ECONOMIC 

DEVELOPMENT 

ADMINISTRATION

Documentation of 

Award Selection 

Decisions Could Be 

Improved

Report to Congressional Committees

February 2014

GAO-14-131

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-131, a report to 

congressional committees

February 2014

ECONOMIC DEVELOPMENT ADMINISTRATION

Documentation of Award Selection Decisions Could 

Be Improved

Why GAO Did This Study

The Department of Commerce’s EDA 

provides financial assistance through 

grants to rural and urban communities 

experiencing substantial and persistent 

economic distress. EDA grants are 

intended to leverage existing regional 

assets to support the implementation 

of economic development strategies 

that advance new ideas and creative 

approaches to promote economic 

prosperity in distressed communities.

House Report 112-463 included a 

mandate that GAO review grants EDA 

made under its Public Works and EAA

programs from fiscal years 2006 

through 2012. This report discusses (1) 

the extent to which EDA documented

its funding decisions (2) the levels of 

economic distress and population 

density of counties where EDA funded 

projects, and (3) the types of projects 

EDA funded. GAO reviewed EDA 

regulations and guidance; analyzed 

EDA project data from fiscal years 

2007 (the year in the period covered by 

the mandate in which EDA awarded 

the most grants), 2011 (the most 

recent year with reliable data), and

2012 (the year in which EDA 

implemented new documentation 

procedures), as well as other federal 

data; and interviewed EDA staff. 

What GAO Recommends

To increase transparency in the award 

selection process, GAO recommends 

that EDA develop and implement

procedures to ensure that EDA 

regional offices consistently complete 

the required template for each 

proposed project considered for 

funding. EDA agreed with the 

recommendation and described its 

plans to address it. 

What GAO Found

The Economic Development Administration (EDA) implemented a new procedure 

in fiscal year 2012 that requires its regional offices to complete a standard 

template to document the results of committee meetings in which proposed 

projects are discussed and potentially recommended for funding. However, GAO 

found that for the Public Works and Economic Development (Public Works) 

program and the Economic Adjustment Assistance (EAA) program—EDA’s two 

largest grant assistance programs—EDA regional offices had not completed the 

template consistently. GAO estimated that only 46 percent of all projects 

recommended for funding in fiscal year 2012 under these programs were 

documented using the complete template. EDA has a history of inconsistent 

documentation: for example, in 2000 the Department of Commerce’s Inspector 

General reported inconsistencies in how EDA’s regional offices documented the 

project review process. Standards for internal control in the federal government 

require all transactions and significant events to be clearly documented and 

available for examination. Until EDA takes steps to ensure that all of its regional 

offices consistently and fully complete the standard template for all proposed 

projects considered for funding, EDA will not have adequate assurance that its 

funding decisions are consistent and transparent. 

GAO found that counties where EDA funded projects in fiscal years 2007 and 

2011 under its Public Works and EAA programs generally had lower per capita 

income and higher unemployment rates than national and state averages. 

Furthermore, some projects that EDA funded under the Public Works and EAA 

programs in fiscal years 2007 and 2011 had an EDA-defined special need arising 

from actual or threatened severe unemployment or economic adjustment 

problems. In addition, GAO found that counties where EDA funded projects

under Public Works and EAA were generally part of nonrural areas (areas with 

an urban center of more than 50,000 people). Specifically, in fiscal years 2007

and 2011, respectively, 52 percent and 67 percent of all of EDA’s funded projects 

under the two programs were in nonrural areas. 

GAO found that various types of economic development projects received 

funding under Public Works and EAA in fiscal years 2007 and 2011. The most 

common types of projects funded under Public Works involved constructing or 

repairing infrastructure (such as water, sewer, gas, and electrical systems) or 

constructing or renovating commercial buildings and industrial and business 

parks. The most common types of projects funded under EAA involved helping

businesses get started, planning and research to support job creation and 

retention, and constructing or repairing infrastructure.

View GAO-14-131. For more information, 

contact Cindy Brown Barnes at (202) 512-

9345 or brownbarnesc@gao.gov.
Page i GAO-14-131 EDA Award Selection Documentation

Letter 1 

Background 3

EDA Offices Did Not Consistently Document Funding Decisions 9

Project Counties Were Generally Distressed Relative to National 

and State Averages and Located in Nonrural Areas 12

EDA Funded Various Types of Projects under Its Public Works 

and Economic Adjustment Assistance Programs 22

Conclusions 24

Recommendation 24

Agency Comments and Our Evaluation 25

Appendix I Objectives, Scope, and Methodology 27

Appendix II Description of Project Categories 34

Appendix III Comments from the Department of Commerce 35

Appendix IV GAO Contact and Staff Acknowledgments 37

Tables

Table 1: PWEDA Criteria for Eligible Entities and Projects, and 

Mandatory Award Factors 5

Table 2: Criteria and Procedures Used To Assess Public Works 

and Economic Adjustment Assistance Grant Applications 

in Fiscal Years 2007 and 2011 8

Figures

Figure 1: EDA Template for Investment Review Committee 

Record 10

Figure 2: Project County Per Capita Income Levels Relative to 

National Averages, Fiscal Years 2007 and 2011 13

Figure 3: Project County Per Capita Income Levels Relative to 

State Averages, Fiscal Years 2007 and 2011 14

Contents
Page ii GAO-14-131 EDA Award Selection Documentation

Figure 4: Project County 24-Month Unemployment Rates Relative 

to National Averages, Fiscal Years 2007 and 2011 15

Figure 5: Project County 24-Month Unemployment Rates Relative 

to State Averages, Fiscal Years 2007 and 2011 16

Figure 6: Special Need Eligibility for Public Works and Economic 

Adjustment Assistance Projects, Fiscal Years 2007 and 

2011 18

Figure 7: Rural-Urban Continuum Codes of Counties with EDA 

Public Works or Economic Adjustment Assistance 

Projects in 2007 20

Figure 8: Rural-Urban Continuum Codes of Counties with EDA 

Public Works or Economic Adjustment Assistance 

Projects in 2011 21

Figure 9: Public Works and Economic Adjustment Assistance 

Projects by Category, Fiscal Years 2007 and 2011 23

Abbreviations

ACS American Community Survey

BEA Bureau of Economic Analysis

BLS Bureau of Labor Statistics

EAA Economic Adjustment Assistance

EDA Economic Development Administration

EDAP Economic Development Assistance Program

ERS Economic Research Service

OIG Office of Inspector General

PCI per capita income

PWEDA Public Works and Economic Development Act of 1965

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Page 1 GAO-14-131 EDA Award Selection Documentation

441 G St. N.W.

Washington, DC 20548

February 6, 2014

The Honorable Barbara Mikulski

Chairman

The Honorable Richard Shelby

Ranking Member

Subcommittee on Commerce, Justice, Science, and Related Agencies

Committee on Appropriations

United States Senate

The Honorable Frank Wolf

Chairman

The Honorable Chaka Fattah

Ranking Member

Subcommittee on Commerce, Justice, Science, and Related Agencies

Committee on Appropriations

House of Representatives

The Public Works and Economic Development Act of 1965 (PWEDA) 

authorized the creation of the Economic Development Administration 

(EDA) within the Department of Commerce (Commerce).1 PWEDA, as 

amended, authorizes EDA to provide financial assistance through grants 

to rural and urban communities experiencing substantial and persistent 

economic distress. The two largest programs EDA uses to accomplish its 

mission are the Public Works and Economic Development (Public Works) 

program and the Economic Adjustment Assistance (EAA) program. In 

fiscal year 2012, Public Works projects comprised 48 percent ($129.2 

million) of EDA’s total grant investment dollars, while EAA projects 

comprised 14 percent ($38.5 million) of EDA’s total grant investment 

dollars.

