RURAL BROADBAND 

DEPLOYMENT

Improved Consistency 

with Leading 

Practices Could 

Enhance 

Management of Loan 

and Grant Programs

Report to Congressional Requesters

April 2017

GAO-17-301

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-17-301, a report to 

congressional requesters

April 2017

RURAL BROADBAND DEPLOYMENT

Improved Consistency with Leading Practices Could 

Enhance Management of Loan and Grant Programs

What GAO Found

The Rural Utilities Service (RUS), an agency within the United States 

Department of Agriculture (USDA), has procedures and activities that are 

consistent with four leading practices and partially consistent with six leading 

practices in managing two loan programs and one grant program aimed at 

funding broadband infrastructure projects in rural communities.

• Consistent with Leading Practices: With regard to reviewing applications, 

RUS has procedures for training reviewers, guarding against conflicts of 

interest, and conducting multiple levels of review. For external training and 

external communication, RUS holds workshops and seminars to inform rural 

communities and applicants about its programs. RUS’s website contains 

program information, including eligibility criteria, time frames, and frequently 

asked questions. Applicants can also seek assistance from the RUS general 

field representative (GFR) assigned to their area. Program recipients whom 

GAO interviewed often spoke positively of the help provided by GFRs. As to 

coordination mechanisms, RUS has worked with other federal agencies on 

rural broadband-deployment efforts, including having a memorandum of 

understanding with the Federal Communications Commission. 

• Partially Consistent with Leading Practices: While USDA has a high-level 

goal and a performance metric for measuring the benefits to rural 

communities of the broadband loans and grants, RUS has not developed 

specific program-level goals or performance measures for its individual 

programs. Without specific measureable goals for each loan and grant 

program, RUS will have difficulty determining how well the programs are 

performing. Regarding risk assessment, RUS conducts a variety of risk 

assessment activities at the loan and grant application and project level, but 

has not conducted a risk assessment at the program level. A higher-level, 

programmatic risk assessment would provide a holistic look at the programs’ 

core processes and internal controls. For broadband programs, another 

leading practice is establishing mapping systems that can provide program 

data and reveal areas that lack service. RUS has mapping tools and systems 

in place, but does not have complete mapping information. RUS has efforts 

under way to improve its mapping data going forward. These efforts should 

increase RUS’s understanding of broadband coverage and help RUS begin 

to identify possible unserved areas for outreach. For project monitoring, RUS 

currently oversees loan and grant recipients’ projects through GFR site visits, 

progress reports, and audits. However, RUS does not evaluate its grant 

projects post-completion and is therefore missing information that could be 

used to improve the selection of grant recipients or the results of grant 

awards. RUS has established an organizational structure that supports 

internal communication, but does not have a centralized system to monitor 

loan and grant data. RUS officials said USDA is working toward such a 

system, but they did not have established deliverables or time frames. RUS

generally has external written documentation for recipients, but internal 

written documentation is often outdated, affecting RUS’s ability to share 

knowledge among its staff and retain institutional knowledge.

View GAO-17-301. For more information, 

contact Mark Goldstein at (202) 512-2834 or 

goldsteinm@gao.gov.

Why GAO Did This Study

RUS provides loans and grants to help 

finance the construction of broadband 

infrastructure in rural America. GAO 

was asked to review RUS’s 

management of its programs to fund 

broadband deployment, including 

consistency with leading practices for 

federal funding, program management, 

and broadband deployment. 

This report examines the extent to 

which RUS’s procedures and activities 

are consistent with leading practices 

and how, if at all, its management 

practices could be improved. GAO 

synthesized, from federal guidance 

and relevant literature, a set of 10 

leading practices that would be 

appropriate for the management of 

broadband loan and grant programs. 

GAO validated its set of practices with 

states that have programs similar to 

the RUS programs. GAO then 

reviewed RUS documentation and 

interviewed RUS officials and six 

program recipients, selected for having 

geographically dispersed projects 

currently under construction. Based on 

this information, GAO determined 

whether RUS’s procedures and 

activities were consistent, partially 

consistent, or not consistent with each 

leading practice. 

What GAO Recommends

GAO recommends that RUS develop 

program performance goals and 

measures, conduct program risk 

assessments, evaluate completed 

grant projects, establish a timeline for 

implementing a centralized internal 

data system, and update written 

policies and procedures for RUS staff. 

USDA agreed with the 

recommendations. 
Page i GAO-17-301 Management of Rural Broadband Loans and Grants

Letter 1

Background 4

RUS’s Management Procedures and Activities for Broadband 

Loan and Grant Programs Are Consistent or Partially 

Consistent with Leading Practices, and Could Improve 

in Some Areas 10

Conclusions 28

Recommendations for Executive Action 28

Agency Comments 29

Appendix I Description of Leading Practices and GAO’s Assessment 31

Appendix II GAO Contact and Staff Acknowledgments 34

Tables

Table 1: Lending Authority for the Rural Broadband Access and 

Telecommunications Infrastructure Loan and Loan 

Guarantee Programs, Fiscal Years (FY) 2006–2016 (in 

Millions) 7

Table 2: Community Connect Broadband Grant Program 

Appropriations, Fiscal Years 2004-2017 (in Millions) 7

Table 3: GAO Assessment of the Extent to which the Rural 

Utilities Service’s Procedures and Activities Are 

Consistent with Leading Practices in the Management of 

Broadband Funding Programs 31

Figures

Figure 1: Rural Utilities Service’s (RUS) Infrastructure Loan and 

Broadband Loan Amounts by State and U.S. Territory, 

Fiscal Years 2004–2016 8

Figure 2: Rural Utilities Service’s (RUS) Community Connect 

Grants by State and U.S. Territories, Fiscal Years 2004–

2016 9

Figure 3: Rural Utilities Service’s Review Process for Its 

Infrastructure Loan Program and Broadband Loan 

Program, as of January 1, 2017 16

Contents
Page ii GAO-17-301 Management of Rural Broadband Loans and Grants

Figure 4: Rural Utilities Service’s Review Process for Its 

Community Connect Grant Program, as of January 1, 

2017 17
Page iii GAO-17-301 Management of Rural Broadband Loans and Grants

Abbreviations:

BIP Broadband Initiatives Program

Broadband Program Rural Broadband Access Loan and Loan

 Guarantee Program

Community Connect Community Connect Grant Program

EPA Environmental Protection Agency

FCC Federal Communications Commission

FTE full-time equivalent

FY fiscal year

Green Book Standards for Internal Control in the Federal

 Government

GFR general field representative

GPRA Government Performance and Results Act

Infrastructure Program Telecommunications Infrastructure Loan

 and Loan Guarantee Program

LOAD Loan Origination and Approval Division

MOU memorandum of understanding

NTIA National Telecommunications and

 Information Administration

OIG Office of Inspector General

OMB Office of Management and Budget

PMRA Portfolio Management and Risk

 Assessment

RUS Rural Utilities Service

TIER times interest earned ratio

USDA U.S. Department of Agriculture

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

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-17-301 Management of Rural Broadband Loans and Grants

441 G St. N.W.

Washington, DC 20548

April 13, 2017

The Honorable Frank Pallone, Jr.

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Anna Eshoo

House of Representatives

The Honorable Dave Loebsack

House of Representatives

The Honorable Ben Ray Luján

House of Representatives

The Honorable Jerry McNerney

House of Representatives

The Honorable Peter Welch

House of Representatives

Access to affordable broadband telecommunications is vital to economic 

growth and improved quality of life across the country. In rural areas in 

particular, broadband can serve to reduce the isolation of remote 

communities and individuals. The provision of broadband Internet 

infrastructure and services in the United States is generally privately 

financed. However, rural areas can have attributes that increase the cost 

of broadband deployment, such as remote areas with challenging terrain, 

or make it difficult to recoup deployment costs, such as relatively low 

population densities or incomes. These attributes can decrease the 

likelihood that a broadband service provider will build out or maintain a 

network in a rural area. For these reasons, some rural areas lag behind 

urban and suburban areas in broadband deployment or service speed.

To improve access to broadband in rural America, the U.S. Department of 

Agriculture’s (USDA) Rural Utilities Service (RUS) provides loans and 

grants to finance the construction of broadband infrastructure through 

three programs: the Telecommunications Infrastructure Loan and Loan 

Guarantee Program, the Broadband Access Loan and Loan Guarantee 

Letter
Page 2 GAO-17-301 Management of Rural Broadband Loans and Grants

Program, and the Community Connect Grant Program.1 According to 

RUS data, since fiscal year 2004, RUS has approved 704 broadband 

projects totaling almost $8.6 billion in loans and $144.8 million in grants to 

deploy telecommunications or broadband infrastructure networks in rural 

areas.

You asked that we review RUS’s management of its broadband 

deployment funding programs, including RUS’s incorporation of leading 

practices regarding federal funding, program management, and 

broadband deployment. This report examines the extent to which RUS 

has established procedures and activities that are consistent with leading 

practices in the management of its broadband infrastructure loan and 

grant programs and how, if at all, its management practices could be 

improved.

