Testimony 

Before the Committee on Environment 

and Public Works, U.S. Senate 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 9:30 a.m. EST 

March 3, 2004 GRANTS MANAGEMENT

EPA Needs to Strengthen 

Efforts to Address 

Management Challenges 

Statement of John B. Stephenson, Director 

Natural Resources and the Environment 

GAO-04-510T 
www.gao.gov/cgi-bin/getrpt?GAO-04-510T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact John B. 

Stephenson at (202) 512-3841 or 

stephensonj@gao.gov. 

Highlights of GAO-04-510T, testimony 

before the Committee on Environment and 

Public Works, U.S. Senate 

March 3, 2004

GRANTS MANAGEMENT 

EPA Needs to Strengthen Efforts to 

Address Management Challenges 

EPA continues to face four key grants management challenges, despite past 

efforts to address them. These challenges are (1) selecting the most 

qualified grants applicants, (2) effectively overseeing grantees, (3) measuring 

the results of grants, and (4) effectively managing grant staff and resources. 

In the past, EPA has taken a series of actions to address these challenges by, 

among other things, issuing policies on competition and oversight, 

conducting training for project officers and nonprofit organizations, and 

developing a new data system for grants management. However, these 

actions had mixed results because of the complexity of the problems, 

weaknesses in design and implementation, and insufficient management 

attention. 

EPA’s recently issued policies and a 5-year grants management plan to 

address longstanding management problems show promise, but these 

policies and plan require strengthening, enhanced accountability, and 

sustained commitment to succeed. EPA’s September 2002 competition 

policy should improve EPA’s ability to select the most qualified applicants by 

requiring competition for more grants. However, effective implementation of 

the policy will require a major cultural shift for EPA managers and staff 

because the competitive process will require significant planning and take 

more time than awarding grants noncompetitively. EPA’s December 2002 

oversight policy makes important improvements in oversight, but it does not 

enable EPA to identify systemic problems in grants management. For 

example, the policy does not incorporate a statistical approach to selecting 

grantees for review so that EPA can project the results of the reviews to all 

EPA grantees. 

Issued in April 2003, EPA’s 5-year grants management plan does offer, for 

the first time, a comprehensive road map with objectives, goals, and 

milestones for addressing grants management challenges. However, in 

implementing the plan, EPA faces challenges in holding all managers and 

staff accountable for successfully fulfilling their grants management 

responsibilities. Without this accountability, EPA cannot ensure the 

sustained commitment needed for the plan’s success. While EPA has begun 

implementing actions in the plan, GAO believes that, given EPA’s historically 

uneven performance in addressing its grants challenges, congressional 

oversight is important to ensure that EPA’s Administrator, managers, and 

staff implement the plan in a sustained, coordinated fashion to meet the 

plan’s ambitious targets and time frames. 

The Environmental Protection 

Agency (EPA) has long faced 

problems managing its grants, 

which constitute over one-half of 

the agency’s annual budget, or 

about $4 billion. EPA uses grants 

to implement its programs to 

protect human health and the 

environment and awards grants to 

thousands of recipients, including 

state and local governments, tribes, 

universities, and nonprofit 

organizations. EPA’s ability to 

efficiently and effectively 

accomplish its mission largely 

depends on how well it manages its 

grants resources. 

This testimony, based on GAO’s 

August 2003 report Grants 

Management: EPA Needs to 

Strengthen Efforts to Address 

Persistent Challenges, GAO-03-846, 

focuses on the (1) major challenges 

EPA faces in managing its grants 

and how it has addressed these 

challenges in the past, and (2) 

extent to which EPA’s recently 

issued policies and grants 

management plan address these 

challenges. 

GAO made recommendations to 

the Administrator of EPA to 

strengthen the agency’s efforts to 

address persistent challenges in 

effectively managing its grants. 

EPA agreed with GAO’s 

recommendations and is in the 

process of implementing them as 

part of its 5-year grants 

management plan. 
Page 1 GAO-04-510T EPA Grants Management 

Mr. Chairman and Members of the Committee: 

We are pleased to be here today to discuss the Environmental Protection 

Agency’s (EPA) management of its grants. My testimony is based on our 

report on this topic issued last August.1

 

EPA has faced persistent challenges for many years in managing its grants, 

which constitute over one-half of the agency’s budget, or about $4 billion 

annually. To support its mission of protecting human health and the 

environment, EPA awards grants to a variety of recipients, including state 

and local governments, tribes, universities, and nonprofit organizations. 

There were 4,100 EPA grant recipients when we conducted our review.2

 

Given the size and diversity of EPA’s programs, its ability to efficiently and 

effectively accomplish its mission largely depends on how well it manages 

its grant resources and builds accountability into its efforts. 