House Report 112-463 included a requirement that GAO review grants 

EDA made under the Public Works and EAA programs.2 In response to 

 

1

P. L. 89-136 (79 Stat. 552, codified at 42 U.S.C. §3121 et seq.).

2

The language of House Report 112-463 directing GAO to conduct this review was slightly 

modified and approved by the Explanatory Statement that appears in the Congressional 

Record of March 11, 2013 (159 Cong. Rec. S1287, S1300 (daily ed. March 11, 2013)).

The Explanatory Statement is the equivalent of the Conference Committee Report for the 

Consolidated and Further Continuing Appropriations Act of 2013 (Pub. L. 113-6), which 

contains EDA’s fiscal year 2013 appropriations. See Pub L. 113-6, § 4.
 

Page 2 GAO-14-131 EDA Award Selection Documentation

the mandate, on September 13, 2013, we briefed your committee staffs 

on our preliminary observations and discussed the scope and 

methodology of our work.

This report examines (1) the extent to which EDA documented grant 

selection decisions; (2) the indicators of economic distress for counties 

with EDA-funded projects and how these funds have been distributed to 

rural and nonrural areas; and (3) the types of projects that have been 

funded by these programs. EDA awarded more than 1,500 grants under 

the Public Works and EAA grant programs in fiscal years 2006 through 

2012 (the period of interest in the congressional mandate). In general, we 

focused our review on fiscal year 2007 because EDA awarded the largest 

number of grants in this year compared to the rest of the 7-year period 

and fiscal year 2011 because it was the most recent year during the 

period in which we considered data to be reliable. We also reviewed 

relevant statutes and EDA regulations, operational guidance, and federal 

funding opportunity announcements that defined the eligibility and other 

criteria for awarding grants under the Public Works and EAA programs. 

To address the first objective, we reviewed a nonprobability sample of 64 

projects EDA funded across the six regions in fiscal years 2007 and 2011 

and assessed the documentation its regional offices maintained on 

meetings related to the funding of these projects. We also reviewed a 

random and generalizable sample of 74 grant awards from fiscal year 

2012, drawn from a sample population of 204 projects, to assess the 

extent to which EDA regional offices followed new procedures for 

documenting meetings related to funding of proposed projects during that 

year. All estimates from our review have a margin of error of no more 

than plus or minus 10 percentage points. In addition, we conducted 

structured interviews with officials from EDA’s six regional offices to 

enable comparison of regional grant review and documentation practices. 

To address the second objective, we used Bureau of Economic Analysis 

(BEA) and Bureau of Labor Statistics (BLS) data, respectively, to 

calculate the 12-month per capita income and 24-month unemployment 

rate (calendar years) at the county level for each funded grant from fiscal 

years 2007 and 2011, and we compared the county data to national and 

state averages for the same time periods. We did not use the same 

procedures that EDA staff generally use to calculate per capita income 

and unemployment, and our findings are not intended to replicate EDA’s 
 

Page 3 GAO-14-131 EDA Award Selection Documentation

eligibility determinations.3 We also used EDA’s data to identify and 

describe projects that were funded during the period based upon a 

special need. In addition, we used the U.S. Department of Agriculture 

Economic Research Service’s (ERS) Rural-Urban Continuum Codes to 

identify the population density at the county level for each funded grant. 

To address the third objective, we categorized EDA’s descriptions of the 

economic development activities funded by Public Works and EAA grants 

using GAO-defined project types.4

To assess the reliability of EDA data, we interviewed EDA officials 

knowledgeable about the electronic grants management database, 

reviewed relevant documentation, and conducted electronic data testing. 

We reviewed documentation from BEA, BLS, the Census Bureau, and 

ERS about how they compile their data. We determined that these data 

sources were sufficiently reliable for the purpose of describing the 

poverty, unemployment, and rural classifications of EDA project locations. 

See appendix I for a detailed description of our scope and methodology.

We conducted this performance audit from April 2013 to February 2014 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.

EDA’s primary focus is to help regions experiencing long-term economic 

distress or sudden economic dislocation (brought about by, for example, 

 

3

In comparison with the methodology and data sources used in our analyses, EDA 

regulations require staff to base determination of economic distress on the most recent 

American Community Survey (ACS) published by the U.S. Census Bureau for the relevant 

geographic area. Where a recent ACS is not available, EDA staff must base their decision 

upon the most recent federal data from other sources. As described, our analysis is based 

upon BEA’s per capita income data. ACS uses a different measure of per capita income 

than BEA (specifically, the ACS measure reflects wages and salaries only, while the BEA 

measure reflects additional components of income beyond wages and salaries, such as 

“in kind” income from Medicaid and Medicare, and employer contributions). Such 

differences in data sources may contribute to variations between our findings and EDA’s 

determinations. (See appendix I for more details on EDA’s and our methodologies.) 

4

See appendix II for more detail on these project types. 

Background
 

Page 4 GAO-14-131 EDA Award Selection Documentation

plant closure or natural disaster) through public infrastructure 

investments, technical assistance and research, and the development 

and implementation of comprehensive economic development strategies. 

EDA’s two largest grant assistance programs are Public Works and EAA. 

The Public Works program is used to finance infrastructure-related 

activities that support job creation, such as water and sewer facilities, 

industrial parks and business centers, broadband facilities, port and rail 

improvements, and business incubator facilities. The EAA program is 

used to fund strategic planning and implementation activities, including 

the same activities eligible under Public Works grants.

PWEDA establishes criteria for the (1) types of entities that are eligible for 

assistance; (2) economic distress characteristics of geographic areas in 

which projects can be located, with specific thresholds for per capita 

income and unemployment rates; and (3) factors EDA must consider 

when awarding grants (see table 1). While proposed grant projects 

generally must be located in an area that is experiencing at least one of 

the distressed circumstances, applicants are not required to be physically

located in these areas.5 EDA funds for the Public Works and EAA 

programs are publicly announced in annual Economic Development 

Assistance Program (EDAP) Federal Funding Opportunities (FFO) and 

competitively awarded to eligible entities, as shown in table 1. Grantmaking authority is decentralized among the agency’s six regional offices, 

whose primary responsibility is to review requests for EDA funding, 

provide technical assistance, and administer EDA grants.

 

5

Applicant eligibility is determined by the entity type. (See table 1.)
 

Page 5 GAO-14-131 EDA Award Selection Documentation

Table 1: PWEDA Criteria for Eligible Entities and Projects, and Mandatory Award Factors 

Types of eligible entities Eligible entities must be

• economic development districts;

• Indian tribes;

• State, a city, or other political subdivision of a state;

• an institution or consortium of institutions of higher education; or

• a public or private nonprofit organization or association acting in cooperation with 

officials of a political subdivision of a state.

Economic distress characteristics of 

geographic area in which the project is 

locateda

Project areas must meet one or more of the following

• per capita income of 80 percent or less of the national average;

• most recently available 24-month unemployment rate at least 1 percentage point 

greater than the national average; or

• a special need arising from actual or threatened severe unemployment or 

economic adjustment problems resulting from severe short-term or long-term 

changes in economic conditions.a

Criteria for assistanceb Public Works projects must

• improve opportunities for the successful establishment or expansion of industrial or 

commercial plants or facilities; help create long-term employment opportunities; or 

primarily benefit the long-term unemployed and members of low-income families in 

the project area;

• fulfill a pressing need of the area, or part of the area, where the project is located;

• align with the area’s comprehensive economic development strategy (a plan for 

addressing an area’s economic problems and opportunities); and

• adhere to the rule that not more than 15 percent of EDA funding for Public Works 

may be expended in any one state.