To determine the extent to which RUS has procedures and activities 

consistent with leading practices, we identified leading practices that 

would be appropriate for the management of broadband loan and grant 

programs. To do this, we synthesized leading practices from the 

Standards for Internal Control in the Federal Government (commonly 

referred to as the “Green Book”),2 the Office of Management and 

Budget’s (OMB) Circular A-129,

3 a National Governors Association’s 

Center for Best Practices Issue Brief,4 and past GAO reports on leading 

practices. We also reviewed reports pertaining to broadband deployment 

by USDA, the Federal Communications Commission (FCC), and the 

Department of Commerce’s National Telecommunications and 

Information Administration (NTIA), as well as research and academic 

papers on broadband deployment in rural areas. We conducted 

interviews with representatives of USDA, USDA’s Office of Inspector 

General, FCC, NTIA, the National Governors Association, and NTCA–

 1

The Community Connect Grant Program started as a pilot in fiscal year 2002. RUS 

noted in a 2004 rulemaking that, due to the positive response RUS received to the pilot, 

Congress began funding the program in 2004. It was first funded in the Consolidated 

Appropriations Act of 2004, Pub. L. No. 108-199, Title III, 118 Stat. 3, 25 (2004).

2

Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, 

D.C.: Sept. 2014).

3

OMB, Circular No. A-129, Policies for Federal Credit Programs and Non-Tax Receivables

(Washington, D.C.: Jan. 2013).

4

National Governors Association, Center for Best Practices Issue Brief, State Efforts to 

Expand Broadband Access (Washington, D.C.: May 20, 2008).
Page 3 GAO-17-301 Management of Rural Broadband Loans and Grants

The Rural Broadband Association. Based on our research and interviews, 

we identified a set of 10 leading practices, and key activities associated 

with each, that are reasonable, sufficient, and appropriate to the 

management of loan and grant programs involving broadband 

deployment. In making this determination we considered whether the 

criteria related directly to and covered all elements of our researchable 

question, represented a balanced set of criteria, and were from sources 

that were professionally recognized and respected. This process resulted 

in the following leading practices: (1) program performance 

measurement, (2) risk assessment, (3) application review procedures, (4) 

mapping, (5) external training, (6) project monitoring, (7) external 

communication, (8) internal communication, (9) written documentation, 

and (10) coordination mechanisms. To validate our list of leading 

practices and the key activities associated with each, we identified, 

through searches of state websites and our interviews, states that have 

broadband deployment programs at the state level that are similar to 

RUS’s programs. We then discussed our set of leading practices with 

broadband program officials from the states of California, New York, 

Oklahoma, and Wisconsin to obtain their opinions on the validity of our 

leading practices and key activities as applied to the management of 

similar broadband deployment programs.5 We selected these states 

because they had active state broadband programs and were 

geographically diverse. Based on our discussions with the state officials, 

we made slight modifications to our leading practices and key activities 

and then shared them with RUS officials to obtain the agency’s input on 

the leading practices. RUS officials agreed that our leading practices and 

key activities were applicable to the agency’s management of its 

programs for broadband infrastructure grants and loans.

To determine the extent to which RUS’s procedures and activities are 

consistent with the leading practices, we reviewed program 

documentation provided by RUS and interviewed RUS officials about their 

management of the loan and grant programs. We also interviewed six 

RUS loan and grant recipients (two recipients from each program) to 

obtain their perspectives on RUS’s management of its programs with 

respect to the leading practices with which the recipients would be 

familiar (e.g., external communication, project monitoring). We selected 

the six loan and grant recipients from a list of recipients whose RUS-

 5

We also contacted broadband officials from New Mexico and Kentucky to obtain their 

opinions on our leading practices but they did not respond to our outreach.
Page 4 GAO-17-301 Management of Rural Broadband Loans and Grants

funded projects were currently in the construction phase, that each had a 

different RUS general field representative (GFR), and that were 

geographically dispersed. The views of the recipients cannot be 

generalized to all RUS loan and grant recipients. Based on the 

information we obtained about RUS’s activities, we determined the extent 

to which RUS established procedures and conducted activities that were 

consistent with each leading practice. We assessed the evidence against 

the criteria and assigned one of three ratings for each leading practice: 

(1) consistent, (2) partially consistent, and (3) not consistent. A rating of 

“consistent” was determined when RUS had procedures addressing all of 

the key activities associated with the leading practice. A “partially 

consistent” rating was determined when RUS had procedures addressing 

some key activities of the leading practice, but not others. A rating of “not 

consistent” was determined when RUS did not have procedures 

addressing any of the key activities associated with the leading practice.

See appendix I for a summary of each leading practice, the key activities 

associated with each, and our assessment of how consistent RUS’s 

procedures and activities are with each leading practice.

We conducted this performance audit from March 2016 to April 2017 in 

accordance with generally accepted government auditing standards.

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

RUS, an agency in USDA’s Rural Development mission area, oversees 

three programs for deploying broadband infrastructure in rural 

communities.6 The Telecommunications Infrastructure Loan and Loan 

Guarantee Program (Infrastructure Program) has funded traditional 

telephone networks but, since the mid-1990s, has been used primarily to 

 6

In addition to these three programs, RUS oversees the Distance Learning and 

Telemedicine Grant Program that supports broadband-based applications. We excluded 

this program from our review because it is not an infrastructure program. We also 

excluded the Broadband Initiatives Program (BIP) authorized as part of the American 

Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5, 123 Stat. 115, 118-119 

(2009), because the award period for that program ended in 2010. GAO has examined 

the BIP grants and last reported on that program in 2014 (see GAO, Recovery Act: USDA 

Should Include Broadband Program’s Impact in Annual Performance Reports, 

GAO-14-511 (Washington, D.C.: June 17, 2014)). 

Background
Page 5 GAO-17-301 Management of Rural Broadband Loans and Grants

fund broadband network infrastructure that can provide both voice and 

data services. The Rural Broadband Access Loan and Loan Guarantee 

program (Broadband Program) and the Community Connect Grant 

Program (Community Connect) are assistance programs that are 

specifically dedicated to financing broadband deployment.

Differences among these programs include their definitions of rural areas 

and their eligibility rules for recipients and services.

• Infrastructure Program: The largest and oldest of the three programs, 

the Infrastructure Program was created as part of the Rural 

Electrification Act of 1936, as amended.7 The program provides loans 

and loan guarantees for the deployment of telecommunications 

systems, including broadband systems, to rural areas.8 The program 

is generally not available to any city, village, or borough having a 

population exceeding 5,000. Since fiscal year 2008, the authorized 

principal amount for the loans and loan guarantees (“lending 

authority”) has been $690 million. According to RUS, since 2004, 

individual loans have ranged from $81,600 to $90 million, depending 

on the size of the project. A loan recipient has 5 years to complete its 

infrastructure project. According to RUS, the terms of Infrastructure 

Program loans are typically around 20 years, depending on the nature 

of the facilities to be financed.

9 This program often sees repeat 

borrowers as borrowers use the funds to either upgrade existing 

services in rural areas or expand their rural service area.

• Broadband Program: Authorized in 2002, this program provides loans 

and loan guarantees for the construction, improvement, and 

acquisition of facilities and equipment for broadband service in eligible 

 7

Pub. L. No. 74-605, 49 Stat. 1363 (1936), as amended by Pub. L. No. 81-423, Ch. 776 § 

5, 63 Stat. 948-949 (1949), codified at 7 U.S.C. §§ 901-914. The program dates back to 

1949 as a rural loan program that historically supported infrastructure for telephone voice 

service.

8

For this program, “rural area” means any area of the United States, its territories, and 

insular possessions (including any area within the Federated States of Micronesia, the 

Republic of the Marshall Islands, and the Republic of Palau) not included within the 

boundaries of any incorporated or unincorporated city, village, or borough having a 

population exceeding 5,000 inhabitants. For purposes of the rural area definition, the 

character of an area is determined as of the time of the initial loan for the system. See 7 

C.F.R. § 1735.2.

9

The term of the loan repayment should equal the “expected composite economic life” of 

the facilities to be financed. “Expected composite economic life” means the depreciated 

life plus 3 years. See 7 C.F.R. § 1735.43(a).
Page 6 GAO-17-301 Management of Rural Broadband Loans and Grants

rural communities.10 Recent amendments have revised the program 

including the definition of rural area, among others.11 The lending 

authority for this program has decreased from $602 million in fiscal 

year 2004 to $20.6 million in fiscal year 2016.12 According to RUS, the 

terms of the Broadband Program’s loans depend on the type of 

broadband system being deployed: generally around 20 years for fiber 

systems and around 12 years for wireless systems. According to 

RUS, since 2004, individual loans have ranged from $24,000 to $244 

million, depending on the size of the project.13

• Community Connect: This program started as a pilot program in fiscal 

year 2002, with $20 million in competitive grants. Noting the positive 

response it received, RUS made the Community Connect program an 

annual competitive grant program in fiscal year 2004.14 Annual 

appropriations for the program have ranged from $9 million to $18 

million. As of December 2016, Community Connect grants have 

funded approximately 138 projects across the nation intended to 

improve broadband service. In the past few years, grant awards could 

not be greater than $3 million per project, with a 15-percent matchingfund requirement placed on the recipient. Further, projects must be in 

rural areas, as confirmed by the most recent decennial Census.15 A 

recipient has 3 years to complete construction of its broadband 

infrastructure project.

