the project officer did not agree on the answers to 

multiple questions on the checklist and did not document any resolution of 

their disagreements. 

According to regional staff, these problems occurred because of workload 

and errors. Nevertheless, the lack of documentation for awarded grants 

raises concerns about the appropriateness of the award. More effective 

supervisory review might have resulted in a documented resolution of 

these differences. 

 26In Region 5, the supervisors are “team leaders” who are responsible for reviewing the cost

review checklists, among other award documents; the grants management officer also 

reviews the award documentation. 

Page 18 GAO-06-625 Grant Reforms
EPA has improved some aspects of monitoring, but long-standing 

problems in documentation and grant closeouts continue. EPA has made 

progress in using in-depth monitoring to identify grantee problems 

agencywide, but it does not always document whether corrective actions 

have been taken.27 Furthermore, for ongoing monitoring, the agency found, 

as we did in the regional offices, that in some cases agency staff do not 

consistently document their monitoring of grantees, which hinders 

accountability for effective grants management.28 Finally, we found that 

grant closeouts were often delayed and sometimes improperly carried out, 

which diminishes EPA’s ability to ensure that grantees met the terms and 

conditions of their award and that grant funds were spent appropriately. 

EPA has formed a work group to review its monitoring and closeout 

polices and plans to revise these policies in 2006.

EPA has made progress in conducting in-depth monitoring since it issued a 

new monitoring policy in December 2002, which it revised in 2004 and 

2005.

29 Under its monitoring policy, grants management offices and 

program offices in headquarters and the regions conduct in-depth 

monitoring either (1) at the grantee’s location (on-site) or (2) at an EPA 

office or at another location (off-site)—referred to as desk reviews. EPA’s 

policy for these reviews requires the following, among other things: 

EPA Has Improved Indepth Monitoring to 

Identify Agencywide 

Problems, but 

Weaknesses Remain 

in Ongoing 

Monitoring and in 

Closing Out Grants 

• Grants management offices must conduct in-depth administrative reviews, 

on a minimum of 10 percent of grantees annually, to evaluate the grantee’s 

administrative and financial capacity. For on-site administrative reviews, 

EPA conducts “transaction testing”—that is, reviewing a grantee’s 

accounting ledgers and underlying documentation for unallowable costs, 

such as lobbying and entertainment expenditures. 

In-depth Monitoring 

Results Can Be Analyzed 

Nationwide to Identify 

Problems, but Staff Do Not 

Always Document 

Whether Corrective 

Actions Have Been Taken 

• Program offices must conduct programmatic reviews on a minimum of 10 

percent of grantees annually to assess the grantees’ activities in key areas, 

 27The agency refers to in-depth monitoring as “advanced monitoring.” 

28The agency refers to ongoing monitoring as “baseline monitoring.” 

29In this report, we refer to EPA’s policy that addresses monitoring as “the monitoring

policy.” See EPA, EPA Order 5700.6: Policy on Compliance, Review and Monitoring 

(Dec. 31, 2002). In January 2004, EPA revised the monitoring policy. See EPA, EPA Order 

5700.6 A1 Policy on Compliance, Review and Monitoring (Jan. 8, 2004). Subsequently, 

EPA extended the policy through December 31, 2006, so that EPA could consider changes. 

See EPA, EPA Order 5700.6A1 CHG 1 (Sept. 28, 2005). 

Page 19 GAO-06-625 Grant Reforms
such as the progress the grantees are making in conducting the work and 

in meeting the grant’s terms and conditions. 

In 2003, we reported that although the in-depth review is a useful tool for 

monitoring a grantee’s progress, the agency lacked a way to systematically 

identify grantee problems agencywide because the information from its indepth monitoring was gathered in a form that could not be readily 

analyzed.30 We also found that the policy did not incorporate a statistical 

approach to selecting grantees for review. Without a statistical approach, 

EPA could not evaluate whether 10 percent was appropriate, nor could it 

project the results of the reviews to all EPA grantees. 

We recommended that EPA take action to address these issues. EPA has 

since incorporated the data from its in-depth monitoring into a database, 

analyzed the information to identify key problems, and taken corrective 

actions to address systemic problems. By taking these actions, EPA has 

found, among other things, that grantees have not had documented 

policies and procedures for managing grants. Without these policies and 

procedures, grantees may not be able to operate their financial and 

administrative systems appropriately. As a result of this finding, EPA is 

conducting the preaward reviews discussed earlier to ensure that 

nonprofit grantees have required financial and administrative systems in 

place. EPA has also increased training to grantees. 

Since issuing its most recent revision to the monitoring policy in 2005, 

EPA has initiated several practices that should further strengthen in-depth

monitoring. In 2006, it began incorporating a statistical approach for 

selecting grantees for administrative in-depth reviews. In 2007, EPA plans 

to use a statistical approach to select grants for programmatic in-depth 

reviews. When the statistical approach is fully implemented, it should 

significantly reduce the percent of grantees reviewed, according to an 

agency official. Furthermore, the statistical approach will enable the 

agency to project results among various types of grantees. EPA also began

incorporating transaction testing into administrative desk reviews in 2006

because it found that administrative desk reviews were not otherwise 

yielding adequate financial information about grantees. 

While EPA has improved its in-depth monitoring, the Office of Grants and 

Debarment has found that staff do not always take corrective actions, or

 30GAO-03-846. 

Page 20 GAO-06-625 Grant Reforms
document actions taken, to address findings identified during this 

monitoring. The office found that corrective actions were documented for 

only 55 percent of the 269 problems identified through administrative and 

programmatic reviews. We reported similar results in August 2003. 

According to an Office of Grants and Debarment official, while some EPA 

staff took corrective actions, they did not document those actions in EPA’s 

grantee computer database. Until this problem is addressed, the Office of 

Grants and Debarment will not be able to fully assess the extent to which 

corrective actions have or have not been taken to address identified 

grantee problems. Without these assessments, EPA cannot be assured that 

grantees are in full compliance with the terms and conditions of their 

grants. 

Ongoing monitoring is critical because, in contrast to in-depth monitoring, 

it is conducted on every grant at least once a year throughout the life of 

the grant, and the results are used to determine whether the grantee is on 

track to meeting the terms and conditions of its grant agreement. EPA’s 

grant specialist and project officer manuals—used as training tools for 

EPA staff involved in grants—emphasize that staff should properly 

document grant monitoring activities to maintain an official agency

record. Agency officials state that proper documentation of monitoring is 

necessary to ensure that third parties—such as other EPA staff who 

assume responsibility for the grant or a supervisor—can fully understand 

and review the actions that have occurred during the project period. 

Moreover, a lack of documentation raises questions about the adequacy of

project officers’ and grant specialists’ ongoing monitoring of grantee 

performance. Despite the importance of documenting ongoing monitoring, 

the absence of documentation in grant files has been a long-standing 

problem that we reported on in 2003.

To conduct ongoing monitoring, EPA policy requires the following: 

Inadequate Documentation 

of Ongoing Monitoring 

Hinders Accountability 

• Grant specialists should ensure that administrative terms and conditions

of the grants are met and review the financial status of the project. The 

grant specialist is to speak with the project officer and the grantee at least 

annually during the life of the grant. 

• Project officers should ensure that programmatic award terms and 

conditions are being met, including ensuring that they have received

progress reports from the grantee. Project officers are also to speak with 

the grant specialists and the grantee at least annually during the life of the

grant. 

Page 21 GAO-06-625 Grant Reforms
According to the monitoring policy, the grant specialists and project 

officers must document the results of their ongoing monitoring in their 

grant files. 

Despite this policy, the lack of documented ongoing monitoring remains a 

problem. EPA’s recent internal reviews in program and regional offices 

demonstrate—as did our review in three regional offices—that EPA grant 

specialists and project officers still do not consistently document ongoing 

monitoring. In 2004 and 2005, the Office of Grants and Debarment found 

limited or incomplete documentation of ongoing monitoring in internal 

reviews it conducted in seven program and regional offices.31 In addition, 

self-assessments completed by 11 program and regional offices during this

period identified the same lack of documentation. Our analysis of these 

reviews indicates that several offices experienced recurring problems in 

2004 and 2005. For example, an August 2004 Office of Grants and 

Debarment internal review cited one regional office as having “very 

limited” documentation of ongoing monitoring; and in the following year, 

the regional office’s self-assessment found the same documentation 

problem with project officer files. 

Because of these documentation problems, two of the three regional 

offices we visited have committed to using checklists to document their 

ongoing monitoring. Regions 1 and 9 had implemented such checklists at 

the time of our review. As table 2 shows, however, of the 40 project officer 

and grant specialist files we reviewed in Regions 1 and 9, more than half of

the checklists were either missing, blank, or incomplete. 

 31The internal reviews were those based on the dates of the site visits which occurred in

2004 and 2005. 