Economic Adjustment Assistance projects must

• help the area to meet a special need arising from— 

• actual or threatened severe unemployment; or

• economic adjustment problems resulting from severe changes in economic 

conditions; and

• align with the area’s comprehensive economic development strategy (with the 

exception of planning projects). 

Source: PWEDA.

Note: According to EDA regulations, eligible projects can also include projects located within an 

Economic Development District in a region that does not meet the per capita income, unemployment, 

or special need criteria. Such projects would be eligible for investment assistance if EDA determines 

that the project will be of ‘‘substantial direct benefit’’ to a geographic area within the Economic 

Development District that meets one or more of the above criteria. For this purpose, a project 

provides a ‘‘substantial direct benefit’’ if it provides significant employment opportunities for 

unemployed, underemployed, or low-income residents of the geographic area within the Economic 

Development District. Although they represent a small portion of the fiscal year 2007 and 2011 

projects we reviewed, we did not conduct separate analyses of the numbers or types of projects that 

were eligible based on this criterion because it was outside the scope of our review.

a

Projects generally must be located in an area that, on the date of submission of the application, 

meets one or more of these criteria.

b

EDA must determine that the project will meet all stated objectives.
 

Page 6 GAO-14-131 EDA Award Selection Documentation

EDA uses multiple levels of review to identify competitive economic 

development investment proposals:

• Pre-application review (optional). Regional office staff provides 

technical assistance to applicants prior to formal application.

• Technical review. Regional office staff assess the timeliness and 

completeness of applications, including whether the applications meet 

the eligible entity and economic distress criteria.

• Project analysis review. A regional representative assesses complete

applications’ responsiveness to the specific requirements set forth in 

the relevant FFO.

• Investment Review Committee review. After the technical and project 

analysis reviews, members of the Investment Review Committee 

(IRC) prioritize competitive applications that merit consideration for an 

award. Each office maintains an IRC that must include regional 

counsel, a specialist in environmental issues, and a representative 

from EDA headquarters. The final IRC voting panel consists of at least 

four voting members, excluding the regional counsel and Regional 

Director. According to EDA’s 2012 operations manual, IRC 

recommendations must be developed with an aim of ensuring the 

balance of EDA’s grant portfolio both in terms of geography and 

investment type, and recommendations must be balanced against the 

amount of funding each office is allotted for Public Works and EAA 

grants.

• Grant officer’s review. Each office’s regional director serves as the 

grant officer and is responsible for reviewing the IRC 

recommendations and making final award decisions. EDA’s 2012 

operations manual requires grant officers to document in writing the 

reasons behind decisions that disagree with the IRC’s 

recommendation.

EDA staff also apply three types of criteria during review phases, as 

outlined by the EDAP FFO:

• Economic distress criteria. During the technical review phase, regional 

office staff apply economic distress criteria established by PWEDA to 

determine whether applications meet regulatory eligibility 

requirements.
 

Page 7 GAO-14-131 EDA Award Selection Documentation

• Evaluation criteria. During the project analysis review, regional office 

staff assess each application’s responsiveness to evaluation criteria 

set forth in the relevant FFO. 

• Selection criteria. The IRC uses selection criteria to select the pool of 

competitive applications from which grants will be recommended for 

an award.

Table 2 describes these criteria in detail. According to EDA headquarters, 

the criteria used to review applications for Public Works and EAA grant 

funds have generally reflected EDA’s investment priorities since the 

agency was established in 1965 and, thus, have not changed. However, 

officials said that the process for applying the criteria may change from 

time to time based upon, for example, a suggestion from Commerce’s 

Office of General Counsel or a regional office. The 2011 EDAP FFO 

described two grant review procedures that were not part of EDA’s 2007 

EDAP FFO. Specifically, in fiscal year 2007, applications were only 

required to meet one out of five evaluation criteria, and EDA staff were 

not required to prioritize or rank competitive applications to help inform 

the grant officer’s award decision. However, in fiscal year 2011, EDA 

policy required staff to apply specific weights, as shown in table 2, to five 

categories of evaluation criteria: (1) national strategic priorities; (2) 

economically distressed and underserved communities; (3) return on 

investment; (4) collaborative regional innovation; and (5) public/private 

partnerships.6 Next, staff were to categorize each grant application as 

“not competitive,” “competitive,” or “highly competitive” based upon the 

merit review. IRC panels were then required to make a ranked list of 

recommendations from the pool of “competitive” and “highly competitive” 

applications. The ranked list of applications would be considered by the 

grant officer for final grant award decisions. Table 2 illustrates the criteria 

and procedures used to assess Public Works and EAA grants in fiscal 

years 2007 and 2011.

 

6

In other words, in 2011, the five evaluation criteria were to be specifically weighted during 

IRC discussions, while in 2007, IRC staff may have discussed and considered any one of 

the five evaluation criteria without limitation.
 

Page 8 GAO-14-131 EDA Award Selection Documentation

Table 2: Criteria and Procedures Used To Assess Public Works and Economic Adjustment Assistance Grant Applications in 

Fiscal Years 2007 and 2011

Evaluation criteria and procedures

FY 2007 FY 2011

Proposed projects were to exhibit at least one of the following criteria:

• Market-based and results drive;

• Strong organizational leadership;

• Advance productivity, innovation and entrepreneurship;

• Looks beyond the immediate economic horizon, anticipates 

economic changes, and diversifies the local and regional 

economy;

• Demonstrate a high degree of local commitment

Proposed projects were evaluated using weighted criteria:

• National Strategic Priorities (30%)

• Economically Distressed and Underserved Communities 

(25%)

• Return on Investment (25%)

• Collaborative Regional Innovation (10%)

• Public/Private Partnerships (10%)

Selection criteria and procedures

FY 2007 FY 2011

Applications that met technical and project analysis review 

requirements were selected for further consideration based on the 

following criteria:

• Whether proposals support or encourage one or more of the 

following funding priority considerations:

• Long-term, coordinated, and collaborative regional economic 

development approaches;

• Innovation and competitiveness; and

• Entrepreneurship

• Additional consideration was given to proposals that:

• responded to sudden and severe economic dislocations;

• enabled communities impacted by Base Realignment and 

Closures (BRAC) to transition to a civilian economy;

• advanced the goals of Executive Order 13287, “Preserve 

America”; and

• supported economic revitalization of brownfieldsa 

Applications ranked “competitive” or “highly competitive” were 

further evaluated based on the extent to which they

addressed the following objectives:

• Relative economic distress;

• Applicant’s financial or management capacity;

• Availability of program funds;

• Geographic balance in distribution of program funds;

• Diversity of project types across grant programs;

• Diversity of organizations, populations, and regional 

territories receiving funding;

• Applicant’s performance under previous federal financial 

assistance awards;

• Likelihood and/or time frame of job creation; or

• Ability to enable BRAC-impacted communities to 

transition to a civilian economy

Source: EDA Economic Development Assistance Program Federal Funding Opportunities from 2007 and 2011.

a

Brownfields are defined as real properties of which the expansion, redevelopment, or reuse may be 

complicated by the presence or potential presence of a hazardous substance, pollutant, or 

contaminant. EDA funds projects designed to prevent, assess, safely clean up, and reuse 

brownfields.
 