Tables 1 and 2 show the annual lending authority for the loan programs 

and the annual appropriations for the grant program, respectively.

 10Pub. L. No. 107-171, § 6103, 116 Stat. 134, (2002), codified at 7 U.S.C. § 950bb.

11Pub. L. No. 113-79 § 6104(a), 128 Stat. 649, 851 (2014) and Pub. L. No. 110-246 § 

6110, 122 Stat. 1651, 1660 (2008), codified at 7 U.S.C. § 950bb. A rural area is defined 

as any area other than (1) a city or town that has a population greater than 20,000 and (2) 

an urbanized area contiguous and adjacent to a city or town with a population greater than 

50,000.

12According to RUS officials, the reduction in lending authority for the Broadband Program 

might be due, in part, to alternative funding that was available for broadband projects 

through the BIP grants. 

13Not included in this range was a Broadband Program loan for $268 million that RUS 

awarded in fiscal year 2008. According to RUS officials, $78 million of the loan had been 

disbursed when the loan recipient defaulted on the project.

14Pub. L. No. 108-199, Title III, 118 Stat. 3, 25 (2004).

15Specifically, “rural area” means any area not located within a city, town, or incorporated 

area with a population greater than 20,000 inhabitants, or an urbanized area contiguous 

and adjacent to a city or town with a population greater than 50,000. 7 C.F. R. § 1739.3.
Page 7 GAO-17-301 Management of Rural Broadband Loans and Grants

Table 1: Lending Authority for the Rural Broadband Access and Telecommunications Infrastructure Loan and Loan Guarantee 

Programs, Fiscal Years (FY) 2006–2016 (in Millions)

FY

2004

FY

2005

FY

2006

FY

2007

FY

2008

FY

2009

FY

2010

FY

2011

FY

2012

FY

2013

FY

2014

FY

2015

FY

2016

Rural Broadband 

Access

$602 550 500 500 300 400.5 400 400 212 42.2 34.5 24.1 20.6

Telecommunications 

Infrastructure

$515 520 694 694 690 690 690 690 690 690 690 690 690

Source: GAO Analysis of Appropriations Acts, Fiscal Years 2006–2016. | GAO-17-301

Note: Actual loan levels for a fiscal year can vary from what is authorized in the annual appropriations 

acts.

Table 2: Community Connect Broadband Grant Program Appropriations, Fiscal 

Years 2004-2017 (in Millions)

Fiscal Year (FY) Appropriations

FY2004 $10

FY2005 $9

FY2006 $9

FY2007 $9

FY2008 $13.5

FY2009 $13.4

FY2010 $18

FY2011 $13.4

FY2012 $10.4

FY2013 $10.4

FY2014 $10.4

FY2015 $10.4

FY2016 $10.4

Source: GAO Analysis of Appropriation Acts, Fiscal Years 2004–2016. | GAO-17-301

As shown in figure 1, the dollar amount of loans approved by RUS varies 

by state, with Colorado, Kansas, and North Dakota receiving the largest 

loan amounts—each receiving over $500 million in loans from fiscal years 

2004 through 2016. Conversely, Vermont, Maine, and New Hampshire 

received the lowest loan amounts—each receiving around $6 million or 

less during this time. While most states have obtained the majority of their 

funding from the Infrastructure Program, Colorado and Hawaii used 

mainly the Broadband Program.
Page 8 GAO-17-301 Management of Rural Broadband Loans and Grants

Figure 1: Rural Utilities Service’s (RUS) Infrastructure Loan and Broadband Loan Amounts by State and U.S. Territory, Fiscal 

Years 2004–2016

Note: Amounts shown are the total amounts approved by RUS. The actual amounts disbursed by 

RUS can be lower since some loans defaulted or were rescinded or reduced before all funds were 
Page 9 GAO-17-301 Management of Rural Broadband Loans and Grants

paid out. According to RUS officials, differences in the amounts received by states are a function of 

the level of participation in the program by eligible entities within each state.

As shown in figure 2, the dollar amounts of Community Connect grants 

approved by RUS from fiscal years 2004 through 2016 varied, with 

Oklahoma receiving the largest amount of grant funds (about $22.5 

million) and Pennsylvania receiving the lowest amount (around 

$290,000).

Figure 2: Rural Utilities Service’s (RUS) Community Connect Grants by State and U.S. Territories, Fiscal Years 2004–2016

Note: Amounts shown are the total amounts approved by RUS. The actual amounts disbursed by 

RUS can be lower since some grants were rescinded or reduced before all funds were paid out.

According to RUS officials, differences in the amounts received by states are a function of the level of 

participation in the program by eligible entities within each state.
Page 10 GAO-17-301 Management of Rural Broadband Loans and Grants

Overall, RUS has procedures and activities addressing the leading 

practices we identified, including the key activities associated with these 

practices, as part of its management of the rural broadband programs.

We found that RUS has procedures and activities consistent with the 

leading practices for reviewing applications, conducting external training, 

communicating with applicants and recipients, and coordinating with other 

federal agencies. RUS has procedures and activities that are partially 

consistent with leading practices for conducting program performance 

measurement, conducting risk assessments, mapping, monitoring loan 

and grant infrastructure projects, communicating internally, and providing 

written program documentation.

RUS has procedures and activities that are partially consistent with the 

leading practice of program performance measurement because USDA 

has identified a goal and a performance measure at a high level.

However, at the individual program level, RUS has not established a 

process that ensures program goals are identified, tracked, and fulfilled; 

has not developed performance measures linked to goals; and does not 

evaluate or document the results of program measurement activities.

First, we have previously found that results-oriented organizations 

implement two key practices to lay a strong foundation for successful 

program management—setting performance goals to clearly define 

desired program outcomes and developing performance measures that 

are clearly linked to the performance goals.16 Through our review of 

USDA and RUS documentation, we identified a goal set by USDA at the 

Rural Development mission area level. Specifically, USDA’s Fiscal Year 

2015 Annual Performance Report and Fiscal Year 2017 Annual 

Performance Plan describes the year-end progress of USDA toward 

achieving the department’s strategic goals, objectives, and performance 

measures. USDA sets forth a strategic goal “to assist rural communities 

to create prosperity so they are self-sustaining, repopulating, and 

economically thriving.” Under this strategic goal, the annual performance 

 16GAO, Executive Guide: Effectively Implementing the Government Performance and 

Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1996). 

RUS’s Management 

Procedures and 

Activities for 

Broadband Loan and 

Grant Programs Are 

Consistent or Partially 

Consistent with 

Leading Practices, 

and Could Improve in 

Some Areas

Program Performance 

Measurement

Leading Practice: Program Performance 

Measurement

Key activities:

• Establish a process that ensures program 

goals are identified, tracked, and fulfilled.

• Develop performance measures that link 

directly to stated program goals

• Evaluate and document the results of 

program measurement activities, 

including plans for corrective actions.

Sources: GAO analysis. | GAO-17-301
Page 11 GAO-17-301 Management of Rural Broadband Loans and Grants

report contains a performance measure for RUS: the annual number of 

borrowers or subscribers receiving new or improved telecommunications 

services. According to the report, the performance target for 2016 was 

120,000 borrowers or subscribers receiving new or improved 

telecommunications services; the 2017 target is 100,000. Outside of this 

one high-level strategic goal and performance measure, RUS officials told 

us they do not have formal documented program performance goals and 

measures for the individual loan and grant programs. RUS officials told us 

that they believe their goals for each of the three programs are to ensure 

that facilities are constructed properly and that the service is actually 

provided. However, these goals are not documented, and there are no 

specific performance measures that link to these goals.

Federal agencies can use the information gained from performance 

measurement to make various types of management decisions to 

improve programs and results.17 Both the Government Performance and 

Results Act (GPRA)18 and OMB’s Circular A-12919 highlight the use of 

performance measures and goals as a means to evaluate program 

performance. For example, GPRA requires agencies to develop a 

performance plan covering each program activity set forth in the budget, 

including program goals that are objective, quantifiable, and 

measurable.20 Although such practices are only required at the federal 

department or agency level under GPRA, they can serve as leading 

practices for planning at lower levels within federal agencies, such as at 

an individual program or initiative level. In addition, OMB’s Circular A-129

stipulates that for credit programs, agencies shall periodically evaluate 

 17GAO, Managing for Results: Enhancing Agency Use of Performance Information for 

Management Decision Making, GAO-05-927 (Washington, D.C.: Sept. 9, 2005). 