Congressional hearings in 1996, 1999, and 2003, have focused on EPA’s 

problems in effectively managing its grants. We and EPA’s Inspector 

General have reported on a number of weaknesses throughout the grants 

management process—from awarding grants to measuring grant results.3

 

EPA’s efforts to address its grants management problems have not fully 

resolved them. To highlight these problems and hopefully focus greater 

attention on their resolution, we designated EPA’s grants management as a 

major management challenge in our January 2003 EPA performance and 

accountability report.4

 

Late in 2002, EPA issued two new policies to address some of its grants 

management problems—one to promote competition in awarding grants 

and one to improve its oversight of grants. In April 2003, EPA issued a 

comprehensive 5-year grants management plan to address its longstanding grants management problems. 

 1

U.S. General Accounting Office, Grants Management: EPA Needs to Strengthen Efforts to 

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

2

As of September 30, 2002. 

3

See U.S. General Accounting Office, Environmental Protection Agency: Problems Persist 

in Effectively Managing Grants, GAO-03-628T (Washington, D.C.: June 11, 2003). 

4

U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Environmental Protection Agency, GAO-03-112 (Washington, D.C.: January 2003). 
Page 2 GAO-04-510T EPA Grants Management 

Our testimony today describes the (1) major challenges EPA faces in 

managing its grants and how it has addressed these challenges in the past, 

and (2) extent to which EPA’s recently issued policies and grants 

management plan address these challenges. 

To identify the challenges EPA faces in managing its grants and to 

examine how it has addressed these challenges in the past, we (1) 

analyzed 93 reports on EPA’s grants management, including our reports, 

EPA’s Inspector General reports, and EPA’s internal management reviews 

conducted from 1996 through 2003, (2) systematically reviewed and 

recorded information from the 1,232 records of calendar year 2002 indepth reviews of grantee performance—from financial management to 

progress in achieving grant objectives, and (3) interviewed EPA officials 

and reviewed documents obtained from them.5

 To determine the extent to 

which EPA’s recently issued policies and grants management plan address 

these challenges, we (1) reviewed the new policies and plan and 

interviewed EPA officials responsible for key aspects of the plan, (2) 

attended EPA’s grants management training courses, and (3) observed five 

EPA in-depth reviews of grantees.6

 This testimony is based on GAO’s 

report for which audit work was conducted from June 2002 through June 

2003 in accordance with generally accepted government auditing 

standards. 

In summary, we found the following: 

• EPA faces four key management challenges. These challenges are (1) 

selecting the most qualified grant applicants, (2) effectively overseeing 

grantees, (3) measuring the results of grants, and (4) effectively managing 

grant staff and resources. In the past, EPA has taken a series of actions to 

address these challenges by, among other things, issuing policies, 

conducting training, and developing a new data system for grants 

management. However, these actions had mixed results because of the 

complexity of the problems, weaknesses in design and implementation, 

and insufficient management attention. 

 5

Federal financial assistance includes grants, cooperative agreements, loans, loan 

guarantees, scholarships, and other forms of assistance. For this report, we focused on 

both grants and cooperative agreements, and for simplicity, refer to both as “grants.” 

6

For detailed methodology, see GAO-03-846, app.I. 
Page 3 GAO-04-510T EPA Grants Management 

• EPA’s 2002 competition and oversight policies and 2003 grants 

management plan focus on the major grants management challenges we 

identified but will require strengthening, enhanced accountability, and a 

sustained commitment to succeed. 

 

We made recommendations in our report to the EPA Administrator to 

strengthen grants management, specifically in overseeing grantees, 

measuring environmental outcomes, incorporating accountability for 

grants management responsibilities, considering promising practices, and 

reporting on the progress of its efforts in its annual report to Congress. 

EPA agreed with our recommendations and is in the process of 

implementing them as part of its 5-year grants management plan. 

EPA administers and oversees grants primarily through the Office of 

Grants and Debarment, 10 program offices in headquarters,7

 and program 

offices and grants management offices in EPA’s 10 regional offices. Figure 

1 shows EPA’s key offices involved in grants activities for headquarters 

and the regions. 

 7

According to EPA officials, two headquarters’ offices, EPA’s Office of General Counsel and 

the Office of the Chief Financial Officer conduct limited grant activity. 

Background 
Page 4 GAO-04-510T EPA Grants Management 

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

The management of EPA’s grants program is a cooperative effort involving 

the Office of Administration and Resources Management’s Office of Grants 

and Debarment, program offices in headquarters, and grants management 

and program offices in the regions. The Office of Grants and Debarment 

develops grant policy and guidance. It also carries out certain types of 

administrative and financial functions for the grants approved by the 

headquarters program offices, such as awarding grants and overseeing the 

financial management of these grants. On the programmatic side, 

headquarters program offices establish and implement national policies 

for their grant programs, and set funding priorities. They are also 

responsible for the technical and programmatic oversight of their grants. 

In the regions, grants management offices carry out certain administrative 
Page 5 GAO-04-510T EPA Grants Management 

and financial functions for the grants, such as awarding grants approved 

by the regional program offices,8

 while the regional program staff provide 

technical and programmatic oversight of their grantees. 