Page 9 GAO-14-131 EDA Award Selection Documentation

EDA has a history of inconsistently documenting the results of committee 

meetings in which proposed projects are recommended for funding. In 

December 2000, the Commerce Office of Inspector General (OIG) 

reported that it found inconsistencies in how EDA’s regional offices 

documented the project review committee (now referred to as the IRC) 

process and recommended that EDA keep better documentation of 

actions by these committees.7 We also found inconsistencies in how 

EDA’s regional offices documented the results of IRC meetings, based on 

our review of a nongeneralizable sample of the IRC meeting 

documentation for 64 Public Works and EAA projects EDA funded in 

fiscal years 2007 and 2011. For example, some IRC meeting 

documentation we reviewed provided limited information on the proposed 

projects and included only a discussion of the number of jobs and the 

amount of private investment that the project would generate. In contrast, 

we found other instances of IRC meeting documentation that provided 

detailed information on proposed projects reviewed, including positives 

and negatives associated with the project and recommendations to 

improve the project. EDA officials told us that the agency had policies and 

procedures in place for its regional offices to follow for awarding grants in 

fiscal years 2007 and 2011, but that copies of the 2007 policies and 

procedures could not be located and that the same policies and 

procedures effective in fiscal year 2010 were also applicable in 2011. Our 

review of EDA’s 2010 policies and procedures found that there was no 

requirement that regional offices document IRC meeting discussions in a 

consistent manner. Similarly, EDA officials said that, prior to fiscal year 

2012, discussions were not consistently documented. 

In March 2012, EDA implemented new procedures in response to the 

Commerce OIG’s December 2000 recommendations. According to the 

new procedures, regional offices were required to complete an IRC 

record for each proposed project reviewed using a standard template 

(see fig. 1). EDA guidance notes that the IRC should address several 

items using the template, including the (1) pros and cons of each project; 

(2) environmental/legal issues, if any; (3) project’s fit with the agency’s 

investment priorities; (4) notes on the reasonableness of reported 

 

7

U.S. Department of Commerce, Office of Inspector General, Economic Development 

Administration: Financial Assistance Programs’ Award Processes Promote Merit-Based 

Selection Decisions CFDA Nos. 11.300, 11.303-11.305, and 11.307. Financial Audit 

Report No. DEN-11580/December 2000. 

EDA Offices Did Not 

Consistently 

Document Funding 

Decisions
 

Page 10 GAO-14-131 EDA Award Selection Documentation

outcome data on jobs and private investment; and (5) recommendations 

for further action.

Figure 1: EDA Template for Investment Review Committee Record
 

Page 11 GAO-14-131 EDA Award Selection Documentation

Despite the new guidance and procedures, we found that EDA regional 

offices did not consistently complete the required IRC template in fiscal 

year 2012. We reviewed a random and generalizable sample of IRC 

record templates for 74 Public Works and EAA projects that EDA regional 

offices funded in fiscal year 2012, and we estimate that the regional 

offices filled out the template in its entirety for only 46 percent of all 

projects funded that year.8 We found that one of EDA’s regional offices 

did not complete an IRC record template for any of the 20 projects we 

reviewed from this office. In addition, we estimate that 34 percent of the 

projects across all six regions did not include a discussion of pros and 

cons as required by EDA’s new procedures and 35 percent did not 

indicate the investment priority or priorities the projects were designed to 

address. Further, EDA has yet to implement a means of monitoring the 

offices’ use of the IRC template or assessing its effectiveness.

Standards for Internal Control in the Federal Government requires that all 

transactions and other significant events be clearly documented and the 

documentation be readily available for examination.9 Such documentation 

provides an entity with reasonable assurance that its operations are 

conducted effectively and efficiently and in compliance with applicable 

laws and regulations. Until EDA ensures that its regional offices 

consistently and fully complete an IRC record template for all proposed 

projects considered for funding, EDA will not have adequate assurance 

that its funding decisions are consistent and transparent.

 

8

All estimates from our random sample have a margin of error of 10 percentage points.

9

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C.: November 1999). 
 

Page 12 GAO-14-131 EDA Award Selection Documentation

Based on our analysis of the economic distress characteristics of the 

counties where EDA funded projects under its Public Works and EAA 

programs in fiscal years 2007 and 2011, we found that counties where 

EDA funded projects generally had lower per capita income and higher 

unemployment rates than national and state averages. Furthermore, 

some projects that EDA funded under the Public Works and EAA 

programs in fiscal years 2007 and 2011 had a special need, as defined by 

EDA. In addition, we found that for fiscal years 2007 and 2011, more than 

half of the projects EDA funded were located in counties that were part of 

nonrural areas, or areas with an urban center of more than 50,000 

people.

Based on our methodology and data sources, counties where EDA 

funded projects in fiscal years 2007 and 2011 under its Public Works and 

EAA programs generally had lower per capita income and higher 

unemployment rates compared with national and state averages. As 

previously mentioned, we did not use the same procedures that EDA staff 

generally use to calculate per capita income and unemployment, and our 

findings are not intended to replicate EDA’s eligibility determinations. 

As figure 2 illustrates, in fiscal years 2007 and 2011, our analysis showed 

that EDA funded a number of projects in counties that had a per capita 

income at or less than the national average, particularly under the Public 

Works program. For example, 121 of the 135 projects (90 percent) EDA 

funded under the Public Works program in fiscal year 2007 and 67 of the 

80 projects (84 percent) in fiscal year 2011 were located in counties with 

per capita income at or less than the national average. Under the EAA 

program, 89 of the 116 projects (77 percent) EDA funded in fiscal year 

2007 and 93 of the 150 projects (62 percent) it funded in fiscal year 2011 

were located in counties that had a per capita income at or less than the 

national average.

Project Counties 

Were Generally 

Distressed Relative to 

National and State 

Averages and 

Located in Nonrural 

Areas

Project Counties Generally 

Had Lower Per Capita 

Income and Higher 

Unemployment Rates 

Compared with National 

and State Averages
 

Page 13 GAO-14-131 EDA Award Selection Documentation

Figure 2: Project County Per Capita Income Levels Relative to National Averages, Fiscal Years 2007 and 2011

EDA also funded a number of projects in counties that had a per capita 

income at or less than the state average, as figure 3 shows. Specifically, 

under the Public Works program, 119 of the 135 projects (88 percent) 

EDA funded in fiscal year 2007 and 68 of the 80 projects (85 percent) 

EDA funded in fiscal year 2011 were located in counties with per capita 

income at or less than the state average. Under the EAA program, 86 of 

the 116 projects EDA funded (74 percent) in fiscal year 2007 and 87 of 

the 150 projects (58 percent) EDA funded in fiscal year 2011 were 

located in counties with per capita income at or less than the state 

average.
 

Page 14 GAO-14-131 EDA Award Selection Documentation

Figure 3: Project County Per Capita Income Levels Relative to State Averages, Fiscal Years 2007 and 2011

Our analysis also found that the 24-month unemployment rates of EDAfunded project counties were typically higher than national unemployment 

rates. In fiscal year 2007, 89 (66 percent) of 135 Public Works project 

counties and 85 (71 percent) of 120 EAA project counties had 24-month 

unemployment rates that met or exceeded the national average (see fig. 

4). In fiscal year 2011, fewer Public Works and EAA project counties (49 

projects, or 60 percent and 76 projects, or 50 percent, respectively) had 

unemployment rates meeting or exceeding the national average.
 