18Pub. L. No. 103-62, 107 Stat. 285 (1993), as modified by Pub. L. No. 111-352, 124 Stat. 

3866 (2011). Since 1993, Congress has required federal agencies through GPRA to 

develop strategic plans with long-term, outcome-oriented goals and objectives, annual 

goals linked to achieving the long-term goals, and annual reports on the results achieved. 

GAO, Results-Oriented Government: GPRA Has Established a Solid Foundation for 

Achieving Greater Results GAO-04-38 (Washington, D.C.: Mar. 10, 2004). The GPRA 

Modernization Act of 2010 modified GPRA to, among other things, create a governmentwide planning and reporting framework, including federal government priority goals, 

performance plans, quarterly priority progress reviews, and a government-wide 

performance website. GAO, Managing for Results: Opportunities for Congress to Address 

Government Performance Issues, GAO-12-215R (Washington, D.C.: Dec. 9, 2011).

19OMB, Policies for Federal Credit Programs and Non-Tax Receivables, Circular A-129

(Washington, D.C.: January 2013).

2031 U.S.C. § 1115(b).
Page 12 GAO-17-301 Management of Rural Broadband Loans and Grants

programs in terms of the policy goals of the program and the program’s 

effectiveness towards addressing those goals. Without specific, 

documented goals for each loan and grant program—and specific 

performance measures that are crafted around those goals—it is difficult 

to determine in an objective, quantifiable way if these programs are 

fulfilling USDA’s strategic goal of assisting rural communities, and it could 

be more difficult for RUS to manage the programs in a proactive, resultsoriented manner.

RUS has procedures and activities that are partially consistent with the 

leading practice of risk assessment because RUS conducts a variety of 

risk assessment activities at the application and the individual project 

level, as well as having procedures to guard against fraud; however, RUS 

has not established procedures to conduct risk assessment activities at 

the program level. The Green Book defines the standards for internal 

control in the federal government, noting that management should:

• define objectives clearly to enable the identification of risks and define 

risk tolerances;

• identify, analyze, and respond to risks related to achieving the defined 

objectives;

• consider the potential for fraud when identifying, analyzing, and 

responding to risks; and

• identify, analyze, and respond to significant changes that could impact 

internal controls.

OMB’s Circular A-129 provides that, for credit programs, agencies must

• have robust management and oversight frameworks for credit 

programs to monitor the program’s progress towards achieving policy 

goals within acceptable risk thresholds,

• reinforce these frameworks with appropriate internal controls, and

• take action where appropriate to increase efficiency and 

effectiveness.

RUS’s risk assessment efforts have focused on the proposed and funded 

broadband projects and their financial risks, particularly for the loan 

programs, which have greater inherent risk to the federal government 

because borrowers are expected to repay loans with interest. The 

application review process for both of the loan programs includes a 

financial risk review to determine whether the borrower has a sufficient 

Risk Assessment

Leading Practice: Risk Assessment

Key activities:

• Define program objectives.

• Define the program's risk tolerances.

• Establish a process to conduct risk 

assessments to identify and analyze risks 

to achieving program objectives. 

• Conduct risk assessments to identify and 

analyze risks for credit programs. 

• Determine the program's fraud risk factors 

and the types of fraud for which the 

program is most at risk. 

• Determine and conduct the appropriate 

responses to identified risks.

Sources: GAO analysis. | GAO-17-301
Page 13 GAO-17-301 Management of Rural Broadband Loans and Grants

forward-looking return on investment. Borrowers are required to maintain 

a times interest earned ratio (TIER) between 1.0 and 1.5, based on the 

projected TIER determined by a feasibility study prepared for each loan.21

According to RUS, all borrowers receive the same treatment once their 

loans are approved, irrespective of the risk involved with the project. In 

other words, RUS does not vary interest rates based on risk or set a 

higher TIER requirement for riskier borrowers. However, because the 

loan programs target rural areas that, as previously mentioned, may not 

appeal to private broadband providers, the programs tend to attract some 

applicants that may present higher financial risks. Since 2004, the 

Broadband Program’s loans have had defaults on 22 of 108 loans. In 

analyzing the risk factors behind these defaults, RUS determined that the 

majority of the defaulting companies were startup firms. In response, RUS 

has put in place new financial requirements on startup firms to better 

ensure that such borrowers are financially sound and less likely to default.

For 2017 Broadband applicants, RUS has a Calculation of Additional 

Cash Requirement for startup operations or firms that have not 

demonstrated a positive cash flow from operations for the 2 years prior to 

the application date. This stipulation is in addition to the audited financial 

statements, tax returns, methodology, and assumptions that must be part 

of the application package. According to RUS officials, these 

requirements will enable RUS to place greater emphasis on evaluating 

these applicants’ subscriber and revenue projections to help address 

default risks.

With regard to fraud risks, there are procedures to help limit fraud 

incidents. For instance, the grant agreements that Community Connect 

recipients are required to sign stipulate that invoices are to be submitted 

with requests for advance or with reimbursement forms before grant 

funds are disbursed. Recipients, depending on entity type, are to provide 

RUS with an audit for each year in which grant funds are expended and 

an annual project performance activity report. Loan agreements lay out 

specific conditions that loan recipients are required to follow for loan 

advances. Loan recipients are required by their loan agreements to have 

fidelity bond or theft insurance coverage and maintain all documentation, 

such as invoices, receipts, and annual financial reports, available for 

federal inspection, if requested. Loan recipients are required to provide 

RUS with annual audited financial statements until the loans are paid off.

 21TIER is the total net income or margins plus the total fixed charges divided by total fixed 

charges, after taxes paid. TIER is a measure of a borrower’s ability to service its debts.
Page 14 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS performs compliance audits for all grant and loan projects on a 2-5 

year cycle (depending on the amount of unaudited advances) until all 

funds are disbursed. Furthermore, USDA requires GFRs to submit reports 

on construction status based on regular site visits. These site visits also 

allow GFRs an opportunity to examine the projects for any misuse of 

funds. If a discrepancy is found, RUS officials told us that they will 

immediately disallow funding. If fraud involving a grant project is 

suspected, RUS officials said they would turn the information over to 

USDA’s Office of Inspector General (OIG) for investigation. Investigations 

can also be turned over to the Department of Justice for further action, 

such as a criminal indictment or an action to recover funds. According to 

RUS officials, fraud cases have been rare and have involved fake 

invoices and employee theft.

While RUS has risk assessment activities at the application and individual 

project level and procedures related to fraud risks, RUS has no risk 

assessment activities at the overall program level. As set forth in the 

Green Book, a precondition to risk assessment is the establishment of 

clear, consistent program objectives. When clear program objectives are 

established up front, then internal controls can be designed around the 

fundamental risk that program objectives will not be met. As previously 

discussed, RUS does not have clear goals and performance measures in 

place for its loan and grant programs. RUS officials acknowledged that 

they have not conducted a formal risk assessment of the broadband loan 

and grant programs because to date, as noted, they have focused on risk 

assessment at the application and project level. But a higher-level, 

programmatic risk assessment would provide a holistic look at the 

programs’ core processes and practices and assess internal controls over 

each program. Such a programmatic risk assessment could include an 

examination of risks at the portfolio level for both the portfolio of loans and 

the portfolio of grants.22 RUS officials told us that they recognize the need 

for portfolio risk assessments and would like to put procedures in place in 

the future to assess the loan and grant portfolios. In late 2016, USDA 

hired a Chief Risk Officer for the Rural Development mission level. While 

RUS’s efforts to address risks in applications and funded projects and its 

 22A risk assessment at the portfolio level would seek to identify and examine common 

risks across all of the loans or grants within a program, as compared to a risk assessment 

at the project level which focuses on the risks inherent within a single application or 

project. A programmatic risk assessment, which could include information gained from a 

portfolio risk assessment, is at a higher level, seeking to identify and examine risks to 

achieving program objectives, as discussed in the Green Book.
Page 15 GAO-17-301 Management of Rural Broadband Loans and Grants

recent creation of the Chief Risk Officer position are positive steps, these 

efforts are not fully consistent with the level of risk assessment that is 

intended under the Green Book. Those standards call for first establishing 

clear objectives for each program and then for comprehensively 

identifying risks to meeting those objectives. Without doing so, RUS is 

missing information crucial to the thoughtful design of an internal control 

structure that appropriately considers program risks for each of the three 

programs.