Page 22 GAO-06-625 Grant Reforms
Table 2: Use of Ongoing Monitoring Checklist in Region 1 and 9 Grant Files for Two 

Programs 

Checklist status 

Project officer

file 

Grant specialist 

file

Missing or blank checklista14 3

Incomplete checklist 0 5

Complete checklist or checklist not yet 

applicableb

6 12

Total 20 20

Source: GAO analysis of EPA documents on selected wetland and nonpoint source grants awarded between January 1, 2004, through

June 30, 2005. See app. I. 

a

These files should have contained checklists documenting ongoing monitoring.

b

Checklists may legitimately be left blank until 1 year has elapsed assuming no grant activity occurred

that would warrant EPA staff to conduct monitoring. 

The water program office in Region 5 also developed a checklist for 

documenting ongoing monitoring but had not yet implemented it at the 

time of our review. Consequently, in Region 5, we examined other 

documentation of ongoing monitoring in the grant files and found similar 

omissions. None of the six files requiring annual contact with the 

grantee—three grant specialist files and three project officer files—had 

documentation showing that this contact had occurred. 

In the three regions, we also found that project officers’ files did not 

always contain grantees’ progress reports, which can be required 

quarterly, semiannually, or annually, as defined by an individual grant’s 

terms and conditions. Thirteen of the 32 project officer grant files we 

reviewed in these regions were missing at least one or more progress 

reports required by the grant’s terms and conditions. According to EPA’s 

project officer manual, progress reports are the project officer’s primary 

mechanism for determining if the grantee is fulfilling its grant agreement 

obligations. In general, progress reports should contain information that 

compares grantee progress with the stated grant objectives, identify 

problems with meeting these objectives, and state the reasons for those 

problems. While the submission of progress reports is clearly the grantee’s

responsibility, it is also the project officer’s responsibility to work with the 

grantees to ensure that they provide their progress reports in accordance 

with the terms of the grant. When EPA staff do not obtain progress 

reports, they cannot monitor effectively, which may hinder accountability. 

In the three regions we visited, the lack of documentation for ongoing 

monitoring occurs because of weaknesses at the staff, supervisory, and 

Page 23 GAO-06-625 Grant Reforms
management level. First, grant specialists and project officers do not 

consistently document key monitoring efforts. For example, several staff 

stated that they had not printed out their e-mail correspondence with 

grantees or recorded those contacts in the official grant files. Other staff 

cited their workload as a reason for not documenting monitoring. Lack of 

documentation also occurs because grant specialists and project officers 

rely on other staff with technical expertise, known as “technical contacts,” 

to assist with ongoing monitoring, and these technical contacts may not 

provide the documented results of their monitoring for inclusion in the 

grant file. We found this situation had occurred in two of the three regions 

we visited. For example, one administrative project officer—a project 

officer who maintains files but is not necessarily knowledgeable about the 

technical aspects of the project—had asked for key monitoring 

documentation from a technical contact, who did not provide it. The 

technical contact had the monitoring documents in his work area and said 

he would routinely provide them to the project officer in the future. 

Second, the lack of ongoing monitoring documentation may occur, in part,

because supervisors do not always effectively review grant files for 

compliance with grant policies. According to staff we interviewed in the 

three regions, to their knowledge, their supervisors had not reviewed their

files to assess compliance with the agency’s monitoring policies, which 

could contribute to the lack of documentation. A regional project officer 

told us that he would have completed the ongoing monitoring checklist if 

his regional program supervisor had made it a priority. In another region, 

officials told us that some supervisors do review some files, but they do 

not have enough time to review every file. 

In contrast, supervisory review can contribute to complete documentation

of ongoing monitoring. For example, Region 5 was cited as having 

“excellent” documentation for ongoing monitoring in an Office of Grants 

and Debarment 2003 internal review. According to the EPA supervisor in 

Region 5 at the time of the 2003 review, she had notified staff that she 

would review their grant files to assess compliance with EPA policy for 

ongoing monitoring, among other things. She believes that her review 

contributed to the region’s excellent rating. 

Third, senior EPA managers in the regions do not always ensure that their 

commitments to improve monitoring documentation are being met. For 

example, in the post-award monitoring plans submitted to the Office of 

Grants and Debarment for two of the EPA regions we visited, the plans 

stated that the regions would place a checklist in the grant specialist and

project officer files documenting ongoing monitoring activities. Although 

Page 24 GAO-06-625 Grant Reforms
the two regions developed the checklists, more than half of the checklists 

we reviewed were missing, blank, or incomplete. This occurred, in part, 

because senior managers did not ensure that the commitments they made 

were met in their post-award monitoring plans.

Despite the importance of ongoing monitoring, EPA has not created a 

performance measure for documenting ongoing monitoring that would 

underscore its importance to managers and staff. Furthermore, EPA’s 

Integrated Grants Management System has a field for recording 

information about ongoing monitoring that could enable the agency to 

systematically identify whether this monitoring is documented 

agencywide, but recording this information is optional. Establishing a 

performance measure and/or requiring the entry of information could 

enhance accountability for implementing the monitoring policy. 

As part of its grant reforms, EPA incorporated grant closeout into its 

monitoring policy and its Grants Management Plan.

32 During closeout, 

EPA ensures that the grant recipient has met all financial requirements 

and provided final technical reports, and ensures that any unexpended 

balances are “deobligated” and returned to the agency. Delays in closing 

out the grant can unnecessarily tie up obligated but unexpended funds that 

could be used for other purposes. Furthermore, according to EPA’s 

closeout policy, closeout becomes more difficult with the passage of time 

because persons responsible for managing various aspects of the project

may resign, retire, or transfer; and memories of events are less clear. 

The monitoring policy states that the agency is committed to closing out 

grants within 180 days after the end of the grant’s project period. Under its 

monitoring policy, EPA provides 180 days for closeout because (1) 

grantees—by regulation and policy—have up to 90 days after the grant 

project period to provide all financial and technical reports;33 and (2) by 

policy, agency staff—grant specialists and project officers—have 90 days 

to review grantee information and certify that financial and technical 

requirements have been met. Following certification, the grant specialist 

closes out the grant with a letter to the grantee stating that the agency

EPA Has Reduced Its 

Closeout Backlog, but 

Grant Closures Are Often 

Delayed and Sometimes 

Improperly Carried Out 

 32EPA has had a closeout policy in effect since 1992. See EPA, EPA Closeout Policy for 

Grants and Cooperative Agreements, GPI-92-04 (Aug. 27, 1992). 

3340 C.F.R. § 31.50 (grants to state and local governments); 40 C.F.R. § 30.71 (grants to 

nonprofit organizations). Each regulation grants EPA authority to extend the deadline 

upon the grantee’s request. 

Page 25 GAO-06-625 Grant Reforms
closed out the grant. EPA’s Grants Management Plan identified measures 

with targets that were developed to assess EPA’s closeout performance. 

In reviewing EPA’s management of grant closeouts, we found that EPA (1) 

has effectively reduced its historic backlog of grants due for closeout; (2) 

does not always close out grants in a timely way—within 180 days after 

the project period ends, as required by agency policy; and (3) does not 

always close out grants properly based on the regional files we reviewed. 

In the past, EPA had a substantial backlog of grants that it had not closed 

out. EPA reported that by 1995, the agency had amassed a backlog of over 

18,000 completed grants that had not been closed out from the past 2 

decades. In fact, EPA had identified closeout, among other things, as a 

material weakness—an accounting and internal control weakness that the 

EPA Administrator must report to the President and Congress.34 As we 

reported in 2003, however, EPA improved its closeout of backlogged 

grants, eliminating backlog as a material weakness. Specifically, for fiscal 

year 2005, using its historic closeout performance measure, EPA reported 

that it had closed 97.8 percent of the 23,162 grants with project end dates 

between the beginning of fiscal year 1999 and the end of fiscal year 2003. 

EPA came close to its 99-percent target of closing out this backlog. 

EPA developed a second closeout performance measure—which we call 

the current closeout performance measure—to calculate the percent of 

grants with project end dates in the prior fiscal year that were closed out 

by the end of the current fiscal year (September 30). For example, as table 

3 shows, EPA closed out 79 percent of the grants with project end dates in 

fiscal year 2004 by the end of reporting fiscal year 2005 (September 30, 

2005) but did not meet its performance target of 90 percent. 

EPA Has Effectively Reduced 

Its Historic Closeout Backlog 

EPA Does Not Always 

Close Out Grants in a 

Timely Manner 

 3431 U.S.C. § 3512. 

Page 26 GAO-06-625 Grant Reforms
Table 3: EPA’s Current Closeout Performance Target Compared with Percent EPA Reported as Meeting That Target, 

Reporting Fiscal Years 2003-2005 

Reporting fiscal year Project end dates

Current closeout

performance target 

(percent)

Percent of grants meeting the 

current closeout performance 

target

2003 (baseline) 10/01/2001 through 9/30/2002 90 83

2004 10/01/2002 through 9/30/2003 90 85

2005 10/01/2003 through 9/30/2004 90 79

2006 10/01/2004 through 9/30/2005 90 Data will be available

 in October 2006

Source: EPA documents. 

