United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Water 

Resources and Environment, Committee 

on Transportation and Infrastructure, 

House of Representatives 

ENVIRONMENTAL 

PROTECTION AGENCY 

Progress Has Been Made in 

Grant Reforms, but 

Weaknesses Remain in 

Implementation and 

Accountability 

Statement of John B. Stephenson, Director 

Natural Resources and the Environment 

For Release on Delivery

Expected at 10:00 a.m. EDT 

Thursday, May 18, 2006

 

GAO-06-774T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

May 18, 2006

ENVIRONMENTAL PROTECTION AGENCY

Progress Has Been Made in Grant 

Reforms, but Weaknesses Remain in 

Implementation and Accountability 

Highlights of GAO-06-774T, a testimony 

before 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. 

This testimony is based on GAO’s 

May 2006 report, Grants 

Management: EPA Has Made 

Progress in Grant Reforms but 

Needs to Address Weaknesses in 

Implementation and 

Accountability (GAO-06-625). 

GAO examined 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. 

What GAO Recommends

GAO’s recommendations in its May 

2006 report were directed toward

strengthening ongoing monitoring, 

grant closeouts, and obtaining 

results from grants. EPA has 

agreed to implement these 

recommendations. 

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.

However, 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 a 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. 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 its 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 that 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. The Office of Management and 

Budget’s 2006 assessment also 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-06-774T.

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. 
Mr. Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss the work you requested on the

Environmental Protection Agency’s (EPA) grant management reforms. My 

testimony today focuses on the progress EPA has made in implementing 

its grant management reforms and the problems that remain. This 

testimony is based on the report being released today.1

As you know, 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. In fiscal year 2005, EPA took 6,728 grant actions involving 

funds totaling about $4 billion.2 These awards were made through 93 

programs to various types of recipients, with states receiving the largest 

portion (about 75 percent) of the grant funds.3

 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, in 

2003, EPA issued its Grants Management Plan.

4

 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 had five goals that addressed 

 1

GAO, Grants Management: EPA Has Made Progress in Grant Reforms but Needs to 

Address Weaknesses in Implementation and Accountability, GAO-06-625 (Washington,

D.C.: May 12, 2006). 

2

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

amendments. 

3

These awards were made to six main categories of recipients: states (74.9%), local

governments (9.8%), nonprofits (7.3%), universities (4%), Native American tribes (3.5%), and 

other (0.6%). 

4

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

2003). The plan’s goals are to (1) strengthen the award of grants by using competition to 

select grantees for certain awards 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. 

Page 1 GAO-06-774T 
major concerns we had identified in our 2003 report on grants

management.5

 EPA has also issued policies to implement the plan and 

other grant reforms.6

 EPA is currently revising this plan to reflect 

accomplishments achieved and to address remaining issues. 

Our testimony today assesses 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. At EPA headquarters, we reviewed EPA documents from, 

and interviewed officials of, the Office of Grants and Debarment and the 

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). 7

 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 

because it is a discretionary grant program and Nonpoint Source 

Management Program grants because it is a type of formula-based grant 

program. 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 provide geographic 

dispersion. Our regional work offers insights into regional grant activities

in the two 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. This testimony is 

based on GAO’s report for which audit work was conducted from 

February 2005 through April 2006, in accordance with generally accepted 

government auditing standards. 

 5

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

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

6

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

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

7

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

federal programs. 

Page 2 GAO-06-774T 
In summary, 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. Specifically: 

• Awarding grants. EPA has strengthened its award process by, among 

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

applicants and issuing new policies and guidance to improve the awarding

of grants. Nevertheless, EPA has found that staff do not always fully 

document their assessments of grantees’ cost proposals, and we also 

identified this problem in one region. Without documentation, EPA may be 

limited in its ability to be accountable for the reasonableness of a grantee’s 

proposed costs. EPA is reexamining its cost review policy to address this 

problem. 

• Monitoring grantees. EPA has made progress in reviewing the results of 

its in-depth monitoring to identify systemic problems, but long-standing 

issues remain in documenting ongoing monitoring and closing out grants.

EPA and we 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. Lack of documentation 

occurred, in part, because managers did not fulfill their commitment to 

improve monitoring documentation. 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, 

however, EPA closed out only 37 percent of its 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 we reviewed. 

• Obtaining results from grants. 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 the 

criteria that 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, OMB’s 2006 assessment indicates that EPA 

needs to continue its concerted efforts to achieve results from grants. 

• Managing grants staff and resources. 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

Page 3 GAO-06-774T 
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. 

EPA offers three types of grants. First, discretionary grants fund 

activities such as environmental research and training, and EPA has the 

discretion to independently determine the recipients and funding levels for 

these grants. In fiscal year 2005, EPA awarded about $644 million in 

discretionary grants. Second, nondiscretionary grants are awarded 

primarily to state and local governments and support projects often on the 

basis of formulas prescribed by law or agency regulation. In fiscal year 

2005, EPA awarded about $2.4 billion in nondiscretionary grants. Finally, 

continuing environmental program grants contain both nondiscretionary 

and discretionary features. In fiscal year 2005, EPA awarded about $1 

billion in grants for continuing environmental programs. 