RUS has procedures and activities consistent with the leading practice for 

application review, such as procedures for assigning applications to 

reviewers, reviewing and scoring applications, recording the results of 

application reviews, resolving scoring variances, and ensuring consistent 

reviews across reviewers. We found some differences among the 

individual loan- and grant-application review processes as a result of the 

nature of their individual funding mechanisms. For example, the 

Infrastructure loan application process is not competitive and uses a firstcome, first-served procedure as long as the applications meet eligibility 

requirements. The Broadband Program is a competitive program that 

currently requires two application windows per year. Priority is given to 

those applications with the highest percentage of unserved areas. The 

grant program is also competitive but selects applications based on a 

scoring process. In addition, RUS has procedures for training reviewers, 

ensuring relevant expertise and the appropriate application of criteria, and 

guarding against conflicts of interest. For example, RUS uses a 

combination of guidance documents and on-the-job training to train 

reviewers, and helps ensure relevant expertise by hiring staff in particular 

job classifications for particular types of reviews (e.g., only engineers in 

the engineering job series conduct the engineering reviews of proposed 

projects).

With regard to loans, the application review procedures for the 

Infrastructure Program start in the field, where the GFR conducts the first 

level of review (see fig. 3, which illustrates the loan review and approval 

process). For both loan programs, once an application is at RUS 

headquarters, staff from RUS’s engineering and financial-operations 

branches review the application for completeness. If complete, RUS’s 

financial and engineering analysts, managers, GFR, and GFR managers 

discuss the eligibility of the applicant. Once a loan application package is 

determined complete and eligible, it undergoes an engineering and 

financial review, followed by multi-level reviews and approvals by a 

number of committees and divisions. RUS officials noted a difference 

Application Review 

Procedures

Leading Practice: Application Review 

Procedures

Key activities: 

• Develop procedures for the review of 

grant and loan applications that describes 

the process (describing, for example, the 

number of panels or reviewers, the 

methods for assigning applications to 

panels or reviewers, how the results of 

the review are recorded, how scoring 

variances across panels or reviewers are 

resolved, how panels or reviewers ensure 

consistent reviews, etc.).

• Use a panel or reviewers who hold 

relevant expertise, do not have conflicts of 

interest, apply the appropriate criteria, 

and are trained.

Sources: GAO analysis. | GAO-17-301
Page 16 GAO-17-301 Management of Rural Broadband Loans and Grants

between the two loan programs in that the Infrastructure Program has a 

rolling application process while the Broadband Program holds two 

application submission periods each year.

Figure 3: Rural Utilities Service’s Review Process for Its Infrastructure Loan 

Program and Broadband Loan Program, as of January 1, 2017

Like the loan applications, Community Connect grant applications go 

through a multilevel review process (see fig. 4). To confirm that the area 
Page 17 GAO-17-301 Management of Rural Broadband Loans and Grants

in question is truly unserved, a GFR physically goes to the area of the 

proposed broadband project to test that existing broadband services are 

not present. After the engineering and financial review, the application is 

scored independently by two GFRs who do not oversee the applicant’s 

area, to avoid any conflict of interest. Each application is scored 

according to the criteria outlined in the Notice of Funding Availability or 

Notice of Solicitation of Applications. RUS has guidelines on how to score 

applications and how many points each criterion is worth. While the 

expectation is for the two scores to be similar, RUS officials said that 

occasionally there can be substantial differences. If such variance occurs, 

the officials review the application again and hold discussions with the 

Deputy Assistant Administrator and their branch chiefs to determine 

whether to move the application forward. All awards in the grant program 

must have been approved by the Administrator.

Figure 4: Rural Utilities Service’s Review Process for Its Community Connect Grant 

Program, as of January 1, 2017
Page 18 GAO-17-301 Management of Rural Broadband Loans and Grants

Currently, RUS’s procedures and activities are partially consistent with 

the leading practice of mapping because RUS has two mapping systems 

in place, but its mapping information is not complete and the agency has 

efforts under way to improve its mapping activities. RUS officials told us 

that they currently use mapping data to determine if the service proposed 

by an applicant overlaps the service of an existing provider in the same 

area, and to determine and prioritize grant applications that propose to 

serve areas with the greatest need. Applicants requesting funding under 

the Infrastructure Program and Broadband Program for loans and the 

Community Connect grant program are required to submit maps of their 

service area and proposed service area. RUS uses a number of sources 

to collect mapping data, but has two distinct mapping tools. First, 

applicants upload digital maps of their proposed service areas in RDApply 

as they submit their applications.23 Second, applicants can also use the 

RUS mapping tool, which predates the RDApply mapping system.

According to RUS, the mapping tool serves three purposes. First, it can 

be used by existing borrowers or those interested in applying for loan or 

grant funding to draw their existing or proposed service-area maps.

Second, it can be used by RUS to post Public Notices of applicants’

proposed service areas or be used by existing providers to submit 

information regarding their service offerings. Third, it can be used by any 

state, local, or other entity that wishes to upload an authenticated map of 

existing broadband services.

According to RUS officials, they intend that the RDApply system will 

eventually incorporate the mapping tool information and they will no 

longer use the mapping tool, but will instead rely on one system. They 

explained that they are building a mapping system based on recent and 

current application information because they did not previously require all 

applicants to submit mapping data. They began requiring submission of 

geospatial mapping data for the Broadband Program in 2009, for 

Community Connect in 2012, and for the Infrastructure Program in 2015.

According to RUS officials, USDA’s Office of General Counsel ruled that 

they do not have the authority to require past recipients to provide them 

with mapping data, so they are unable to completely fill in historical 

mapping information for past projects.

 23RDApply is an RUS application system that allows applicants applying for RUS 

broadband loans and grants to create an application, upload attachments, sign 

certifications, and draw service areas, among other things.

Mapping

Leading Practice: Mapping

Key activities: 

• Map broadband availability to help both 

policymakers and service providers 

determine where to focus their efforts, 

and to reveal gaps in service to providers 

that might wish to expand their offerings.

• Establish mapping systems that identify 

the necessary information requirements, 

obtain relevant data from reliable sources, 

and process mapping data into quality 

information.

Sources: GAO analysis. | GAO-17-301
Page 19 GAO-17-301 Management of Rural Broadband Loans and Grants

Presently, RUS has service-area and proposed service-area data for the 

loan and grant recipients in the RUS mapping tool, which it then overlays 

with decennial Census data. RUS also incorporates data from federal and 

state sources, including FCC’s National Broadband Map, into the RUS 

mapping tool.24 Currently, RUS uses information from the National 

Broadband Map as part of its review of an applicant’s proposed coverage 

area. However, according to RUS, it has found the National Broadband 

Map to have accuracy limitations. We testified before Congress in April 

2016 that when a service provider reports any availability of high-speed 

Internet in a Census block, the entire block was counted as served in 

FCC’s National Broadband Map.25 As we testified, this reporting could 

overstate service in rural areas, which generally constitute large Census 

blocks.26 RUS officials told us that they do not have a mapping system 

that houses extensive broadband service-area data. RUS officials told us 

that they are in the process of improving the data and their broadbandmapping capabilities as they move to improve their RDApply mapping 

information and move to having one mapping system. If successful, this 

effort should lead to improved information about the location of rural 

broadband services. Going forward, improved mapping information can 

help RUS begin to use its mapping information to determine if there are 

unserved rural areas where it should consider additional outreach.

 24The National Broadband Map was originally created by NTIA in collaboration with FCC, 

using data that each state, territory, and the District of Columbia collected from broadband 

providers or other sources. It was first published in February 2011 and updated every six 

months through April 2015 with data from the State Broadband Initiative. Data displayed 

on the National Broadband Map site are as of June 30, 2014, and have not been updated 

since. In May 2015, NTIA transferred the map to FCC. FCC now collects broadband 

deployment data twice a year from service providers through the Form 477 data collection, 

beginning with data as of December 2014 (available at https://www.fcc.gov/general/form477-resources-filers). FCC is actively reviewing how best to update the data in the 

National Broadband Map.

25Census blocks are the basis for all geographic boundaries for which the Census Bureau 

tabulates data. Census blocks are statistical areas bounded by visible features such as 

roads, streams, and railroad tracks, and by nonvisible boundaries such as property lines, 

city, township, school district, county limits, and short line-of-sight extensions of roads. 

26GAO, Tribal Internet Access: Increased Federal Coordination and Performance 

Measurement Needed, GAO-16-504T (Washington, D.C.: Apr. 27, 2016).
Page 20 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS has procedures and activities that are consistent with the leading 

practice of providing external training to prospective applicants, 

applicants, and recipients of its loan and grant programs. For example, 

we found that, over the past 5 years, RUS has held a number of external 

training and outreach events, such as workshops and seminars, to 

provide a range of information about its broadband loan and grant 

programs to rural communities and prospective applicants. For example, 

RUS has hosted multi-day construction and engineering workshops on 

broadband engineering and construction issues. RUS also hosted

workshops on contract administration issues, such as the financial, 

accounting, and audit processes and requirements for the programs. RUS 

has also provided technical training on system installation. In addition, 

RUS representatives have participated in conferences held by broadband 

trade associations and other groups, setting up information booths or 

holding information sessions on the RUS programs. For applicants, RUS 

has held webinars on the loan- and grant-application processes. While 

RUS does not have a formal process for identifying external training 

needs, the agency assesses and makes training decisions at the 

beginning of each fiscal year or when there are available funds.