Note: The reporting fiscal year reflects grants that had project period end dates from the prior year. 

EPA’s current closeout performance measure does not calculate whether 

EPA closed the grant within 180 days. Rather, this measure only reports 

whether EPA closed the grant by the end of the following fiscal year (the

fiscal year in which it reports on closeouts—the reporting year). The 

measure, in fact, can allow for a much more generous closeout time, from 

183 days beyond the 180 days to as much as 547 days (18 months) beyond 

the 180 days—because EPA does not report the performance measure 

until September 30, the end of the current fiscal year, as shown by 

hypothetical examples in table 4. 

Table 4: Minimum and Maximum Times Allowed under EPA’s Current Closeout Performance Measure 

Time allowed under

policy beyond 180 days 

for grant closeouts 

Project period

end date

Closeout due date (180 

days allowed after 

project ends)

Reporting date for

performance measure 

Number of days elapsed

between the closeout due 

date and the reporting date

Minimum time Sept. 30, 2004 Mar. 31, 2005 Sept. 30, 2005 183 (6 months)

Maximum time Oct. 1, 2003 Apr. 1, 2004 Sept. 30, 2005 547 (18 months)

Source: GAO.

Note: EPA routinely waits about 1 month after the end of the fiscal year—in this case, until October 

2005—to allow sufficient time for end-of-fiscal year data to be entered into its system. 

EPA’s current performance measure for closing out grants is a valuable 

tool for determining if grants were ultimately closed out. However, we 

believe that this performance measure—taken alone—is not a sufficient 

way to measure closeout because it does not reflect the 180-day standard 

specified in EPA policy.

To determine the percentage of grants that were closed within 180 days, 

we examined EPA’s analysis of closeout time frames for regional offices,

Page 27 GAO-06-625 Grant Reforms
headquarter offices, and agencywide. As table 5 shows, EPA is having 

significant difficulty in meeting the 180-day standard. 

Table 5: Percent of Grants Closed Out Agencywide and for Program and Regional Offices, by Length of Time to Closeout, 

Fiscal 2005 Reporting Year 

Percent of grants closed out

Regional offices 

Length of time to closeout

for projects ending in fiscal 

year 2004 Agencywide Program offices 1 2 3 4 5 6 7 8 9 10

On time (0-180 days) 37 35 30 26 51 43 16 49 44 45 32 52

Late (181-270 days) 19 15 26 9 26 31 9 15 29 28 21 18

Significantly late (271+ days) 25 34 40 14 21 17 14 21 18 27 26 20

Not closed 19 16 4 51 2 9 61 14 9 1 21 10

Total 100 100 100 100 100 100 100 100 100 100 100 100

Source: GAO analysis of EPA information from EPA’s Grant Information and Control System database, as of December 31, 2005. 

Note: Totals may not add up to 100 due to rounding. 

As the table shows, agencywide, only 37 percent of grants with project end 

dates in fiscal year 2004 were closed out within 180 days, 25 percent were 

significantly late—at least 3 months beyond the 180-day standard, and 19 

percent were not closed.

Table 6 shows that EPA’s current performance measure is masking the 

fact that the agency is having significant difficulty in closing out grants 

within 180 days. 

Page 28 GAO-06-625 Grant Reforms
Table 6: Comparison of EPA’s Performance against the Current Closeout Measure

and the 180-Day Standard, Fiscal 2005 Reporting Year 

Percent of grants meeting the current measure and

180-day standard

Unit 

Current closeout performance 

measure 180-day standard

Agencywide 79 37

Program offices 81 35

Region 1 96 30

Region 2 49 26

Region 3 97 51

Region 4 91 43

Region 5 37 16

Region 6 85 49

Region 7 90 44

Region 8 99 45

Region 9 76 32

Region 10 89 52

Source: EPA data. 

Notes: For the current closeout performance measure, GAO’s analysis of information from EPA’s 

Grant Information and Control System database, as of November 30, 2005; for the 180-day standard,

GAO’s analysis of information from EPA’s Grant Information and Control System database, as of 

December 31, 2005. 

In guidance on preparing the annual post-award monitoring plans, the 

Office of Grants and Debarment has indicated that agency offices should 

use the agency’s current closeout performance measure—90 percent of 

the grants with project end dates in the prior fiscal year—as the closeout 

goal.35 In effect, as a regional grants management office manager stated, 

the performance measure, not the 180-day standard, is the target EPA is 

working toward for closing out grants. 

At the regional level, our analysis of closeout data for the wetland and 

nonpoint source grant programs indicates that grants were closed out late

because of (1) grantee delays and/or (2) internal delays within the agency.

We reviewed 34 closed grants in three regions. First, as table 7 shows, 

 35EPA, Office of Grants and Debarment, Grants Administration Division, Guidance for 

Preparation of 2005 Post-Award Management Plans (Nov. 8, 2004). 

Page 29 GAO-06-625 Grant Reforms
grantees often submit their final financial and technical reports after the 

90 days that they are allowed.36

Table 7: Length of Time It Took Grantees to Deliver Final Financial and Technical 

Reports for Two Grant Programs in Regions 1, 5, and 9

Days for grantees to deliver final reports Number of grants

1-90 days (on time) 9

91-180 days 10

181-270 days 6

271-450 days 4

451 + days 1

Report missing from file or date of receipt could not be 

determined 

4

Total 34

Source: GAO analysis of EPA documents on selected wetland and nonpoint source grants for grants closed out between January 1,

2004, and June 30, 2005. 

Note: Technical reports and financial reports are submitted separately. Our analysis is based on the 

date of the last report submitted.

According to regional staff, different types of grantees may be submitting 

their reports late for different reasons. Specifically: 

• States do not always provide their final technical and financial closeout 

reports on time. The states may not be on time because, for example, they 

(1) are understaffed; (2) are awaiting the completion of work conducted 

by sub-grantees or subcontractors—which can be legitimately delayed 

because of weather conditions that affect the project’s progress; or (3) 

consider closeout a lower priority than applying for new grants. 

Furthermore, states do not believe there will be any consequences if they 

submit final reports late because their grants are for continuing

environmental programs. 

• Tribes may submit their final reports late because of high turnover among 

tribal staff and limited organizational capacity, and because tribal 

councils, which meet intermittently, must approve the reports. 

 36The financial and technical reports are key, but not the only, documents required to

closeout a grant. Other documents may include the (1) Lobbying and Litigation 

Certification Form and (2) Minority Business Enterprise/Women Business Enterprise 

report. 

Page 30 GAO-06-625 Grant Reforms
While grantees are responsible for providing final reports within 90 days, 

EPA staff are responsible for working with the grantees to ensure that the 

reports are received on time. Under EPA’s 1992 closeout policy, grant 

specialists must notify grantees 90 days before the project end date that 

final reports will be due 90 days thereafter. However, we found that 

regional staff do not always send out these letters. For example, Region 5 

adopted the practice of reminding grantees 45 days before the project end 

date because the grants management office believes that the 90 days is too 

long in advance to be effective. However, several Region 5 grant 

specialists stated that their workload is also preventing them from sending 

out the 45-day letter to grantees. 

According to EPA’s closeout policy, if a grantee is late with the final 

financial or technical report, the region should send reminder letters that 

escalate in tone as time progresses. In Region 1, for example, if the grantee 

does not submit its materials within 90 days, the grants management office

sends a letter asking that the grantee contact its grant specialist to discuss 

the reasons for the overdue reports; if the region does not receive the 

reports within 120 days after the project has ended, the grants

management office sends a certified letter that more strongly calls for the 

submission of these required reports. 

When these letters do not result in grantee compliance, regional staff and

managers told us that they have no realistic option for taking strong action 

against states that are late—such as withholding money—because these 

grantees have continuing grants for environmental programs. 

Second, late closeouts result from a variety of internal agency delays. As 

shown in table 8, of those files that had information that we could use to

determine the dates the reports were submitted, regional staff closed out

about half within the 90 days provided for in EPA guidance. For 9 of the 30 

files that had this report information, it took the project officers or the 

grant specialists over 180 days to close out the grant after receiving the 

final reports from the grantees. 

Page 31 GAO-06-625 Grant Reforms
Table 8: Length of Time Elapsed for Grants Management Offices to Close Out

Grants after Grantee Provides Final Reports for Two Grant Programs, Regions 1, 5,

and 9

Days from receipt of final report from

grantee to closeout Number of grants

1-90 days 14

91-180 days 7

181-270 days 3

271-450 days 2

451 + days 4

Report missing from file or date of receipt could 

not be determined 

4

Total 34

Source: GAO analysis of EPA documents on selected wetland and nonpoint source grants for grants closed out between January 1,

2004, and June 30, 2005. 