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. 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 technical and programmatic aspects of 

grants in headquarters and regional program offices. Unlike grant 

specialists, however, project officers also have nongrant responsibilities, 

such as using their scientific and technical expertise. 

Background 

Page 4 GAO-06-774T 
EPA has strengthened its award process by, among other things, 

expanding competition to select the most qualified applicants. In 

September 2002, EPA issued a policy that for the first time required 

competition for many discretionary grants.8

 EPA issued a revised 

competition policy, effective January 2005.

9

 It enhanced competition by, 

among other things, reducing the threshold for competition from $75,000 

to $15,000. EPA also issued a policy to require certain nonprofit 

organizations to document that they have administrative and financial 

systems to manage grants. 

As part of its Grants Management Plan, 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 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 2005.10 The 7 percent of eligible 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. 

While EPA has improved its award process, its internal reviews in program 

and regional offices have found that staff do not always fully document 

their reviews of grantees’ cost proposals. For example, in 2004 and 2005, in

six of the seven program and regional offices it reviewed, the Office of 

Grants and Debarment found either no documentation of cost reviews or 

insufficient documentation.11 Furthermore, we also found this problem in 

one of the three regions we visited. Region 5 has a checklist to ensure that

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

completed and documented their review before awarding a grant. For 

EPA Has 

Strengthened the 

Award Process, but 

Lack of Key 

Documentation 

Raises Accountability 

Concerns 

 8

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

2002). 

9

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

(Jan. 11, 2005). 

10In fiscal year 2005, EPA competed 1,414 new grants, or 93 percent of the 1,526 new grants 

eligible for competition. 

11The site visits occurred in 2004 and 2005, and reports were issued later. 

Page 5 GAO-06-774T 
most of the 12 approved award files we reviewed, we found instances in 

which the resolution of the issues between the project officer and grant 

specialist was not documented. This documentation problem may hinder 

EPA’s ability to ensure the reasonableness of its 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. 

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

problems in documentation and grant closeouts continue. Specifically, (1) 

in-depth monitoring results can be analyzed nationwide, but staff do not 

always document corrective actions; (2) inadequate documentation of 

ongoing monitoring hinders accountability; and (3) EPA has reduced its 

closeout backlog, but grant closures are often delayed and sometimes 

improperly executed. 

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. In fact, the Office of Grants and 

Debarment 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. 

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. However, our 

analysis of EPA’s internal 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 

EPA Has Improved Indepth Monitoring to 

Identify Agencywide 

Problems, but 

Weaknesses Remain 

in Ongoing 

Monitoring and in 

Closing Out Grants 

In-depth Monitoring 

Results Can Be Analyzed 

Nationwide to Identify 

Problems, but Staff Do Not 

Always Document 

Whether Corrective 

Actions Have Been Taken 

Inadequate Documentation 

of Ongoing Monitoring 

Hinders Accountability 

Page 6 GAO-06-774T 
documentation problem with project officer files. A lack of documentation

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

specialists’ ongoing monitoring of grantee performance. 

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. 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. Similarly, in Region 

5, which did not use a checklist, none of the six grant files requiring annual 

contact with the grantee had documentation showing that the contact had 

occurred. 

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

always contain grantees’ progress reports, which, according to EPA’s 

project officer manual, are the project officer’s primary mechanism for 

determining if the grantee is fulfilling its grant agreement obligations. 

Thirteen of the 32 project officer grant files we reviewed were missing at 

least one or more required progress reports. When EPA staff do not obtain 

progress reports, they cannot monitor effectively, which may hinder 

accountability. 

The lack of documentation for ongoing monitoring occurs because of 

weaknesses at the staff, supervisory, and management level in the three 

regions we visited. Specifically: 

• Grant specialists and project officers do not consistently document key 

monitoring efforts, or they rely on other staff with technical expertise to 

assist with ongoing monitoring who may not provide the documented 

results for inclusion in the grant file. This situation occurred in two of the 

three regions we visited. 

• Supervisors do not always effectively review grant files for compliance 

with grant policies in the three regions we visited. 

• Senior EPA managers in the regions do not always ensure that their 

commitments to improve monitoring documentation are being met. For 

example, two regions had committed to using checklists to document 

ongoing monitoring. However, more than half of the checklists we 

reviewed in these regions were missing, blank, or incomplete.

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

performance measure for documenting ongoing monitoring that would 

Page 7 GAO-06-774T 
underscore its importance to managers and staff. Furthermore, EPA’s 

grants database has a data field for recording ongoing monitoring, 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. 

EPA incorporated grant closeout into its monitoring policy and its Grants

Management Plan.

12 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. 

EPA’s policy states that closeouts should occur within 180 days after the 

grant’s project end date.