According to an RUS official, decisions are made after consulting with the 

GFRs, state officials, and RUS loan and grant recipients.

Officials representing all six loan and grant recipients we spoke with had 

participated in external training provided by RUS. Project recipients 

participated in at least one training course and felt that the RUS training 

was helpful. Moreover, all six recipients said that their GFR was critical to 

obtaining necessary program information by providing ongoing support 

and assistance, such as assisting applicants in filling out the forms for the 

loan programs and helping explain program policies or procedures.

External Training

Leading Practice: External Training

Key activities: 

• Identify external training needs. 

• Develop a mechanism that allows grant 

and loan applicants and recipients to 

establish and maintain a level of subjectmatter expertise and competence so that 

they can fulfill their responsibilities.

• Develop training that helps grant and loan 

recipients obtain sufficient understanding 

of regulations, policies, and procedures 

governing their grants or loans.

Sources: GAO analysis. | GAO-17-301
Page 21 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS’s procedures and activities are partially consistent with the leading 

practice of project monitoring because RUS has in place a number of 

monitoring and oversight activities of program recipients, but RUS does 

not currently evaluate Community Connect project results. According to 

the Green Book, effective project monitoring incorporates a process that 

helps ensure that project goals are identified, tracked, and met. Project 

monitoring should include corrective actions to address identified internalcontrol issues and penalties for serious and frequent offenses of program 

requirements. Project activities are to be evaluated and reported on a 

regular basis to help determine whether changes are needed to better 

meet project goals and detect fraud and abuse.

A July 2014 RUS reorganization resulted in separate divisions for 

overseeing the different phases of RUS projects. Prior to the 

reorganization, analysts were responsible for overseeing each loan and 

grant project from beginning to end. The reorganization split the 

responsibilities by divisions—Loan Origination and Approval Division 

(LOAD) oversees all project applications and approvals, while Portfolio 

Management and Risk Assessment (PMRA) is responsible for monitoring 

all broadband loans and grants and has procedures for tracking 

performance and monitoring projects. While there are some differences in 

the monitoring requirements for the three programs, PMRA tracks the 

following for all projects:

• Subscriber number and service area: Applicants are required to 

provide details on the service area and the number of subscribers 

intended to be served. The GFR is responsible for visiting the 

designated service area to ensure that these goals are met.

• Deliverables and time frames: PMRA reviews recipients’ contracts 

with construction firms and the related invoices to evaluate recipients’

progress toward established deliverables and project milestones.

• Progress reports: Project recipients are required to submit progress 

reports to RUS. According to RUS officials, Community Connect grant 

recipients submit annual progress reports to their GFRs while 

Infrastructure Program and Broadband Program loan recipients are 

required to submit quarterly progress reports as well as an annual 

report. Progress report data are tracked in RUS’s Broadband 

Collection Analysis System and Data Collection System.

• Financial information for loans: The financial information required in 

the progress reports includes balance sheets, income, debt service 

ratios, cash flow, and long-term debt. PMRA analysts evaluate the 

Project Monitoring

Leading Practice: Project Monitoring

Key activities: 

• Establish baselines, goals, and 

performance measures for projects. 

• Establish a system of internal control for 

monitoring projects.

• Identify problematic issues and design 

and take corrective actions. 

• Require periodic reviews, including 

progress reports. 

• Establish corrective actions, including 

penalties, for serious and frequent 

offenses of program requirements.

• Evaluate project results.

Sources: GAO analysis. | GAO-17-301
Page 22 GAO-17-301 Management of Rural Broadband Loans and Grants

financial data against broadband miles constructed and the number of 

subscribers to ensure compliance with the project goals and flag any

potential issues.

• Monitoring duration: Community Connect grants are monitored for the 

duration of the grant project, typically up to the 3 years the program 

allows for construction and implementation; all recipients are required 

to submit a project performance-activity report and audit report 

annually. Infrastructure Program and Broadband Program loans are 

monitored for the life of the loans and audited for compliance every 2-

5 years until all funds are disbursed . A final audit is conducted after 

all funds are disbursed. Annual audited financial statements are 

reviewed annually until the loans are paid in full.

The two grant and four loan recipients we spoke with confirmed that their 

GFRs make site visits to ensure the eligibility of the area to receive 

service. While the number of visits may vary, the recipients said that work 

by their GFRs ranged from evaluating construction progress and ensuring 

compliance with contract goals and deliverables to validating billing 

statements. They also stated that actions that RUS can take for noncompliance are laid out in their loan or grant agreements.

While RUS established many project-monitoring activities, with regard to 

the key activity of evaluating project results, we found that RUS evaluates 

loan performance but does not review post-award grant program 

performance. For loans, RUS necessarily follows loan projects through 

the repayment process—which is often 20 years or more—and evaluates 

what happened when a loan recipient defaults. However, for grants, once 

a Community Connect grant is fully disbursed, RUS does not conduct any 

evaluation of whether the grant recipient is still providing broadband 

service at a later date or measure the effectiveness of the project in 

meeting its goals. RUS officials told us that they would like to go back and 

evaluate grant projects, but that staffing resource constraints have 

prevented them from doing so. However, not periodically evaluating grant 

project results affects RUS’s ability to measure the outcomes and 

success of its grant program. Without analysis of post-award project 

successes or failures, Community Connect program managers are 

missing information that could be used to determine if programmatic 

changes might improve the selection of grant recipients or the results of 

grant awards.
Page 23 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS’s procedures and activities related to its communications with 

program applicants and recipients are consistent with the leading practice 

of external communication. RUS provides outreach efforts to publicize its 

broadband loan and grant programs through workshops and seminars 

located around the country, and to provide information on program 

requirements, key dates, funding availability, and the review processes, 

including how applications are scored. Both RUS headquarters 

employees and GFRs in the field conduct outreach efforts. According to 

an RUS official, it is not cost-effective to visit very remote areas to 

disseminate information about their programs, but they do try to hold their 

workshops in areas where there may be an interest in the programs. For 

example, the workshops that RUS has held in recent years included a 

2014 Telecommunications Workshop held in Clanton, Alabama, which 

has a population under 9,000, and a 2-day workshop in 2015 held in the 

Washington State Rural Development Office in Olympia, Washington, that 

covered broadband access and deployment. To reach out to others, 

RUS’s website contains information on its programs, including information 

about eligibility criteria, corresponding regulations, time frames, and 

frequently asked questions.

Applicants can get pre-application assistance from their GFRs and RUS 

headquarters staff. Applicants can also obtain program application 

guidance on the RUS website, including fact sheets, process information, 

and application instructions. We reviewed documentation and interviewed 

officials and found that RUS sent eligibility, acceptance, and rejection 

letters that explain how decisions were reached. RUS also publicizes 

information on loan and grant awards through press releases and 

announcements on its website.

All six recipients we spoke with said that their GFR was their primary 

communication link, followed by someone in the RUS headquarters office.

The recipients’ views about RUS’s external communication ranged from 

“adequate” to “excellent.” Typically, the recipients would first reach out to 

their GFRs and then to RUS headquarters if a GFR could not answer the 

question. Recipients also said that they would try to get information and 

answers on the RUS website; however, as one recipient noted, it is easier 

to ask the GFR. Overall, the recipients said that RUS’s external 

communication efforts kept them informed. Specifically, recipients praised 

their GFRs’ efforts to inform them about relevant events, such as 

available funding, upcoming application periods, and deadlines.

External Communication

Leading Practice: External Communication

Key activities:

• Conduct outreach efforts to potential 

applicants. 

• Provide relevant information, prior to 

making award decisions, on program 

requirements, time frames, and review 

processes.

• Provide pre-application assistance.

• Notify successful and unsuccessful 

applicants of selection decisions in writing 

and provide feedback on applications.

• Ensure transparency by making program 

documents, policies, procedures, and 

decisions publicly available.

• Publish information on the number of 

grants and loans awarded annually.

Sources: GAO analysis. | GAO-17-301
Page 24 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS’s procedures and activities are partially consistent with the leading 

practice of internal communication as it has established an organizational 

structure to permit the flow of information to assist agency staff and 

recipients, appropriate methods of communication throughout the 

organization, and mechanisms to obtain relevant data based on identified 

project information requirements. However, RUS falls short of this leading 

practice in that it does not have a centralized system to obtain relevant 

data to monitor grant awards and loans, including correspondence and 

deliverables.