For grant closeouts, generally, regional staff often cited workload as a 

factor contributing to delays in agency closeout. Delays also occurred 

because of peak workload periods during the year, such as the fourth 

quarter of the fiscal year, when regions generally give priority to awarding 

new grants. Officials in the three regions we visited also told us that they 

have transferred or will transfer the administrative and financial functions

of grants closeout to EPA’s Las Vegas Finance Center, which should 

reduce the grant specialists’ workload, allowing them to focus on other 

aspects of grants management. 

Regional practices also may have contributed to delays in two of the three 

regions we reviewed. Region 5 had two practices that contributed to 

delays in closing out grants. First, the region uses technical contacts to 

assist with monitoring the wetland and nonpoint source grant programs, 

including closeouts. The project officer first reviews the grantee’s final 

reports to ensure they are complete and then asks the technical contact to

comment on specific points and certify in writing that technical 

requirements have been met. The project officer then certifies in writing to 

the grant specialist that the grantee has met programmatic terms and 

conditions and, from that perspective, the grant can be closed out. 

Regional staff stated that in certain cases the added step of getting signoff 

by the technical contact resulted in closeout delays because the technical 

contact did not always review the grantee’s final reports in a timely way. 

Second, to address its closeout problem, the region’s grants management 

office attempted an administrative change to expedite closeout—having a 

Page 32 GAO-06-625 Grant Reforms
single grant specialist manage closeout. When this approach did not prove 

effective, the region returned to its practice of having the original grant 

specialists responsible for closing out grants. According to regional staff,

the transition to and from this process exacerbated delays in grant 

closeouts. The original grant specialists had other grant work and waited 

until that work was completed before closing out the grants that were 

returned to them. Region 5 had the lowest percentage of grants closing out

within 180 days for all its programs among EPA’s 10 regions (16 percent 

for fiscal year 2005 as shown in table 5). 

Region 9 had delayed closures for continuing nondiscretionary grants, in 

part, because of a practice, discontinued in November 2004, of routinely 

carrying over unspent funds from these grants. That is, the region would 

not close out a grant until it had awarded a new grant. The unspent funds 

from the old grant would then be processed as an amendment to the new 

grant, in order to allow grantees to keep their unspent funds. For example, 

one state nonpoint source grant was closed 278 days beyond the 180 days 

because the project officer had asked the grant specialist to carry over 

$426,000 in unspent funds to the following year’s grant. 

Overall, a combination of grantee lateness and internal inefficiencies 

contributed to late closeouts. For example: 

• In Region 5, it took 795 days—615 days beyond the 180-day standard—to 

close out a 2-year wetland grant for $56,778. The grantee submitted the 

final financial status report 114 days late because a key grant contact had 

died. However, it took the region an additional 591 days after the grantee 

provided the final reports to close out the grant. According to the grant 

specialist, closeout was delayed, in part, because of internal administrative

delays and because the grant was “lost” under a stack of other closeout 

files. 

• In Region 1, closure of a nonpoint source grant that provided $796,532 

over 10 years was delayed primarily because of a lack of documentation. 

According to the project officer who inherited the file from a retiring 

employee, the file had unusually poor documentation, with no assurance 

that the grant’s terms and conditions had been met. Moreover, the state 

employee who assumed responsibility for the grant could not locate all the 

reports detailing how the grant money had been used. Consequently, it 

took the project officer nearly 5 months beyond the allotted 180 days to 

review available information, ascertain that grant activities had been 

completed, and close out the grant. 

Page 33 GAO-06-625 Grant Reforms
According to some of the project officers and grant specialists staff with 

whom we spoke, the 180 days allowed for closeout in EPA’s policy is a 

reasonable amount of time. Moreover, some staff said that if more days 

were allowed, EPA might take longer. As noted in the closeout policy, as 

more time passes and the original grant specialists and project officers 

move on, it becomes more difficult to close out a grant. Finally, one 

regional official pointed out that if the deadline for closeout were 

extended, then unexpended funds would go unused for longer periods of 

time, which would tie up funds that could have been used for other 

purposes. 

We note, however, that EPA still has a 1992 closeout policy that is not 

consistent with its current monitoring policy. Specifically, although both 

the 1992 closeout policy and the monitoring policy state that closeout 

should occur within 180 days after the end of the project period, the 1992 

policy also states that closeout should occur within 180 days after receipt

of all required reports and other deliverables. This aspect of the 1992 

policy could be construed to mean that EPA has up to 270 days to close 

out grants since grantees have up to 90 days to submit their reports. Office 

of Grants and Debarment officials stated that EPA has formed a work 

group to review its monitoring and closeout polices. As part of its review, 

the office plans to examine this inconsistency and the reasonableness of 

the 180-day closeout requirement. It expects to revise these policies in 

2006. 

Adding to the agency’s closeout problems, 8 of the 34 closed grants we 

reviewed in the regions were not closed out properly. Specifically: 

Grants Were Not Always 

Closed Out Properly 

• Region 1 grant specialists had not adequately reviewed the indirect cost 

rate grantees submitted as part of their final financial status report which, 

in turn, led to improper closeout in 5 of the 10 files we reviewed. 

Reviewing the files’ final financial report checklist, we found instances in

which the question on the checklist that addresses indirect cost rates had 

been left blank or had been answered incorrectly. This problem occurred, 

in part, because the grant specialists did not adequately review the work of 

student interns who initially reviewed the financial status reports and 

completed the checklists. These “noncore” employees were used to help

reduce the grant specialists’ workload and the grant specialists were 

expected to review their work before they signed off on the checklist. 

• In Region 5, one grant specialist’s file was missing the final financial status

report, which is a key report that describes how the grantee spent the 

Page 34 GAO-06-625 Grant Reforms
grant funds and whether any unspent funds remain that need to be 

deobligated.

• In Region 9, Lobbying and Litigation Certification Forms—whose purpose 

is to ensure that federal dollars are not spent for lobbying or litigation 

activities—were missing from two grant files. After waiting some time, the 

grant specialist decided to close out the grants without the forms. The 

grant specialist manual states that grant specialists are responsible for 

notifying the grants management office if the grantee has not complied 

with this certification requirement. 

EPA’s guidance states that inadequate file documentation, among other 

things, (1) violates the file management requirement that all significant 

actions must be documented, (2) provides an incomplete historical record

of a grant project, (3) prevents staff from substantiating facts if a dispute

arises, and (4) creates the appearance of poor grant administration and 

oversight.37 Furthermore, the guidance specifically states that the file 

should include evidence of closeout, including the final report or product. 

In Region 1, we also identified an accountability concern when grants 

were closed out by administrative project officers. An administrative 

project officer for a Performance Partnership Grant had not always 

received written approval from the technical contacts, who evaluated 

grantee documents before the administrative project officer certified that 

the grantee had met all the terms and conditions of the grant. According to

a regional official, technical contacts at times tell the project officer that 

they have reviewed technical documents but do not provide written 

approval. Although the administrative project officer certified that 

grantees met their programmatic obligations, the administrative project

officer was “uncomfortable” doing so without written approval from 

technical contacts that they had reviewed final documents. 

As with monitoring, without effective supervisory review of the grant and 

project officer files, grants may be improperly closed out. With more 

effective supervision, grants would be more likely to be properly closed 

out. 

 37EPA, Grants Management Fact Sheet for Agency Leaders: Number 10: Assistance

Agreement File Documentation (May 1, 1998). 

Page 35 GAO-06-625 Grant Reforms
EPA has taken steps to obtain environmental results from its grants, but 

its efforts are not complete. First, EPA included a performance measure in

its Grants Management Plan for identifying expected environmental 

results in grant workplans. In 2004, EPA was far from meeting its 

performance target. Although EPA does not yet have final data for 2005,

EPA officials told us that their preliminary data indicate they are closer to 

meeting this performance target. Second, EPA issued an environmental 

results policy, effective in January 2005 that for the first time requires EPA 

staff to ensure that grants specify well-defined environmental outcomes.38

However, EPA’s current performance measure does not take into account 

the new criteria for identifying and measuring results from grants 

established by the policy. EPA acknowledges that it has not yet fully 

identified better ways to integrate the agency systems for reporting on the 

results of grants. While EPA has taken these positive steps, OMB’s 

evaluations of EPA grant programs in 2006 indicate that EPA must 

continue its concerted efforts to achieve results from its grants. 

The Grants Management Plan established a performance measure for 

identifying environmental outcomes from grants: the percent of grant 

workplans that discusses how grantees plan to measure and report on 

environmental outcomes.39 In 2004, EPA was far from meeting its 

performance target. Although EPA does not yet have final data for 2005, an 

EPA official told us that their preliminary data indicate that the agency is 

closer to meeting this performance target of 80 percent for 2005.40

EPA Has Initiated 

Actions to Obtain

Results from Grants, 

but Its Efforts Are Not 

Complete 

EPA Has Developed a 

Performance Measure and 

Issued a New Policy for 

Specifying Environmental 

Results 

 38EPA, EPA Order 5700.7: Environmental Results under EPA Assistance Agreements 

(Nov. 30, 2004). 