Page 15 GAO-14-131 EDA Award Selection Documentation

Figure 4: Project County 24-Month Unemployment Rates Relative to National Averages, Fiscal Years 2007 and 2011

Our comparisons of the unemployment rate in EDA-funded counties to 

the state unemployment rate produced largely the same results as the 

national comparisons. Specifically, EDA funded 86 projects (64 percent) 

in fiscal year 2007 and 49 projects (60 percent) in fiscal year 2011 under 

the Public Works program in counties that met or exceeded the state 

unemployment average. In addition, EDA funded 70 projects (58 percent) 

in fiscal year 2007 and 79 projects (52 percent) in fiscal year 2011 under 

the EAA program in counties that met or exceeded the state 

unemployment average (see fig. 5).
 

Page 16 GAO-14-131 EDA Award Selection Documentation

Figure 5: Project County 24-Month Unemployment Rates Relative to State Averages, Fiscal Years 2007 and 2011

Our analysis of EDA’s data showed that EDA funded some projects 

located in areas with a special need (as defined by PWEDA and EDA 

regulations) under the Public Works and EAA programs in fiscal years 

2007 and 2011 (see fig. 6). As previously discussed, EDA can determine 

a project to be eligible for funding based on a special need arising from 

actual or threatened severe unemployment or economic adjustment 

problems resulting from severe short-term or long-term changes in 

economic conditions. EDA funded a higher number of projects with a

special need under its EAA program compared with its Public Works 

program in both fiscal years 2007 and 2011. Figure 6 also shows that, 

under both programs and in both fiscal years, firm closure/restructuring

was the most commonly met special need criterion. In addition, EDA 

funded several projects under its EAA program that met the natural 

resource depletion special need criterion in fiscal year 2007 and the 

disaster or emergency special need criterion in fiscal year 2011. 

According to EDA officials, EDA received a large amount of supplemental 

no-year funding (additional funding that is available until expended and 

not tied to a particular fiscal year) in fiscal years 2008 and 2009 that could 

be used for disaster-related activities. Therefore, many of the special 

need projects eligible based on disasters or emergencies and funded in 

Some Project Areas Had 

an EDA-Defined Special 

Need
 

Page 17 GAO-14-131 EDA Award Selection Documentation

fiscal year 2011 could have been identified in fiscal years 2008 or 2009. 

In addition, these officials stated that the economic conditions in fiscal 

year 2011 could have accounted for part of the increased number of 

special-need-eligible projects in that year because the national 

unemployment rate was higher than usual and the national per capita 

income level was lower than usual, making it more difficult for individual 

counties to meet the EDA thresholds for these measures.
 

Page 18 GAO-14-131 EDA Award Selection Documentation

Figure 6: Special Need Eligibility for Public Works and Economic Adjustment 

Assistance Projects, Fiscal Years 2007 and 2011
 

Page 19 GAO-14-131 EDA Award Selection Documentation

With the exception of the Public Works program in fiscal year 2007, at 

least half of the funded Public Works and EAA projects in fiscal years 

2007 and 2011 were located in counties that were part of nonrural areas. 

According to the U.S. Department of Agriculture Economic Research 

Service’s Rural-Urban Continuum Codes, 52 percent of all EDA grants 

awarded in fiscal year 2007 and 67 percent of those awarded in fiscal 

year 2011 funded projects in nonrural areas.10 By program, 45 percent of 

Public Works grants awarded in fiscal year 2007 and 53 percent of those 

awarded in fiscal year 2011 funded projects in nonrural areas, while 61 

percent of EAA grants awarded in fiscal year 2007 and 75 percent of 

those awarded in fiscal year 2011 funded projects in nonrural areas. By 

comparison, 85 percent of the U.S. population lived in such nonrural 

areas as of the 2010 Census. A small number of projects each year were 

located in completely rural counties (population less than 2,500). These 

projects represented 7 percent of combined Public Works and EAA 

projects in fiscal year 2007 and 2 percent of combined projects in fiscal 

year 2011. By comparison, about 1.5 percent of the U.S. population lived 

in completely rural areas as of the 2010 Census. Figures 7 and 8 show 

the population density of counties where projects were funded in fiscal 

years 2007 and 2011, respectively.

 

10According to the Economic Research Service, nonrural areas are part of metropolitan 

statistical areas, which the Office of Management and Budget defines as having at least 

one urbanized area of 50,000 or more population, plus adjacent territory that is highly 

integrated with the core as measured by commuting ties. Only one county in a 

metropolitan statistical area need have a population of 50,000 or more in order for every 

other county within that area to be considered nonrural. In both 2007 and 2011, some 

project counties in the nonrural category had populations of less than 50,000. For 

example, EDA funded a project in 2011 in a Florida county with a 2011 Census population 

estimate of about 27,000. However, the county is in the Jacksonville, Florida, metropolitan 

statistical area, which had a population of about 1.3 million as of the 2010 Census. 

Many Projects Were 

Located in Nonrural Areas
 

Page 20 GAO-14-131 EDA Award Selection Documentation

Figure 7: Rural-Urban Continuum Codes of Counties with EDA Public Works or Economic Adjustment Assistance Projects in 

2007

Notes: In several cases, more than one project was located in a given county. In addition, this map 

excludes projects that occurred in more than one county.

As defined by the U.S. Department of Agriculture’s Economic Research Service, the Rural-Urban 

Continuum Codes reflect the following population densities:

Code 1: Counties in metro areas of 1 million population or more

Code 2: Counties in metro areas of 250,000 to 1 million population

Code 3: Counties in metro areas of 50,000 to 250,000 population

Code 4: Urban population of 20,000 to 49,999, adjacent to a metro area
 

Page 21 GAO-14-131 EDA Award Selection Documentation

Code 5: Urban population of 20,000 to 49,999, not adjacent to a metro area

Code 6: Urban population of 2,500 to 19,999, adjacent to a metro area

Code 7: Urban population of 2,500 to 19,999, not adjacent to a metro area

Code 8: Completely rural or less than 2,500 urban population, adjacent to a metro area

Code 9: Completely rural or less than 2,500 urban population, not adjacent to a metro area

Figure 8: Rural-Urban Continuum Codes of Counties with EDA Public Works or Economic Adjustment Assistance Projects in 

2011

Notes: In several cases, more than one project was located in a given county. In addition, this map 

excludes projects that occurred in more than one county.
 

Page 22 GAO-14-131 EDA Award Selection Documentation

As defined by the U.S. Department of Agriculture’s Economic Research Service, the Rural-Urban 

Continuum Codes reflect the following population densities:

Code 1: Counties in metro areas of 1 million population or more

Code 2: Counties in metro areas of 250,000 to 1 million population

Code 3: Counties in metro areas of 50,000 to 250,000 population

Code 4: Urban population of 20,000 to 49,999, adjacent to a metro area

Code 5: Urban population of 20,000 to 49,999, not adjacent to a metro area

Code 6: Urban population of 2,500 to 19,999, adjacent to a metro area

Code 7: Urban population of 2,500 to 19,999, not adjacent to a metro area

Code 8: Completely rural or less than 2,500 urban population, adjacent to a metro area

Code 9: Completely rural or less than 2,500 urban population, not adjacent to a metro area

Based on our analysis of EDA-funded projects, EDA provided funding for 

various types of economic-development-related projects under its Public 

Works and EAA programs in fiscal years 2007 and 2011. As figure 9 

shows, EDA most often funded projects in two categories under its Public 

Works program:

• infrastructure (projects that involve, among other things, constructing 

and repairing various modes of transportation; constructing and 

repairing water, sewer, gas, and electrical systems; and developing 

telecommunications and broadband infrastructure) and

• commercial and industrial (projects that involve the design, 

construction, demolition, or renovation of commercial buildings and 

industrial and business parks, including infrastructure to support the 

parks and financial support to existing businesses).