As noted above, RUS established a new organizational structure in 2014 

to consolidate expertise and assist agency staff in fulfilling their 

responsibilities. For example, the new organizational structure has clearly 

defined reporting lines that include four divisions with respective Deputy 

Assistant Administrators. These divisions oversee operations, loan 

origination and approval, portfolio management and risk assessment, and 

policy and outreach. With regard to communication methods, internal 

meetings are held on an ad-hoc basis throughout the year, and at the 

Rural Development mission area level, regular announcements and 

notices are sent to the various offices. As discussed earlier, RUS’s 

application review process includes numerous meetings and distribution 

of pertinent information throughout the process among field and 

headquarters staff.

RUS has multiple software systems to monitor loan and grant data, and 

both division and field staff are responsible for collecting and monitoring 

data. However, the current loan and grant data are not aggregated or 

housed in a centralized database. According to RUS officials, RUS has 

updated the application system with RDApply, but in addition to that, uses 

a number of different databases that are mostly legacy systems and 

antiquated. RUS headquarters and field staff can access pertinent data 

from the various software systems. However, RUS officials told us they 

cannot conduct complex analyses, but can produce data such as, for 

example, spreadsheets on how many obligations have been made since 

a particular year. RUS officials told us that they want to move to a 

modern, single, centralized database that would enable them to conduct 

analyses of all loan and grant applications. RUS officials said that USDA’s 

information technology department is working on a new software system, 

but RUS was not able to provide us with a plan or implementation 

timelines for when the system would become operational. Moving toward 

a centralized system would allow RUS to more effectively monitor loans 

and grants and more fully analyze program performance.

Internal Communication

Leading Practice: Internal Communication

Key activities: 

• Establish an organizational structure, 

including well-defined reporting lines, to 

permit the flow of quality information and 

to assist agency staff and recipients in 

fulfilling their responsibilities.

• Establish mechanisms to facilitate 

communication throughout the 

organization.

• Establish mechanisms to obtain relevant 

data in a timely manner based on 

identified project information 

requirements. 

• Use a centralized system to monitor grant

and loan awards, including 

correspondence and deliverables.

Sources: GAO analysis. | GAO-17-301
Page 25 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS’s procedures and activities are partially consistent with the written 

documentation leading practice. According to the Green Book, an 

effective management framework for grants and loans includes 

developing and maintaining written documentation as a means to obtain 

and retain organizational knowledge and to ensure accountability for 

achieving agreed-upon results. Although RUS has effectively developed 

written documentation to communicate to program applicants and 

recipients, we found that RUS has not consistently updated its written 

policies and procedures to retain organizational knowledge and to 

communicate loan- and grant-management knowledge internally among 

its staff.

For each of the three programs, RUS has updated application guides to 

assist applicants in the application process. For Community Connect, 

RUS created an application guide for fiscal year 2016. The current 

application guides for both the Broadband Program and the Infrastructure 

Program incorporate updates regarding the eligibility of equipment and 

facilities for funding. For the benefit of applicants and recipients, we found 

that RUS has periodically issued announcements and letters pertaining to 

the programs, frequently asked questions, and fact sheets. Furthermore, 

information about the three programs and their application documents are 

online.

According to RUS officials, RUS documents its award decisions. RUS 

conducts an initial assessment of applications to determine whether an 

application meets eligibility requirements, is complete, or needs 

clarification. For those not complete, RUS would send the applicant a 

letter stating the deficiencies or with questions. The applicant would have 

30 days to address the concerns of the letter and amend the application 

in order for it to continue through the decision making process. Once final 

application decisions are made, RUS notifies the applicants of the 

decisions and reasons for denial of loan or grant. Recipients are required 

to sign agreements which lay out their expectations during the course of 

the awards.

The six loan and grant recipients we spoke with told us that the 

application processes are lengthy and require a great deal of information.

However, two recipients for the Community Connect and Infrastructure 

Programs told us that they found the written documentation for the 

processes to be relatively clear and straightforward. RUS has provided 

guidance and templates that have been helpful to some of the recipients.

Written Documentation

Leading Practice: Written Documentation

Key activities:

• Develop and maintain guidance specific 

to each grant and loan program, including 

documentation to outline recipient and 

agency expectations, and to ensure 

accountability for achieving agreed-upon 

results.

• Document the rationale for award 

decisions, including the reasons individual 

projects were selected or not selected 

and how changes made to requested 

funding amounts may affect applicants' 

ability to achieve project goals.

• Develop and maintain written policies and 

procedures as a means to obtain, 

communicate, and retain organizational 

knowledge among agency staff.

Sources: GAO analysis. | GAO-17-301
Page 26 GAO-17-301 Management of Rural Broadband Loans and Grants

While written guidance to assist applicants and recipients exists, since its 

reorganization in 2014, RUS has not fully updated written documentation 

for loan and grant management policies and procedures to communicate 

knowledge among its staff. For the Community Connect program, RUS 

has updated its staff instructions, templates and worksheets for 

determining eligibility, conducting technical reviews, and scoring the 

applications. For the Infrastructure Program, RUS provided us with 

revised application checklists, loan checklists, and post-award projectvisit checklists to be used by the GFR. For the Broadband Program, RUS 

provided us with the program’s initial application review report. However, 

RUS does not have any formalized staff instructions for processing the 

Broadband Program’s loan applications. According to one RUS official, 

employees use checklists and review packets similar to those for the 

Infrastructure Program. Moreover, the dates of other checklists and 

instructions RUS provided range from 1995 to 2011, and some of them 

make reference to agency offices that no longer exist.

RUS officials told us that they have not been able to update employee 

manuals on the grant and loan programs due to resource constraints.

While we were told that engineers (job series 855—Professional series 

for engineers) and financial analysts (job series 1101—Business-Industry 

Analyst) review the applications, the grant- and loan-review process steps 

are not written down. New employees are assigned a mentor and learn 

their responsibilities through on-the-job training. The GFR manual is 

dated March 2007 and has not been updated to reflect organizational 

changes within RUS. According to one of the loan recipients we spoke 

with, new RUS employees seemed to have a difficult time ensuring that 

they are passing correct information to program applicants.

The Telecommunications Division responsible for overseeing the 

broadband grant and loan programs consists of employees located in its 

headquarters and GFRs located in 27 regional territories throughout the 

country. Since fiscal year 2000, the Telecommunications Division’s 

approved full-time equivalents (FTE) have decreased about 25 percent, 

from 133 FTEs in fiscal year 2000 to 98 FTEs in fiscal year 2016. We 

found that much of the critical knowledge of these programs resides in 

one key official located at headquarters, who is close to retirement.

Furthermore, several of the recipients we spoke with noted that their GFR 

has changed, either due to retirement or reassignment. These changes 

could negatively affect the agency in efficiently carrying out its tasks, 

unless the agency has documented detailed information on how the 

programs are to be managed for the next generation of RUS officials.
Page 27 GAO-17-301 Management of Rural Broadband Loans and Grants

RUS’s procedures and activities for coordinating and collaborating with 

other federal agencies are consistent with the leading practice of 

coordination mechanisms, which should help the agencies in minimizing 

redundancies and removing regulatory barriers, for example:

• In 2014, RUS and FCC, the other agency with primary responsibility 

for providing rural broadband funding, entered into a memorandum of 

understanding (MOU). The MOU was intended to govern the sharing 

of data between the agencies, thereby improving federal coordination 

and facilitating the agencies’ efforts to carry out the responsibilities of 

their broadband-funding programs. For example, documentation we 

reviewed showed RUS and FCC staff coordinating on issues 

regarding carriers that use both agencies’ programs, data resulting 

from carrier audits, and questions about program rules.

• RUS signed an interagency agreement with the Environmental 

Protection Agency (EPA) in September 2015 to provide technical 

assistance for the Cool & Connected project, which aims to support 

community development by leveraging investments in Internet access.

The agreement states that the two agencies will provide technical 

assistance to the partner communities and conduct outreach for the 

Cool & Connected project. The technical assistance includes 

consultations, analysis, and workshops to help members of the 

partner communities develop action plans for improving broadband 

access and revitalizing downtowns and traditional neighborhoods in 

rural areas. According to the agreement, both RUS and EPA will 

invest financial resources into the project and both agencies will offer 

the services of headquarters and field staff to provide technical 

assistance.

In addition, the Department of Agriculture co-chairs the Broadband 

Opportunity Council, an effort involving 25 federal agencies and 

departments with missions or programs with the potential to drive 

broadband infrastructure investment and adoption. The Broadband 

Opportunity Council seeks to foster increased collaboration among 

agencies, to identify regulatory barriers and additional opportunities to 

improve broadband access, and to elevate the importance of broadband 

as a cross-cutting policy objective across the federal government. The 

Broadband Council issued a report in 2015 with dozens of action items 

intended to improve broadband nationwide and, in January 2017, issued 

a progress report stating that more than one-third of the action items had 

been completed by the federal agencies involved.

Coordination Mechanisms

Leading Practice: Coordination 

Mechanisms

Key activity: 

• Collaborate and coordinate with federal 

agencies to minimize redundancy and 

remove regulatory barriers.