39The Grants Management Plan’s performance measure sets a target for the percentage of 

grant workplans, decision memorandum, and terms of conditions that will include a

discussion of how grantees plan to measure and report on environmental outcomes. 

However, an Office of Grants and Debarment official told us that, in practice, the grant 

workplan is assessed because it is the primary indicator of compliance with the policy. 

40EPA’s assessment of the implementation of this performance measure had not been

completed by the end of our review. 

Page 36 GAO-06-625 Grant Reforms
Table 9: Extent to Which EPA Met Its Target for the Percent of Grant Workplans with

Environmental Outcomes, 2003-2005 

Performance measure 

Calendar year Percent target

Percent of grant workplans

with environmental outcomes

2003 (baseline) Not applicable 31

2004 70 45

2005 80 Not yet available 

Source: EPA documents. 

EPA also issued an environmental results policy in 2004, which was 

effective in January 2005, or about 2 years later than proposed in the 

Grants Management Plan. The policy is promising in that—for the first 

time—it requires EPA staff to ensure that grant workplans specify welldefined environmental outputs (activities) and environmental outcomes 

(results), which enables EPA to hold grantees accountable for achieving 

them. However, planning for grants to achieve environmental results, and 

measuring results, is a difficult, complex challenge. As we have reported, 

while it is important to measure the results of environmental activities 

rather than just the activities themselves, agencies face difficulties in 

doing this.41 Environmental outputs are inherently easier to develop and 

report on than environmental outcomes. 

The policy is also promising because, among other things, it (1) is binding 

on managers and staff throughout the agency; (2) emphasizes 

environmental results throughout the grant life cycle—awards, 

monitoring, and reporting; and (3) requires that grants be aligned with the 

agency’s strategic goals and linked to environmental results. 

To align grants with the agency’s strategic goals and link the grants to 

results, the policy requires for the first time that EPA program offices 

ensure that (1) each grant funding package includes a description of the 

EPA strategic goals and objectives the grant is intended to address and (2) 

the offices provide assurance that the grant workplan contains welldefined outputs and, to the “maximum extent practicable,” well-defined 

outcome measures. Outcomes may be environmental, behavioral, healthrelated, or programmatic in nature, and must be quantitative. EPA 

included the provision to “the maximum extent practicable” in the policy 

 41GAO-03-846. 

Page 37 GAO-06-625 Grant Reforms
because it recognized that some types of grants do not directly result in 

environmental outcomes. For example, EPA might fund a research grant 

to improve the science of pollution control, but the grant would not 

directly result in an environmental or public health benefit. In June 2005, 

the EPA Inspector General found that the agency’s results policy was 

generally consistent with leading nongovernmental organizations that fund

environmental projects and that emphasize grants performance 

measurements.42

EPA’s performance measure and the new results policy are positive steps, 

but the agency’s efforts to address results are not yet complete. Although 

EPA has issued an environmental results policy, its current performance 

measure does not take into account the new criteria for identifying and

measuring results. EPA has identified the following seven criteria that 

grant agreements should meet and is using these seven criteria as the basis 

for assessing the implementation of the policy.43 That is, the agreements 

should 

Efforts to Obtain Results 

from Grants Are Not Yet 

Complete 

• include a description of how the grant is linked to EPA’s Strategic Plan, 

• specify at least one EPA goal and its related objective that the project 

addresses, 

• identify the appropriate program results code—a code applied to new 

grant awards that aligns the grant with EPA’s strategic goals and 

objectives, 

• include an assurance that the program office has reviewed the workplan 

and that the workplan includes well-defined outputs and outcomes, 

• include a requirement for performance reports from recipients, 

• include well-defined outputs in the workplans, and 

• include well-defined outcomes in the workplans. 

 42EPA, Office of Inspector General, EPA's Efforts to Demonstrate Grant Results Mirror

Nongovernmental Organizations' Practices, Report No. 2005-P-00016 (June 2, 2005). 

43EPA plans to complete its first review of the implementation of the new environmental 

results policy based on these seven criteria in 2006. 

Page 38 GAO-06-625 Grant Reforms
According to an Office of Grants and Debarment official, the results policy 

calls for outcomes that are not only well defined but that also include 

quantitative measures. However, recognizing the difficulty and complexity 

posed by applying such measures, the official said, for the purposes of 

assessment, EPA modified its criteria to include well-defined outcomes 

with or without quantitative measures. 

Since EPA has adopted new criteria for assessing environmental results 

from grants based on its environmental results policy, its current 

performance measure—the percentage of grant workplans that discuss 

how grantees plan to measure and report on environmental outcomes—

may not be sufficient to assess the implementation of the policy. EPA’s 

current performance measure does not take into account the new criteria 

for identifying and measuring results from grants established by the policy. 

Establishing a new performance measure and target to reflect the new 

policy would enhance EPA’s ability to assess the agency’s effectiveness in 

implementing the policy.

In addition, EPA continues to face difficulties in ensuring that its grants 

are achieving public health and environmental results. Specifically, EPA 

acknowledges that it has not yet fully identified better ways to integrate 

the agency systems for reporting on the results of grants. EPA does not 

have a systematic way of collecting information about the results of its 

grants agencywide. As stated in the results policy, the Office of Grants and 

Debarment convened a workgroup to (1) examine existing EPA systems 

for collecting results from grant programs, (2) identify better ways to 

integrate these systems, and (3) potentially amend the policy to reflect its 

findings. The workgroup has begun an inventory of existing EPA systems. 

Until recently, EPA recognized—but had not addressed in its results 

policy—the known complexities of measuring environmental outcomes: 

(1) demonstrating outcomes when there is a long lag time before results 

become apparent and (2) linking program activities with environmental 

results because of multiple conditions that influence environmental 

results. In April 2006, the Office of Grants and Debarment provided an

online training course for project officers on environmental results with 

guidance on how to address these measurement complexities. 

Furthermore, OMB has found that EPA has problems in demonstrating 

results from its grants. Using its Program Assessment Rating Tool (PART), 

OMB annually evaluates federal programs in four critical areas of 

Page 39 GAO-06-625 Grant Reforms
performance: program purpose and design, planning, management, and 

results, each scored from 0 to 100.44 OMB combines these scores to create 

an overall rating: effective, moderately effective, adequate, and ineffective. 

In addition, programs that do not have acceptable performance measures 

or have not yet collected performance data generally receive a rating of 

“results not demonstrated.” As table 10 shows, the PART ratings have 

found that some of EPA’s programs are “ineffective” or “results not 

demonstrated,” although there has been some improvement from 2004 

through 2006.45

Table 10: Combined OMB PART Ratings of EPA Grant Programs, 2004-2006 

Number of grant programs by combined rating

Year 

Moderately

effective Adequate Ineffective 

Results not

demonstrated Total

2004 0 2 0 8 10

2005 0 9 2 5 16

2006 1 12 3 2 18

Source: OMB documents. 

Despite this progress, a closer examination of the ratings for 2006 

indicated that, with one exception, the scores for the results component 

were lower than the scores given to other components. (See table 11). 

 44Although we are using OMB information, we have identified concerns about OMB’s PART. 

See GAO, Performance Budgeting: OMB’s Performance Rating Tool Presents 

Opportunities and Challenges for Evaluating Program Performance, GAO-04-550T 

(Washington, D.C.: Mar. 11, 2004). OMB’s reviews can occur about a year before they are

reported as part of the President’s budget. 

45These assessments, which were part of the President’s fiscal year 2005 to 2007 budget 

submissions, were published in February 2004, 2005, and 2006, respectively. 

Page 40 GAO-06-625 Grant Reforms
Table 11: OMB PART Scores for All Components of the Combined Rating, Fiscal Year 2006 

Component scores (0 to 100) 

Grant program 

Program purpose and 

design Planning Management Results

Air Quality Grants and Permitting 60 44 77 13

Alaska Native Villages 100 50 11 7

Brownfields Revitalization 100 50 90 17

Clean Water State Revolving Fund 100 50 78 26

Drinking Water State Revolving Fund 100 63 89 33

Endocrine Disruptors 80 70 91 26

Environmental Education 60 75 90 13

Lead-Based Paint Risk Reduction Program 100 78 77 72

Leaking Underground Storage Tank Cleanup Program 100 75 100 42

Nonpoint Source Pollution Control Grants 80 88 100 40

Ocean, Coastal, and Estuary Protection 100 44 85 27

Pesticide Enforcement Grant Program 100 63 89 8

Pesticide Field Programs 80 13 44 13

Public Water System Supervision Grant Program 100 75 78 17

Tribal General Assistance Program 100 50 78 25

U.S.–Mexico Border Water Infrastructure 100 63 89 20

Underground Injection Control Grant Program 100 75 89 17

Water Pollution Control Grants 60 75 89 40

Source: OMB document. 