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 two 

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.13 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. As EPA reported, the agency

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. However, 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 

EPA Has Reduced Its 

Closeout Backlog, but 

Grant Closures Are Often 

Delayed and Sometimes 

Improperly Carried Out 

 12EPA 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). 

1331 U.S.C. § 3512. 

Page 8 GAO-06-774T 
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. 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,

headquarter offices, and agencywide. EPA is having significant difficulty in

meeting the 180-day standard. In fact, for fiscal year 2005, EPA closed out

only 37 percent of the grants within the 180 days. Table 1 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. 

Table 1: 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: GAO analysis of 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. 

Page 9 GAO-06-774T 
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. Moreover, the state 

employee who assumed responsibility for the grant also did not have a 

complete file. Consequently, it took the project officer nearly 5 months 

beyond the allotted 180 days to complete close out. 

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

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

• 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 

grant funds and whether any unspent funds remain that need to be 

deobligated.

• 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. 

• 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. 

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. 

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

policies and plans to revise these policies in 2006.

Page 10 GAO-06-774T 
EPA has taken steps to obtain environmental results from its grants, but 

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

Grants Management Plan for identifying expected environmental results 

from grants and issued an environmental results policy, effective in 

January 2005. This policy, for the first time, requires EPA staff to ensure 

that grant workplans specify well-defined 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. Until recently, EPA recognized—but had not addressed in its 

results policy—the known complexities of measuring environmental 

outcomes, such as demonstrating outcomes when there is a long lag time 

before results become apparent. While EPA has taken positive steps by 

issuing a results policy, OMB’s evaluation of EPA grant programs in 2006 

indicate that EPA must continue its concerted efforts to achieve results 

from its grants. Specifically, OMB found that 5 of 18 EPA grant programs 

in 2006 are “ineffective” or “results not demonstrated,” although there has 

been some improvement from 2004 through 2006.

14 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 for other components, such as planning and management. 

EPA Has Initiated 

Actions to Obtain

Results from Grants, 

but Its Efforts Are Not 

Complete 

 14These 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 11 GAO-06-774T 
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; and (4) holding managers and staff accountable for 

successfully fulfilling their grant responsibilities. Nevertheless, 

management attention to these four issues is still needed. 

Analyzing workload. Fulfilling an objective identified in the Grants 

Management Plan, in April 2005, an EPA contractor’s analysis of project 

officers and grant specialists showed that EPA had an overall shortage of 

project officers and grant specialists, expressed in full-time equivalents.15

The contractor recommended that before EPA add staff, it take steps to 

improve the effectiveness and efficiency of its grants management 

operations. As a result, grant offices are preparing project officer 

workforce plans—due this year—that incorporate the workload analysis. 

Providing training. EPA has provided some training on grant policies; 

however, according to EPA staff, the amount of training has not been 

sufficient to keep pace with the issuance of new grant policies. Region 1

provided training for its project officers on the new awards process. 

However, only about 25 of the region’s 200 project officers attended the 

optional 90-minute course, although they had three opportunities to do so. 

Assessing the reliability of the grants computer database. In 1997, EPA 

began developing the Integrated Grants Management System to better 

manage its grants; 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 EPA’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.16 EPA expects to complete this review in 2006. 

Holding managers and staff accountable. In 2005, EPA’s Inspector 

General reported that EPA was not holding supervisors and project 

EPA Has Taken Steps 

to Manage Grants 

Staff and Resources 

More Effectively but 

Still Faces Major 

Management 

Problems 

 15LMI Government Consulting, Management of Assistance Agreements at the 

Environmental Protection Agency: Workload Analysis and Models, April 2005. 

16GAO, 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 12 GAO-06-774T 
officers accountable for grants management.17 In response, EPA issued a 

plan in January 2006 to ensure that the agency’s new performance 

appraisal system addresses grants management responsibilities. 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 to incorporate these 

measures into 2007 performance agreements. 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. 

Mr. Chairman, about 3 years into its Grants Management Plan, 2003-

2008, EPA has made important strides in achieving its grant reforms, but it 

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. In our report, we 

recommended that the Administrator of EPA take actions to strengthen

ongoing monitoring, closing out grants, and obtaining results from grants, 

and the agency has agreed to implement our recommendations. At the 

same time, we believe that congressional oversight has contributed to 

EPA’s progress to date and that continuing oversight is important to 

ensuring that EPA builds accountability into the agency’s efforts to 

achieve results from its $4 billion annual investment in grants. 

Mr. Chairman, this concludes my prepared statement. I would be happy to

respond to any questions that you or Members of the Subcommittee may 

have. 

 17EPA 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 13 GAO-06-774T 
For further information, please contact John B. Stephenson at (202) 512-

3841. Individuals making key contributions to this testimony were Andrea 

Wamstad Brown, Bruce Skud, Rebecca Shea, Lisa Vojta, Carol Herrnstadt 

Shulman, Omari Norman, David Bobruff, Matthew J. Saradjian, and Jessica 

Nierenberg.

Page 14 GAO-06-774T (360713)
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