Sources: GAO analysis. | GAO-17-301
Page 28 GAO-17-301 Management of Rural Broadband Loans and Grants

By following leading practices related to program management, federal 

funding, and broadband deployment, RUS can more effectively and 

efficiently use its resources to help promote the deployment of broadband 

infrastructure to rural areas that are currently unserved or underserved.

RUS has established procedures and activities that are consistent with 

leading practices in the management of its broadband infrastructure loan 

and grant programs in several areas, including its application review 

process, its external training of and communication with program 

participants, and its collaboration with other federal entities on efforts 

related to broadband deployment. With regard to mapping, we believe 

that RUS’s plan to obtain mapping information from recipients going 

forward will help RUS to better align with the leading practice in this area.

In other areas, RUS is consistent with some key activities of leading 

practices, but further incorporation of key activities could enhance its 

loan- and grant-program management. Most fundamentally, RUS needs 

to develop clear goals and performance measures for each of its three 

programs. With regard to risk assessments, RUS established procedures 

to conduct numerous risk-assessment activities at the application and 

project level. However, an assessment of each program could help RUS 

determine whether modifications to business practices and internal 

controls are necessary to cost-effectively address programmatic and 

portfolio-level risks. Similarly, RUS established procedures to actively 

monitor loan and grant projects in numerous ways, but has not evaluated 

the outcomes of its grant awards over time. Such an evaluation could 

better inform RUS as to whether changes to Community Connect are 

warranted to help improve the outcomes for the communities served by 

the grant projects. Internally, RUS could improve its practices by 

establishing a centralized data system and improving its written 

documentation for the benefit of its staff. These actions to improve RUS’s 

consistency with leading practices can help the agency build a stronger 

foundation for successful program management.

To improve RUS’s management of the Infrastructure Program, 

Broadband Program, and Community Connect by more closely following 

leading practices for broadband loan- and grant-program management, 

we recommend that the Secretary of Agriculture direct RUS to take the 

following five actions.

• Develop and document clear goals and performance measures linked 

to those goals, for each program.

Conclusions

Recommendations for 

Executive Action
Page 29 GAO-17-301 Management of Rural Broadband Loans and Grants

• Establish and implement procedures to conduct a risk assessment of 

each program, including an examination of risk at both the 

programmatic and portfolio level for each program.

• Establish and implement procedures to conduct periodic evaluations 

of completed grant projects to determine the outcomes associated 

with these projects, and analyze the information gained to assess if 

any programmatic changes are needed to improve the Community 

Connect program.

• Establish a timeline for implementing a centralized internal system for 

staff to obtain relevant and timely program data for use in managing 

and monitoring loans and grant awards.

• Develop, update, and maintain complete written policies and 

procedures for RUS’s programs as a way to retain and communicate 

organizational knowledge internally among agency staff. RUS should 

determine the critical documentation that should be created or 

updated, including considering documentation such as loanapplication review guidance and employee manuals for each of the 

three programs.

We provided a draft of this report to USDA, FCC, and NTIA for review and 

comment. USDA agreed with our recommendations. USDA, FCC, and 

NTIA provided technical comments, which we incorporated as 

appropriate.

Agency Comments
Page 30 GAO-17-301 Management of Rural Broadband Loans and Grants

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of the United States Department of Agriculture, 

the USDA’s Under Secretary for Rural Development, the Chairman of the 

Federal Communications Commission, the Secretary of the Department 

of Commerce, and the Assistant Secretary for Communications and 

Information at the National Telecommunications and Information 

Administration. In addition, the report will be available at no charge on the 

GAO website at http://www.gao.gov.

If you or members of your staff have questions about this report, please 

contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found

on the last page of this report. Key contributors to this report are listed in 

appendix II.

Mark L. Goldstein

Director, Physical Infrastructure
Appendix I: Description of Leading Practices 

and GAO’s Assessment

Page 31 GAO-17-301 Management of Rural Broadband Loans and Grants

Table 3: GAO Assessment of the Extent to which the Rural Utilities Service’s Procedures and Activities Are Consistent with 

Leading Practices in the Management of Broadband Funding Programs

Leading practice Key activities associated with the leading practice Assessment

Program performance measurement • Establish a process that ensures program goals 

are identified, tracked, and fulfilled.

• Develop performance measures that link directly 

to stated program goals.

• Establish a process to evaluate and document the 

results of program measurement activities, 

including plans for corrective actions.

Partially consistent 

Risk assessment • Define program objectives.

• Define the program’s risk tolerances.

• Establish a process to conduct risk assessments 

to identify and analyze risks to achieving program 

objectives.

• Conduct risk assessments to identify and analyze 

risks for credit programs.

• Determine the program’s fraud risk factors and 

the types of fraud for which the program is most 

at risk.

• Determine and conduct the appropriate 

responses to identified risks.

Partially consistent

Application review procedures • Develop procedures for the review of grant and 

loan applications that describes the process 

(describing, for example, the number of panels or 

reviewers, the methods for assigning applications 

to panels or reviewers, how the results of the 

review are recorded, how scoring variances 

across panels or reviewers are resolved, how 

panels or reviewers ensure consistent reviews, 

etc.).

• Use a panel or reviewers who hold relevant 

expertise, do not have conflicts of interest, apply 

the appropriate criteria, and are trained.

Consistent

Mapping • Map broadband availability to help both 

policymakers and service providers determine 

where to focus their efforts, and to reveal gaps in 

service to providers that might wish to expand 

their offerings.

• Establish mapping systems that identify the 

necessary information requirements, obtain 

relevant data from reliable sources, and process 

mapping data into quality information.

Partially consistent

Appendix I: Description of Leading Practices 

and GAO’s Assessment
Appendix I: Description of Leading Practices 

and GAO’s Assessment

Page 32 GAO-17-301 Management of Rural Broadband Loans and Grants

Leading practice Key activities associated with the leading practice Assessment

External training • Identify external training needs.

• Develop a mechanism that allows grant and loan 

applicants and recipients to establish and 

maintain a level of subject-matter expertise and 

competence so that they can fulfill their 

responsibilities related to compliance with the 

terms and conditions of the program.

• Develop training that helps grant and loan 

recipients obtain sufficient understanding of 

regulations, policies, and procedures governing 

their grants or loans.

Consistent

Project monitoring • Establish baselines, goals, and performance 

measures for projects.

• Establish a system of internal control for 

monitoring projects.

• Identify problematic issues and design and take 

corrective actions.

• Require periodic reviews, including progress 

reports.

• Establish corrective actions, including penalties, 

for serious and frequent offenses of program 

requirements.

• Evaluate project results.

Partially consistent

External communication • Establish procedures for outreach efforts to 

potential applicants.

• Provide relevant information, prior to making 

award decisions, on program requirements, time 

frames, and review processes.

• Establish a process to provide pre-application 

assistance.

• Establish a process to notify successful and 

unsuccessful applicants of selection decisions in 

writing and provide feedback on applications.

• Ensure transparency by making program 

documents, policies, procedures, and decisions 

publicly available.

• Publish information on the number of grants and 

loans awarded annually.

Consistent
Appendix I: Description of Leading Practices 

and GAO’s Assessment

Page 33 GAO-17-301 Management of Rural Broadband Loans and Grants

Leading practice Key activities associated with the leading practice Assessment

Internal communication • Establish an organizational structure, including 

well-defined reporting lines, to permit the flow of 

quality information and to assist agency staff and 

recipients in fulfilling their responsibilities.

• Establish appropriate methods of communication 

throughout the organization.

• Establish mechanisms to obtain relevant data in a 

timely manner based on identified project 

information requirements.

• Use a centralized system to monitor grant and 

loan awards, including correspondence and 

deliverables.

Partially consistent

Written documentation • Document the rationale for award decisions, 

including the reasons individual projects were 

selected or not selected and how changes made 

to requested funding amounts may affect 

applicants’ ability to achieve project goals.

• Develop and maintain written policies and 

procedures as a means to obtain, communicate, 

and retain organizational knowledge among 

agency staff.

• Develop and maintain guidance specific to each 

grant and loan program, including documentation 

to outline recipient and agency expectations, and 

to ensure accountability for achieving agreedupon results.

Partially consistent

Coordination mechanisms • Collaborate and coordinate with federal agencies 

to minimize redundancy and remove regulatory 

barriers

Consistent

Source: GAO analysis. | GAO-17-301
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 34 GAO-17-301 Management of Rural Broadband Loans and Grants

Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov.

In addition to the contact named above, Faye Morrison (Assistant 

Director), Martha Chow (Analyst in Charge), Melissa Bodeau, Richard 

Bulman, Russell Burnett, Marcia Carlsen, Carol Henn, Ken Rupar, 

Terence Lam, Hannah Laufe, Benjamin Licht, SaraAnn Moessbauer, 

Joshua Ormond, Cheryl Peterson, Mathew Scirè, and Sarah Veale made 

key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100686)
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