While EPA has taken positive steps, OMB’s 2006 assessment indicates that

EPA must continue its concerted efforts to achieve results from its grants. 

EPA has taken steps to manage grants staff and resources more effectively 

in four key areas: (1) analyzing workload; (2) providing training on grant 

policies; (3) assessing the reliability of the agency’s grants management 

computer database—the Integrated Grants Management System; and (4) 

holding managers and staff accountable for successfully fulfilling their 

grant responsibilities. Because much remains to be accomplished, 

management attention to these issues is still needed. 

EPA Has Taken Steps 

to Manage Grants 

Staff and Resources 

More Effectively but 

Still Faces Major 

Management 

Problems 

Page 41 GAO-06-625 Grant Reforms
As we reported in 2003 and found again in this review, regional grants 

managers and staff are concerned that staff do not have sufficient time to

devote to effective grants management. They pointed out that the new 

policies increased the time needed to implement each step of the grants 

process, such as the more planned, rigorous approach now required for 

competing grants. However, one regional official pointed out that this 

increased workload has not been offset with an increase in resources or 

the elimination of other activities. 

Fulfilling an objective identified in the Grants Management Plan, in April 

2005, an EPA contractor completed a workload analysis of project officers 

and grant specialists.46 The analysis showed that EPA had an overall 

shortage of project officers and grant specialists, expressed in full-time 

equivalents. However, the contractor recommended that before EPA adds 

staff, it take steps to improve the effectiveness and efficiency of its grants 

management operations. For example, the contractor recommended that

EPA review its grant activities and assign “noncore” activities where 

possible to auxiliary federal or nonfederal staff to improve operations, 

freeing EPA staff to conduct their core work. It defined noncore activities 

to typically include those that are related to grant closeouts. 

The Office of Grants and Debarment asked the grant offices to prepare 

project officer workforce plans—due in 2006—that incorporate the 

workload analysis to promote “accountable” grants management. 

EPA Is Examining Grants 

Staff Workload 

EPA Has Provided Some 

Training on Grant Policies 

As outlined in the Grants Management Plan, EPA has developed a longterm grants management training plan.

47 Under the plan, EPA continues to 

certify project officers for grant activities by requiring them to take a 3-day

project officer course before they are allowed to conduct grant 

management activities, and thereafter take a refresher course to maintain

their certification. 

To address the grant reforms, the agency provided additional training. For 

example, EPA held a grants management conference in 2004, attended by

465 EPA staff, which included workshops on new policies. In 2005, the 

 46LMI Government Consulting, Management of Assistance Agreements at the 

Environmental Protection Agency: Workload Analysis and Models, April 2005. 

47EPA, Office of Grants and Debarment, Long-term Grants Management Training Plan, 

2004-2008, EPA-216-R-04-001 (Washington, D.C.: Aug. 2004). 

Page 42 GAO-06-625 Grant Reforms
Office of Grants and Debarment conducted agencywide training on the 

new competition policy. It also conducted training on the environmental 

results policy. 

However, according to EPA staff, the amount of training has not been 

sufficient to keep pace with the issuance of new grant policies. For 

example: 

• A 2006 self-assessment conducted by one program office found that 

project officers and managers expressed frustration that both the pace and 

complexity of new policy requirements left project officers vulnerable 

because they were not properly trained in the policies. 

• A 2005 Region 9 self-assessment found that the region’s project officers 

did not believe that they had received sufficient guidance from their 

programs in headquarters. 

• A Region 1 official stated that the rapid pace of new policies and brief lead

time between issuance and the effective date made it too difficult for the 

regions to adequately train staff on all the new policies related to grants

management. Nevertheless, Region 1 developed a training course for its 

project officers on the award process to address new grant reform policies 

issued in 2005. However, only about 25 of the region’s 200 project officers 

attended the optional 90-minute course, although there were three 

opportunities to do so. 

Regional officials also noted that the grant reforms are changing the skill

mix required of both project officers and grant specialists. According to a 

Region 5 official, the grant specialist was once a clerical position, but 

additional responsibilities required under the new grants policies indicates 

that a business degree or financial background would be helpful. Region 9 

officials told us that traditionally project officers had technical and 

scientific skills. However, the grant reforms had increased the need for 

interaction with grantees, which required more skills in oral 

communications, organization, and analysis. An Office of Grants and 

Debarment official explained the agency is weighing what should be 

considered as the right skill mix for agency staff involved in grant 

activities. 

Page 43 GAO-06-625 Grant Reforms
In 1997, EPA began developing the Integrated Grants Management System 

to better manage its grants, and EPA now also uses this database to inform 

the public and the Congress about its $4 billion investment in grants. Data

quality problems in this database could impair the agency’s ability to 

effectively manage grants and provide accurate information. In 2005, we

recommended that EPA conduct a comprehensive data quality review of 

its Integrated Grants Management System.48 EPA undertook a review, 

which it expects to be completed in 2006. 

EPA’s Grants Management Plan included an objective of establishing 

clear lines of accountability for grants management, including 

performance standards that address grants management responsibilities 

for project officers. As we reported in 2003, project officers did not have 

uniform performance standards; instead, each supervisor set standards for 

each project officer, and these standards may or may not have included 

grants management responsibilities. 

Later in 2003, EPA’s Assistant Administrator for the Office of

Administration and Resources Management asked all senior resource 

officials to review the current performance standards of all employees 

below the senior executive service who had grants management 

responsibilities.49 This review was to ensure that the complexity and extent

of these employees’ grants management duties were reflected in their 

performance standards and position descriptions. The Assistant 

Administrator asked senior resource officials to ensure that such 

standards were in place. The Office of Grants and Debarment is assessing 

the extent to which the guidance was implemented; the assessment is to 

be completed in May 2006. 

As we reported in 2003, the Office of Grants and Debarment faces some 

difficulties in holding managers and staff accountable for effective grants

management. The office does not directly oversee many of the managers 

and staff who perform grants management duties, particularly the 

approximately 2,100 project officers in headquarter and regional program 

EPA Has Developed a 

Grants Database but Has 

Not Completed a Data 

Quality Review 

EPA Has Taken Steps to 

Enhance Staff and 

Management 

Accountability, but 

Concerns Remain 

 48GAO-05-149R. 

49According to the memorandum, the Office of Administration and Resources Management

had determined that senior executive services standards adequately addressed grants 

management responsibilities. 

Page 44 GAO-06-625 Grant Reforms
offices. This division of responsibilities makes it more difficult to hold 

these staff accountable for grants management. 

In 2005, EPA’s Inspector General reported that EPA was not holding 

supervisors and project officers accountable for grants management.50

Specifically:

• EPA does not have a process to measure an individual project officer’s 

performance in carrying out grants management duties. In practice,

supervisors relied on project officers to inform them of grants 

management weaknesses. 

• EPA managers and supervisors are not discussing project officer grants 

management responsibilities during end-of-year evaluations. Managers 

were not discussing project officers’ grants management responsibilities 

during year-end evaluations; and, if grant issues were addressed, the 

discussion focused on the grant recipient’s performance, rather than on 

the project officer’s performance. Supervisors provided various reasons 

for rating project officers without discussing grants management 

responsibilities, stating, for example, that the year-end evaluation should 

focus on problems or issues with grantee performance, and project 

officers’ responsibilities should be discussed at staff meetings or at other 

times through the year. 

• EPA managers had not conveyed weaknesses from the agency’s internal 

reviews and self-assessments to project officers. EPA managers did not 

communicate weaknesses identified in internal reviews, such as a lack of 

documentation of cost reviews and ongoing monitoring, and supervisors 

were not aware of these identified weaknesses. 

Our review is consistent with the Inspector General’s findings. As 

previously discussed, EPA grants staff told us that their supervisors were 

not reviewing their grant files to determine compliance with grant 

monitoring policies. It is possible that the awarding, monitoring, and 

closeout problems we found would have been mitigated by effective 

supervisory review. 

 50EPA Office of Inspector General, EPA Managers Did Not Hold Supervisors and Project 

Officers Accountable for Grants Management, Report No. 2005-P-00027 (Washington, D.C.:

Sept. 27, 2005). 

Page 45 GAO-06-625 Grant Reforms
In response to the Inspector General’s concerns, EPA issued a plan in 

January 2006 to ensure that the agency’s new performance appraisal 

system—Performance Appraisal and Recognition System—addresses 

grants management responsibilities. The new system requires that (1) 

appraisals of project officers and supervisors/managers include a 

discussion of grants management performance; (2) performance 

agreements and associated mid-year and end-of-year performance 

discussions focus on key areas of preaward reviews of nonprofit grantees, 

competition, post-award monitoring, and environmental results; and (3) 

performance discussions take into account the results of internal reviews, 

such as those conducted by the Office of Grants and Debarment, selfassessments, and performance measure reviews. For the 2007

performance appraisal process, EPA plans to establish a workgroup to 

develop final performance measures to assess the grants management 

performance of project officers and supervisors and plans to incorporate 

these measures into 2007 performance agreements. 