Examples of Public Works projects from these categories that were 

selected from competitive applications include a grant of about $2.0 

million for improving water and wastewater systems (infrastructure) in 

Northampton County, North Carolina, which, according to our analysis, 

had per capita income of 72 percent of the national average and an 

unemployment rate 2 percentage points higher than the national average, 

and a grant of about $1.2 million to expand an industrial park (commercial 

and industrial) in Beltrami County, Minnesota, which had per capita 

income of 72 percent of the national average.

EDA Funded Various 

Types of Projects 

under Its Public 

Works and Economic 

Adjustment 

Assistance Programs
 

Page 23 GAO-14-131 EDA Award Selection Documentation

Figure 9: Public Works and Economic Adjustment Assistance Projects by Category, Fiscal Years 2007 and 2011

Figure 9 also shows that EDA most often funded projects in three 

categories under its EAA program:

• infrastructure (projects that involve, among other things, constructing 

and repairing various modes of transportation; constructing and 
 

Page 24 GAO-14-131 EDA Award Selection Documentation

repairing water, sewer, gas, and electrical systems; and developing 

telecommunications and broadband infrastructure).

• business development (projects that support entrepreneurial efforts, 

help businesses get started, and promote the development of new 

markets for existing products); and

• plans and research (planning and strategy development efforts for job 

creation and retention and projects that support research of practices, 

principles, and innovations that foster effective economic development 

strategies).

Examples of EAA projects from these categories that were selected from 

competitive applications include grants of about $150,000 for 

entrepreneurial training (business development) in Tulare County, 

California, which, according to our analysis, had per capita income of 68 

percent of the national average; about $200,000 for the development of 

an oil spill recovery plan (plans and research) in Lafayette County, 

Louisiana, which was awarded under the special need economic distress 

eligibility criterion; and about $2.5 million for a road reconstruction project 

(infrastructure) in Washington County, Rhode Island, which was also 

awarded under the special need economic distress eligibility criterion.

While EDA took steps in fiscal year 2012 to address long-standing issues 

with its documentation of IRC decisions, we found inconsistencies in 

regional offices’ use of the new template, including offices that did not 

include a discussion of the pros and cons associated with the projects 

being considered and one office that did not use the IRC template to 

document any of the discussions we sampled from its fiscal year 2012 

records. Federal internal control standards require clear and accessible 

documentation of all program transactions and other significant events. 

Because EDA officials have not ensured that its regional offices fully and 

consistently document their IRC discussions in the template, EDA may 

not have adequate assurance that its funding decisions are consistent 

and transparent.

To increase transparency in the award selection process, the Secretary of 

Commerce should direct the Deputy Assistant Secretary for Economic 

Development to develop and implement procedures to ensure that EDA 

regional offices consistently complete the required Investment Review 

Committee record template for each proposed project considered for 

funding.

Conclusions

Recommendation
 

Page 25 GAO-14-131 EDA Award Selection Documentation

We provided a draft of this report to the Department of Commerce 

(Commerce) for review and comment. Commerce’s Economic 

Development Administration (EDA) provided written comments, which are 

presented in appendix III. EDA agreed with our recommendation and 

requested that we provide additional clarification on our methodology for 

analyzing the economic distress characteristics and distribution of the 

economic development grant funds sampled in our study.

EDA agreed with our recommendation to develop and implement 

procedures to ensure that regional offices consistently complete the 

required Investment Review Committee (IRC) template. Further, the 

agency noted that it plans to implement updated grant procedures and 

operations manuals in fiscal year 2014. The agency stated that these 

manuals should more clearly delineate requirements for proper 

documentation of the IRC meetings and other grant review requirements. 

The agency also stated that it plans to provide training to EDA regional 

staff on both new manuals. 

EDA officials also commented on our use of different data sources than 

EDA staff are required to use to determine the potential eligibility of 

funded projects. We note throughout the report that we did not use the 

same procedures that EDA staff generally use to calculate per capita 

income and unemployment, and that our findings are not intended to 

replicate EDA’s eligibility determinations. We added language to clarify 

the difference between the American Community Survey’s and Bureau of 

Economic Analysis’ measures of per capita income. In addition, we 

deleted references to statutory thresholds to further distinguish our 

analysis from a compliance review. 

EDA officials also commented on our use of the Department of 

Agriculture’s (USDA) Rural-Urban Continuum Codes for rural and 

nonrural classifications, compared to EDA’s use of the Census definitions 

of these terms. We used Rural-Urban Continuum Codes to describe the 

population densities of the counties that received grants because, 

together, these nine codes provide a more nuanced picture of EDA’s 

grant distribution across counties, while the Census classifies areas as 

either rural or urban. We agree that using the Census definitions of rural 

and urban would have provided a different perspective on the distribution 

of EDA grants to these areas, and we have clarified EDA’s methods and 

our rationale for using USDA’s classification system in the report. 

Finally, EDA officials commented on our finding that the agency funded 

more projects under the special need criterion in fiscal year 2011 than in 

Agency Comments 

and Our Evaluation
 

Page 26 GAO-14-131 EDA Award Selection Documentation

fiscal year 2007, and commented that this was largely because the 

national unemployment rate was high during the recession at the time, 

making it more difficult for communities to meet the EDA thresholds for 

high unemployment or low per capita income. We have included these 

observations in the report.

We are sending copies of this report to appropriate congressional 

committees and to the Secretary of the Department of Commerce. In 

addition, this letter will be made available at no charge on the GAO 

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

Should you or your staff have any questions concerning this report, 

please contact me at (202) 512-9345 or BrownBarnesC@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this letter. GAO staff who made 

key contributions to this report are listed in appendix IV.

Cindy Brown Barnes

Director, Financial Markets

 and Community Investment
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-14-131 EDA Award Selection Documentation

This report examines, for the Economic Development Administration’s 

(EDA) Public Works and Economic Development (Public Works) and 

Economic Adjustment Assistance (EAA) programs, (1) the extent to which 

EDA documented grant selection decisions; (2) the indicators of 

economic distress for counties with EDA-funded projects and how these 

funds have been distributed to rural and nonrural areas; and (3) the types 

of projects that have been funded by these programs.

EDA awarded more than 1,500 grants under the Public Works and EAA 

grant programs in fiscal years 2006 through 2012 (the period of interest in 

the congressional mandate). For most of our review, we focused on fiscal 

year 2007 because EDA awarded the largest number of grants in this 

year compared to the rest of the 7-year period and on fiscal year 2011 

because it was the most recent year during the period in which we 

considered data to be reliable. We did not focus on fiscal year 2012 data 

because some of the data from that year were not considered reliable due 

to an information technology event that shut down EDA’s grant 

management system for several months. However, to assess the extent 

to which EDA staff followed documentation requirements that the agency 

introduced in fiscal year 2012, we used a list of 204 projects from that 

year provided by EDA to randomly select a generalizable sample. We 

found this 2012 data sufficiently reliable for the purpose of drawing a 

sample (see full description of this sample below). 

To determine which fiscal year 2007 and 2011 EDA projects to review, we 

obtained extracts from EDA’s Operations Planning and Control System, 

its electronic grants management system. These data extracts contained 

characteristics of each funded project for fiscal years 2007 and 2011, 

including the project number; relevant program; applicant name; project 

description; project state; project county; amount of EDA funding; total 

project funding; rural classification of the project location; whether the 

project was eligible for funding based on per capita income, 

unemployment, a special need, or other criteria; the maximum percentage 

of program costs the project was eligible to receive from EDA; and an 

open-ended field for a description of the geographic area.1 The original 

 

1 We also received a list of fiscal year 2012 projects from EDA, but we did not assess all 

of the variables listed for fiscal years 2007 and 2011. Rather, we identified the project 

number, relevant program, applicant name, project description, and amount of EDA 

funding for a sample of fiscal year 2012 projects for which we requested meeting minutes 

from EDA. 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 28 GAO-14-131 EDA Award Selection Documentation

data that EDA provided included 751 total projects from fiscal year 2007 

and 711 total projects from fiscal year 2011. These projects reflected all 

of EDA’s grant programs. We removed all projects except those funded 

under the Public Works and EAA programs, leaving 267 and 237 projects, 

respectively, from fiscal years 2007 and 2011. We excluded a small 

number of projects from all or some of our analyses as described below.

To describe the extent to which EDA documented grant selection 

decisions, we selected a nonprobability sample of 72 grant awards—36 

from fiscal year 2007 and 36 from fiscal year 2011—across EDA’s six 

regions. We received and examined 64 of the 72 requested records (33 

from fiscal year 2007 and 31 from fiscal year 2011) of EDA grant review 

meeting minutes associated with these projects to summarize factors 

associated with funding decisions. The results of our analyses of the 

minutes from fiscal years 2007 and 2011 cannot be generalized to all 

EDA grant awards in these two or any other years. In addition, we 

reviewed a random and generalizable sample of 74 grant awards from 

fiscal year 2012 to assess the extent to which EDA staff followed newly 

required procedures for documenting grant review meetings that year. To 

select the probability sample, we started with a list of all 224 Public Works 

and EAA-funded projects from fiscal year 2012 and removed 20 projects 

that were not subject to EDA’s standard grant review process. From the 

list of 204 projects, we randomly selected and requested grant review 

records for 76 projects, and we received 74 records.2 With this probability 

sample, each member of the study population had a nonzero probability 

of being included, and that probability could be computed for any 

member. Our analysis of the fiscal year 2012 minutes provides a 

generalizable perspective (with a margin of error of plus or minus 10 

percentage points) on the extent to which EDA staff followed the newly 

required documentation procedures in fiscal year 2012. As noted earlier, 

there were concerns over the reliability of fiscal year 2012 data. We 

created the sample frame out of the 2012 data extract that EDA provided. 

Later, we discovered that EDA listed 7 projects in its fiscal year 2012 

annual report that were not included in the data extract and included 2 

 

2

According to EDA staff, grants awarded through EDA’s Jobs and Innovation Accelerator 

Challenge and i6 Green Challenge are funded with EAA funds but are not subject to the 

normal review process by regional investment review committees. Therefore, we excluded 

the 20 projects funded under these programs from our potential population of 224 

projects, reducing our population to 204 projects. In addition, when we sent our sample of 

76 projects to EDA, minutes for two projects were unavailable, thus reducing our sample 

to 74 projects. 
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-14-131 EDA Award Selection Documentation

projects in the data extract that were not in the annual report. However, 

after discussion with the agency, we have a reasonable level of 

assurance that the fiscal year 2012 data that we used for our sampling 

purposes were sufficiently reliable. We also reviewed operational 

guidance that identified the eligibility and evaluation criteria for EDA staff 

to apply in determining projects to fund and conducted structured 

interviews with the six regional offices (Atlanta, Austin, Chicago, Denver, 

Philadelphia, and Seattle) to enable comparison of regional grant review 

and documentation practices.

To describe the distress characteristics for counties with EDA-funded 

projects in fiscal years 2007 and 2011, we determined the 12-month per 

capita income and 24-month unemployment rate at the county level for 

each funded grant from fiscal years 2007 and 2011 (based on the EDAdefined date that the project record was created) using Bureau of 

Economic Analysis (BEA) and Bureau of Labor Statistics (BLS) data, 

respectively. We used the same data sources to calculate the national 

and state per capita income and unemployment rates for the same 

periods for each funded grant and compared them to the county level 

data. We chose the 12-month and 24-month periods because EDA’s 

authorizing statute requires EDA staff to obtain “the most recent data 

available” for per capita income and the most recent 24-month period for 

which data are available for unemployment data. To determine the 

appropriate time period for the data, we referred to the date that the 

project record was created in EDA’s electronic grants management 

system and used the BEA and BLS data from the previous 1 or 2 

calendar years, respectively.3 We did not use the same procedures that 

EDA staff generally use to calculate per capita income and 

unemployment, and our findings are not intended to replicate EDA’s 

 

3

Although we used the data extract that EDA provided for the majority of our analyses, we 

retrieved the project creation dates from the complete electronic database, which EDA 

also provided to us. 
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-14-131 EDA Award Selection Documentation

eligibility determinations.4 Some EAA project counties did not have 

relevant per capita income or unemployment data from the BEA or the 

BLS, respectively. In these cases, we dropped the projects from our 

analysis of per capita income or unemployment, as appropriate. 

Specifically, for 2007, we excluded 1 Public Works project and 4 EAA 

projects from the PCI analysis and 3 Public Works projects and 2 EAA 

projects from the unemployment analysis. For 2011, we excluded 2 Public 

Works projects and 3 EAA projects from the PCI analysis and 1 Public 

Works project and 1 EAA project from the unemployment analysis. These 

exclusions resulted in final counts of 135 Public Works projects and 116 

EAA projects for the fiscal year 2007 per capita income analysis, 80 

Public Works projects and 150 EAA projects for the fiscal year 2011 per 

capita analysis, 135 Public Works projects and 120 EAA projects for the 

fiscal year 2007 unemployment analysis, and 81 Public Works projects 

and 152 EAA projects for the fiscal year 2011 unemployment analysis.

We also used EDA’s data to identify and describe Public Works and EAA 

projects that were funded based upon a special need in fiscal years 2007 

and 2011.

To describe the distribution of EDA Public Works and EAA funds among 

rural and nonrural areas in fiscal years 2007 and 2011, we used the U.S. 

Department of Agriculture Economic Research Service’s (ERS) Rural-

 

4

EDA regulations require staff to base determination of economic distress (for per capita 

income or unemployment) on the most recent American Community Survey (ACS) 

published by the U.S. Census Bureau for either the region where the project will be 

located, the geographic area where substantial direct project benefits will occur, or the 

geographic area of poverty or high unemployment, as applicable. Where a recent ACS is 

not available, EDA staff must base their decision upon the most recent federal data from 

other sources (including data available from the Census Bureau, BEA, BLS, the Bureau of 

Indian Affairs, or any other federal source determined by EDA to be appropriate). If no 

federal data are available, an eligible applicant must submit to EDA the most recent data 

available from the state. Because we could not determine what federal data sources 

would have been available at the time of eligibility determination for each project, we used 

the previous 1 or 2 years of BEA and BLS data (for 12-month per capita income and 24-

month unemployment data, respectively) for all projects that we reviewed. Consequently, 

our results may differ from what EDA staff calculated for some projects, particularly with 

regard to per capita income, since the ACS and BEA use different definitions of this 

measure. Specifically, the ACS measure reflects wages and salaries only, while the BEA 

measure reflects additional components of income beyond wages and salaries, such as 

“in kind” income from Medicaid and Medicare, and employer contributions for health and 

pension plans. In addition, we excluded three projects (two from fiscal year 2007 and one 

from fiscal year 2011) from the per capita income analysis because BEA defined the 

relevant geographic areas differently than BLS and the U.S. Department of Agriculture 

(sources of the unemployment and rural classification data).
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-14-131 EDA Award Selection Documentation

Urban Continuum Codes to identify the population density at the county 

level for each funded grant.5 These codes range from 1 (counties in 

metropolitan areas of 1 million or more people) to 9 (counties that are 

completely rural or less than 2,500 people, not adjacent to a metropolitan 

area). ERS regards counties falling into codes 1 through 3 as 

metropolitan (“nonrural”) and those with codes 4 through 9 as 

nonmetropolitan (“rural”). We determined the proportion of grants 

awarded in nonrural versus rural areas in accordance with these 

definitions. We excluded one Public Works project from the population 

density analysis for each of the two fiscal years because Rural-Urban 

Continuum Codes were not available for the relevant counties.