More broadly, to address the growing demands of the grant reforms and 

enhance accountability, the Office of Grants and Debarment formed a 

senior-level grants management council that cuts across the organization

by including representatives from program offices, such as the Office of 

Water, and regional offices. The council is to help develop and implement 

new policies agencywide. Similarly, the regional offices we visited have 

formed grants management councils to coordinate and implement grant 

reforms with the region’s grants management office and various program 

offices.51

Despite the efforts of these various national- and regional-level offices, 

managers, and councils to identify problems and undertake corrective 

actions, some grants management problems still persist. For example, 

although some of the regions we visited had implemented checklists as 

internal controls to ensure the documentation of ongoing monitoring, the 

regions did not ensure they were actually completed. Closeout problems 

that were identified by EPA’s current performance measure have not been

effectively addressed. 

 51To further assist regional grants staff in understanding new policies, Regions 1 and 9

appointed a project officer and water program manager, respectively, to serve as regional 

office experts on grant policies.

Page 46 GAO-06-625 Grant Reforms
About 3 years into its Grants Management Plan, 2003-2008, EPA has 

made important strides in achieving its grant reforms, particularly in 

competing a higher percentage of grants and trying to identify results from 

its grants. However, EPA has not resolved its long-standing problems in 

documenting ongoing monitoring and closing out grants. As it revises its 

management plan, EPA has an opportunity to tackle these continuing 

problems. 

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 effectively review 

grant files; and managers are not always meeting their commitments to 

address known problems with lack of documentation. Despite the 

importance of ongoing monitoring, EPA has not created a performance 

measure and target for documenting monitoring, which should elevate the 

importance of ongoing monitoring to the agency. EPA is also not taking 

full advantage of its grants management database, which has a data field

for documenting ongoing monitoring. That is, EPA does not require 

project officers and grant specialists to enter monitoring documentation 

information into its database. With the information in the database, EPA 

would be better able to determine that staff are meeting documentation 

requirements. Use of performance measures and targets for ongoing 

monitoring as well as the database could enhance accountability. 

EPA’s current performance measure and target for closing out grants is a

valuable tool for determining if grants were ultimately closed out, but it is 

not a tool for determining whether grants were closed out within the 180-

days now specified in EPA’s monitoring policy. EPA needs an

accompanying measure that accurately reports whether grants are closed

out within the 180 days or other standard EPA may establish. EPA’s 

current measure and target mask the fact that, agencywide, almost twothirds of grants are not closed out within 180 days. A specific performance 

measure and target will enable EPA to oversee and manage the timeliness 

of grant closeout. We recognize that grantees’ late submission of required 

reports is a common problem that contributes to the lack of timeliness in 

closing out grants. Because fixing this problem on a case-by-case basis is 

difficult, the agency needs an overarching strategy to address it. 

Furthermore, in the three regions we visited, we found instances in which

appropriate documentation was missing from the closeout files. While we 

do not know the extent of this problem agencywide, these problems could 

Conclusions 

Page 47 GAO-06-625 Grant Reforms
indicate a major weakness that EPA may need to address. In responding to 

a draft of this report, EPA acknowledged that it does have a problem in 

closing out grants properly. Finally, we note that inconsistencies in EPA’s 

monitoring and closeout policies may hinder EPA’s ability to close out 

grants in a timely fashion. 

While EPA has made strides in trying to identify and obtain results from its 

grants by issuing an environmental results policy, it has not yet established 

a performance measure and target that reflect the policy’s direction. 

Finally, the lack of effective supervision may have contributed to the 

problems we identified. EPA has issued a plan in January 2006 to ensure

that the agency’s new performance system addresses grants management 

responsibilities. It is too early to tell whether this plan will effectively hold 

managers and staff accountable for grants management. 

As EPA revises its Grants Management Plan, the agency has an 

opportunity to strengthen the management of its grants. We recommend 

that the Administrator of EPA direct the Office of Grants and Debarment 

to take action in the following three areas: 

Ongoing monitoring. 

Recommendations 

• Develop a performance measure and a performance target for ongoing 

monitoring, and 

• Consider requiring project officers and grant specialists to document 

ongoing monitoring in the agency’s grants database so that the managers

can monitor compliance agencywide.

Grant closeout. 

• Establish a standard for the timely closeout of grants and ensure that 

EPA’s monitoring and other policies are consistent with that standard. 

• Develop a performance measure and target for the grant closeout 

standard. 

• Develop a strategy for addressing grantees’ late submission of required 

final documentation. 

• Issue revised policies and procedures to ensure proper closeout of grants. 

Page 48 GAO-06-625 Grant Reforms
Environmental results. 

• Develop a performance measure and target that better reflects the new 

environmental results policy. 

We provided a draft of this report to EPA for review and comment. We 

received oral comments from EPA officials, including the Director of the 

Office of Grants and Debarment. Overall, EPA officials agreed with our 

recommendations, and they stated that the agency has begun to take steps 

to implement them and will incorporate them into the agency’s and Grants 

Management Plan, policies, and procedures. In addition, EPA officials 

provided some clarifying language for our recommendations, which we 

incorporated as appropriate. Furthermore, EPA officials acknowledged 

that proper closeout of grants is an agencywide problem that needs to be

addressed. Based on this acknowledgement, we strengthened our 

recommendation to state that EPA needs to issue revised policies and 

procedures to better ensure the proper closeout of grants, rather than 

determine the extent of improper closeouts at the agency. EPA agreed. 

Finally, EPA provided additional information about the agency’s efforts to 

address the complexities of measuring environmental results and other 

clarifying comments, which we incorporated into this report, as 

appropriate.

As agreed with your office, unless you publicly announce the contents of

this report earlier, we plan no further distribution until 6 days from the 

report date. At that time, we will send copies of this report to the 

congressional committees with jurisdiction over EPA and its activities; the 

Administrator, EPA; and the Director, Office of Management and Budget. 

We will also make copies available to others upon request. In addition, the 

report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Agency Comments 

and Our Response 

Page 49 GAO-06-625 Grant Reforms
If you have any questions about this report, please contact me at (202) 512-

3841. Key contributors to this report are listed in appendix II. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. 

Sincerely yours, 

John B. Stephenson 

Director, Natural Resources and Environment 

John B. Stephenson 

Director, Natural Resources and Environment

Page 50 GAO-06-625 Grant Reforms
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

This appendix details the methods we used to assess the progress the 

Environmental Protection Agency (EPA) has made in implementing its 

grant reforms. 

To assess EPA’s progress, we reviewed information from both 

headquarters and the regions. At headquarters, we reviewed EPA’s Grants 

Management Plan, 2003-2008 and EPA policies that address awarding, 

monitoring, and obtaining results from grants. We also reviewed reports 

on EPA’s grants management, including prior GAO reports; EPA’s 

Inspector General reports; the Office of Management and Budget’s 

Program Assessment Rating Tool; EPA’s internal management reviews, 

including comprehensive grants management reviews, post-award 

monitoring plans, grants management self-assessments from 2003 to 2005; 

an April 2005 workload analysis conducted by LMI, a government 

consultant; and a closeout analysis prepared for GAO by the Office of 

Grants and Debarment. We also interviewed officials in the Office of 

Grants and Debarment and at the Office of Water. 

In addition, we reviewed EPA performance metric information. These 

metrics are based on data from the agency’s Integrated Grants

Management System, which is currently undergoing a data quality review, 

and the Grant Information and Control System, which has not undergone a 

data quality review. Given EPA’s ongoing data quality review of the 

Integrated Grants Management System—and because we present EPA’s 

performance metric data as documentary evidence and do not use it as the 

sole support for findings, conclusions, or recommendations—we did a 

limited reliability review of the two systems. Our assessment included (1) 

information from GAO’s prior data reliability assessment work on the two 

systems and (2) interviews with an Office of Grants and Debarment 

official about the data systems and data elements. We determined that the

performance information we used is sufficiently reliable for our purposes. 

To assess the progress and problems EPA has experienced from a regional 

perspective, we selected EPA Office of Water programs under the Clean 

Water Act, at the Subcommittee’s request. We selected Wetland Program 

Development Grants (wetland grants) because it is a discretionary grant 

program—that is, EPA decides who receives the award and its amount, 

and the program is subject to competition. We selected Nonpoint Source 

Management Program grants (nonpoint source grants) because it is type of

formula-based grant program—grants that are often awarded on the basis 

Page 51 GAO-06-625 Grant Reforms
Appendix I: Scope and Methodology 

of formulas prescribed by law or agency regulation.1 We reviewed EPA’s 

progress at the regional level by selecting grants in 3 of EPA’s 10 regional 

offices: Region 1 (Boston), Region 5 (Chicago), and Region 9 (San 

Francisco). We selected these regions because collectively they represent

a significant share of grant funding for the two programs we reviewed, 

geographic dispersion, and a significant share of Performance Partnership 

Grants among the regional offices. 