In fiscal years 2007 and 2011, there were 28 and 15 EDA projects, 

respectively, that EDA described as serving multiple counties. Three of 

the fiscal year 2007 multicounty projects only listed one county, so we 

treated these as single county projects. We completely removed 7 of the 

multicounty projects from our fiscal year 2007 sample and 2 from our 

fiscal year 2011 sample because the data extracts did not include the 

names of the relevant counties, which were necessary to obtain per 

capita income, unemployment, and rural classification data. For the 

multicounty projects for which the individual county names were available, 

we calculated a weight for each county by dividing its population for the 

most recent year for which data were available (using Census Bureau 

population estimates) by the total population for all counties in the project. 

We applied the population weight to each county’s 12-month per capita 

income or 24-month unemployment rate to arrive at an average per capita 

income or unemployment rate for the entire project. With regard to the 

Rural-Urban Continuum Codes for the multicounty projects, we 

determined that a weighted average would not be appropriate to apply to 

categorical data. Instead, we applied decision rules that resulted in the 

exclusion of 18 projects (10 projects from fiscal year 2007 and 8 projects 

from fiscal year 2011) from our rural classification analysis and assigned 

 

5

We used Rural-Urban Continuum Codes to describe the population densities of the 

counties that received grants because, together, these nine codes provide a more 

nuanced picture of EDA’s grant distribution across counties. The Census classification 

system, which EDA uses, classifies areas as either rural or urban. ERS updates the RuralUrban Continuum Codes after each decennial census. The two most recent updates 

occurred in calendar years 2003 and 2013. We matched the 2003 continuum codes to the 

fiscal year 2007 project counties and the 2013 continuum codes to the fiscal year 2011 

project counties to approximate as closely as possible the population densities of the 

relevant counties in the years the projects were awarded EDA funds.
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-14-131 EDA Award Selection Documentation

one Rural-Urban Continuum Code to each of the remaining multicounty 

projects. Specifically, for each unique project serving two or more 

counties, we applied the following decision rules. First, if all of the 

counties in a multicounty project had the same code, we assigned that 

code to the entire project. Second, if there were only 2 codes and they 

were contiguous (for example, all 1s and 2s) we assigned the code that 

was most frequent to the entire project. Third, when there were 2 or more 

noncontiguous codes, if one code occurred two-thirds of the time or more, 

we assigned that code to the entire project. Finally, if none of the first 

three rules applied, we excluded the project from the rural classification 

analysis.

To describe the types of projects that EDA funded through its Public 

Works and EAA programs in fiscal years 2007 and 2011, we categorized 

EDA’s descriptions of funded projects using GAO-defined project 

categories. Specifically, in a prior GAO report, we identified nine project 

categories for the Public Works and EAA programs, among other federal 

economic development programs.6 One staff member independently 

categorized the fiscal year 2007 and 2011 projects, another staff member 

reviewed the categorizations, and they addressed any discrepancies with 

the input of a third-party reviewer. After reviewing all project descriptions, 

we condensed the original nine categories into six major categories, as 

well as an “all other” category. (See app. II for a description of project 

categories.) For projects for which the EDA project descriptions were 

unclear, we conducted Internet research and obtained EDA input on 31 

projects to complete our categorizations.

We assessed the reliability of the various electronic data sources used for 

this report, including project data from EDA’s electronic grants 

management database; county, state, and national per capita income and 

unemployment data from BEA and BLS; county population estimates from 

the Census Bureau; and Rural-Urban Continuum Codes from ERS. To 

assess reliability, we interviewed EDA officials knowledgeable about the 

electronic grants management database, reviewed the data dictionary, 

and conducted electronic testing of the data extracts against the relevant 

fields in the full database. We reviewed documentation from BEA, BLS, 

the Census Bureau, and ERS about how they compile their data. We 

 

6

GAO, Rural Economic Development: More Assurance Is Needed That Grant Funding 

Information Is Accurately Reported, GAO-06-294 (Washington, D.C.: February 24, 2006). 
Appendix I: Objectives, Scope, and 

Methodology

Page 33 GAO-14-131 EDA Award Selection Documentation

determined that these data sources were sufficiently reliable for the 

purpose of describing the poverty, unemployment, and rural 

classifications of EDA project locations.

We conducted this performance audit from April 2013 to February 2014 in 

accordance with generally accepted government auditing standards. 

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Description of Project Categories

Page 34 GAO-14-131 EDA Award Selection Documentation

Project categories developed by GAO include the following:

• Business Development: This category captures projects that support 

entrepreneurial efforts, help businesses get started, facilitate job 

placement, and promote the development of new markets for existing 

products.

• Commercial and Industrial: This category captures projects that 

involve the design, construction, demolition, or renovation of 

commercial buildings and industrial parks, including the infrastructure 

designed to support those structures, as well as financial support to 

existing businesses.

• Infrastructure: This category captures projects that involve the 

development of infrastructure, including constructing and repairing 

various modes of transportation (e.g., airports, roads, rail, and 

harbors); and water, sewer, gas, and electricity systems; as well as 

projects that support telecommunications and broadband 

infrastructure.

• Plans and Research: This category captures planning and strategy 

development efforts for job creation and retention, and projects that 

support research of the practices, principles, and innovations that 

foster effective economic development strategies.

• Technical Assistance: This category captures projects that provide 

business management and technical services including assistance 

with technical issues such as disaster mitigation and recovery, and 

biotechnology.

• Training and Education: This category captures projects that provide 

training and education services, including the construction of facilities 

and equipment needed to provide these services.

• All Other Project Types: This category captures projects that do not fit 

appropriately into any of the other categories (e.g., performance 

awards, base grant adjustments, tourism, and enterprise 

development).

Appendix II: Description of Project 

Categories
Appendix III: Comments from the Department 

of Commerce

Page 35 GAO-14-131 EDA Award Selection Documentation

Appendix III: Comments from the 

Department of Commerce
Appendix III: Comments from the Department 

of Commerce

Page 36 GAO-14-131 EDA Award Selection Documentation
Appendix IV: GAO Contact and Staff 

Acknowledgments

Page 37 GAO-14-131 EDA Award Selection Documentation

Cindy S. Brown Barnes, (202) 512-9345 or brownbarnesc@gao.gov

In addition to the individual named above, Marshall Hamlett, Assistant 

Director; Cynthia Grant; Tiffani Humble; May Lee; John McGrail; Andrew 

Moore; Lisa Reynolds; Beverly Ross; Max Sawicky; Jennifer Schwartz; 

Jena Sinkfield; Ardith Spence; and Shana Wallace made key 

contributions to this report.

Appendix IV: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(250757)
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