To ensure coverage of the grant life cycle—from awarding to closing out 

grants, we conducted a case study review of a nonprobability sample of 

these two programs. Specifically, we asked EPA Regions 1, 5, and 9 to

provide lists of wetlands and nonpoint source grants awarded between 

January 1, 2004, and June 30, 2005, and those grants officially closed 

during this period. We targeted recently awarded and recently closed 

grants because the grant reforms began in 2002. To complete the case 

study, we reviewed two files per grant—the project officer file and the 

grant specialist file—using a detailed data collection instrument. All data 

entered in the data collection instrument was verified by a second party to

ensure the accuracy and validity of each entry. Additionally, we conducted 

semistructured interviews with project officers and the grant specialists in 

order to understand the files. Overall, we reviewed the files for 32 active 

grants and 34 closed grants; and we interviewed administrative project

officers, project officers, and technical contacts, and grant specialists 

about those files. We also interviewed senior resource officials and grants 

management office managers in the three regions we visited. 

We were limited in the number of grants we could review because the case 

study approach required multiple, detailed file reviews and interviews for 

each grant. Consequently, we selected a nonprobability sample of active 

and closed grants in the wetland and nonpoint source programs to review 

in each of the three regions. For active grants in our nonprobability 

sample, we sorted the grants by recipient type, project officer, and grant 

specialist to provide a distribution, and then randomly selected grants for 

review. For closed grants, we sorted the grants similarly, but we also 

selected grants based on the length of time it took to close out the grant. 

Because the case study design is nonprobabilistic, the findings are not 

generalizable to all grants in all regions. However, the case study design 

provides insights into regional grant activities for the two Clean Water Act 

 1

EPA has two types of formula-based programs, nondiscretionary and continuing 

environmental programs, which is a hybrid of nondiscretionary and discretionary grant

programs. The nonpoint source grant program is a continuing environmental program. 

Page 52 GAO-06-625 Grant Reforms
Appendix I: Scope and Methodology 

programs in three regions, and it offers an in-depth perspective on some of 

the successes and continuing problems EPA faces in implementing its 

grants management reforms. Table 12 shows the population of wetland 

and nonpoint program grants in Regions 1, 5, and 9, and the number of 

those grants we reviewed. 

Table 12: Number of Active and Closed Wetland and Nonpoint Source Grants from

January 1, 2004, through June 30, 2005, in the Universe and the Number of Grants 

GAO Reviewed in Three Regions

Active grants Region 1 Region 5 Region 9 Total

Number of grants in universe 13 18 33 64

Number of grants reviewed 10a 12 10 32

Closed grants 

Number of grants in universe 26 16 60 102

Number of grants reviewed 10 13 11 34

Source: GAO.

a

We requested 11 files, but EPA Region 1 was unable to locate 1 of the files.

We experienced some limitations in conducting our review. For example, 

we were not able to assess the implementation of some EPA policies at the 

regional level because they had been issued too recently to assess during

our file review time frame. We also found evidence in two of the three 

regions we visited that staff had added materials to their files after we had 

requested the files and before our review, despite the fact that we had 

taken precautions to avoid this situation. That is, we had asked the regions 

to inform staff not to add documents to files once they were requested, 

and we limited the time frame between our request for specific files and 

our review of the files. When we determined that these additions had 

occurred, we took mitigating steps to “restore” the grant files to their 

original state. Specifically, we checked the dates of documents to detect 

any widespread updating of files, asked all project officers and grant 

specialists we interviewed who were assigned to the grants in our sample 

whether they added anything to the file in preparation for the GAO visit, 

asked managers to tell their staff to point out materials added to the file, 

and, in one region, shortened the time between file request and our visit. 

To adjust for the alterations, we used a special code in our data collection 

instrument to denote “additions,” and later subtracted the information in 

our analysis. The file alteration mitigation strategies and the analysis 

adjustments afford us confidence in the accuracy and validity of our file 

review results. 

Page 53 GAO-06-625 Grant Reforms
Appendix I: Scope and Methodology 

We conducted our work between February 2005 and April 2006, in 

accordance with generally accepted government auditing standards. 

Page 54 GAO-06-625 Grant Reforms
Appendix II: 

A

GAO Contact and Staff 

cknowledgments 

Page 55 GAO-06-625 

Appendix II: GAO Contact and Staff 

Acknowledgments 

John B. Stephenson, (202) 512-3841 

In addition to the contact named above, Andrea Wamstad Brown, 

Assistant Director; Bruce Skud, Analyst-in-charge; Rebecca Shea; Lisa 

Vojta; Carol Herrnstadt Shulman; Omari Norman; David Bobruff; Matthew 

J. Saradjian; and Jessica Nierenberg made key contributions to this report. 

GAO Contact 

Staff 

Acknowledgments 

Grant Reforms
Related GAO Products Related GAO Products 

Grants Management: EPA Needs to Strengthen Efforts to Provide the 

Public with Complete and Accurate Information on Grant 

Opportunities. GAO-05-149R. Washington, D.C.: February 3, 2005. 

Grants Management: EPA Continues to Have Problems Linking Grants 

to Environmental Results. GAO-04-983T. Washington, D.C.: July 20, 2004. 

Grants Management: EPA Needs to Better Document Its Decisions for 

Choosing between Grants and Contracts. GAO-04-459. Washington, D.C.: 

March 31, 2004. 

Grants Management: EPA Needs to Strengthen Efforts to Address 

Management Challenges. GAO-04-510T. Washington, D.C.: March 3, 2004.

Grants Management: EPA Actions Taken against Nonprofit Grant 

Recipients in 2002. GAO-04-383R. Washington, D.C.: January 30, 2004. 

Grants Management: EPA Needs to Strengthen Oversight and Enhance 

Accountability to Address Persistent Challenges. GAO-04-122T. 

Washington, D.C.: October 1, 2003. 

Grants Management: EPA Needs to Strengthen Efforts to Address 

Persistent Challenges. GAO-03-846. Washington, D.C.: August, 29, 2003. 

Environmental Protection Agency: Problems Persist in Effectively 

Managing Grants. GAO-03-628T. Washington, D.C.: June 11, 2003. 

Federal Assistance: Grant System Continues to Be Highly Fragmented.

GAO-03-718T. Washington, D.C.: April 29, 2003. 

Results-Oriented Cultures: Creating a Clear Linkage between Individual 

Performance and Organizational Success. GAO-03-488. Washington, D.C.: 

March 14, 2003. 

Major Management Challenges and Risks: Environmental Protection 

Agency. GAO-03-112. Washington, D.C.: January 2003. 

Results-Oriented Cultures: Using Balanced Expectations to Manage 

Senior Executive Performance. GAO-02-966. Washington, D.C.: September

27, 2002. 

Page 56 GAO-06-625 Grant Reforms
Related GAO Products 

Environmental Protection: Grants Awarded for Continuing 

Environmental Programs and Projects. GAO-01-860R. Washington, D.C.:

June 29, 2001. 

Environmental Protection: EPA’s Oversight of Nonprofit Grantees’ Costs 

Is Limited. GAO-01-366. Washington, D.C.: April 6, 2001. 

Environmental Protection: Information on EPA Project Grants and Use 

of Waiver Authority. GAO-01-359. Washington, D.C.: March 9, 2001. 

Environmental Research: STAR Grants Focus on Agency Priorities, but 

Management Enhancements Are Possible. GAO/RCED-00-170. 

Washington, D.C.: September 11, 2000. 

Environmental Protection: Grants for International Activities and 

Smart Growth. GAO/RCED-00-145R. Washington, D.C.: May 31, 2000. 

Environmental Protection: Collaborative EPA-State Effort Needed to 

Improve Performance Partnership System. GAO/T-RCED-00-163. 

Washington, D.C.: May 2, 2000. 

Managing for Results: EPA Faces Challenges in Developing ResultsOriented Performance Goals and Measures. GAO/RCED-00-77. 

Washington, D.C.: April 28, 2000. 

Environmental Protection: Factors Contributing to Lengthy Award 

Times for EPA Grants. GAO/RCED-99-204. Washington, D.C.: July 14, 

1999. 

Environmental Protection: Collaborative EPA-State Effort Needed to 

Improve New Performance Partnership System. GAO/RCED-99-171. 

Washington, D.C.: June 21, 1999. 

Environmental Protection: EPA’s Progress in Closing Completed Grants

and Contracts. GAO/RCED-99-27. Washington, D.C.: November 20, 1998. 

Dollar Amounts of EPA’s Grants and Agreements. GAO/RCED-96-178R. 

Washington, D.C.: May 29, 1996. 

(360548) Page 57 GAO-06-625 Grant Reforms
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