As of June 2003, 109 grants specialists in the Office of Grants and 

Debarment and the regional grants management offices were largely 

responsible for administrative and financial grant functions. Furthermore, 

1,835 project officers were actively managing grants in headquarters and 

regional program offices. These project officers are responsible for the 

technical and programmatic management of grants. Unlike grant 

specialists, however, project officers generally have other primary 

responsibilities, such as using the scientific and technical expertise for 

which they were hired. 

In fiscal year 2002, EPA took 8,070 grant actions totaling about $4.2 

billion.9 These awards were made to six main categories of recipients as 

shown in figure 2.

 8

Program offices in regions 4, 5, 6, 9, and 10 award grants directly. 

9

Grant actions include new awards, increase and decrease amendments. The 8,070 grant 

actions involving funding were composed of 4,374 new grants, 2,772 increase amendments, 

and 924 decrease amendments. In addition, EPA awarded 1,620 no cost extensions, which 

did not involve funding, in fiscal 2002. 
Page 6 GAO-04-510T EPA Grants Management 

Figure 2: Percentage of EPA Grant Dollars Awarded by Recipient Type, Fiscal Year 

2002 

EPA offers two types of grants—nondiscretionary and discretionary: 

• Nondiscretionary grants support water infrastructure projects, such as 

the drinking water and clean water state revolving fund programs, and 

continuing environmental programs, such as the Clean Air Program for 

monitoring and enforcing Clean Air Act regulations. For these grants, 

Congress directs awards to one or more classes of prospective recipients 

who meet specific eligibility criteria; the grants are often awarded on the 

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

2002, EPA awarded about $3.5 billion in nondiscretionary grants. EPA has 

awarded these grants primarily to states or other governmental entities. 

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

research and training. EPA has the discretion to independently determine 

the recipients and funding levels for grants. In fiscal year 2002, EPA 

awarded about $719 million in discretionary grants. EPA has awarded 

these grants primarily to nonprofit organizations, universities, and 

government entities. 
Page 7 GAO-04-510T EPA Grants Management 

The grant process has the following four phases: 

• Preaward. EPA reviews the application paperwork and makes an award 

decision. 

• Award. EPA prepares the grant documents and instructs the grantee on 

technical requirements, and the grantee signs an agreement to comply 

with all requirements. 

• Postaward. After awarding the grant, EPA provides technical assistance, 

oversees the work, and provides payments to the grantee; the grantee 

completes the work, and the project ends. 

• Closeout of the award. EPA ensures that all technical work and 

administrative requirements have been completed; EPA prepares closeout 

documents and notifies the grantee that the grant is completed. 

EPA’s grantees are subject to the same type of financial management 

oversight as the recipients of other federal assistance. Specifically, the 

Single Audit Act requires grantees to have an audit of their financial 

statements and federal awards or program-specific audit if they spend 

$300,000 or more in federal awards in a fiscal year. 10, 11 Grantees submit 

these audits to a central clearinghouse operated by the Bureau of the 

Census, which then forwards the audit findings to the appropriate agency 

for any necessary action. However, the act does not cover all grants and 

all aspects of grants management and, therefore, agencies must take 

additional steps to ensure that federal funds are spent appropriately. In 

addition, EPA conducts in-depth reviews to analyze grantees’ compliance 

with grant regulations and specific grant requirements.12 Furthermore, to 

determine how well offices and regions oversee grantees, EPA conducts 

internal management reviews that address grants management. 

EPA’s Inspector General testified before Congress in 1996 and again in 

1999 that EPA did not fulfill its obligation to properly monitor grants. 

Acknowledging these problems, EPA identified oversight, including grant 

 10The Single Audit Act Amendments of 1996, Pub. L. No. 104-156, 110 Stat. 1396 (codified at 

31 U.S.C. §§ 7501-7507). 

11The Office of Management and Budget, as authorized by the act, increased this amount to 

$500,000 in federal awards as of June 23, 2003. 

12EPA refers to these in-depth reviews as advance monitoring. 
Page 8 GAO-04-510T EPA Grants Management 

closeouts, as a material weakness—an accounting and internal control 

system weakness that the EPA Administrator must report to the President 

and Congress.13 EPA’s fiscal year 1999 Federal Managers’ Financial 

Integrity Act report indicated that this oversight material weakness had 

been corrected, but the Inspector General testified that the weakness 

continued. In 2002, the Inspector General again recommended that EPA 

designate grants management as a material weakness. The Office of 

Management and Budget (OMB) also recommended in 2002 that EPA 

designate grants management as a material weakness. In its fiscal year 

2002 Annual Report,14 EPA ultimately decided to maintain this issue as an 

agency-level weakness, which is a lower level of risk than a material 

weakness. EPA reached this decision because it believes its ongoing 

corrective action efforts will help to resolve outstanding grants 

management challenges. However, in adding EPA’s grants management to 

our list of EPA’s major management challenges in January 2003, we 

signaled our concern that EPA has not yet taken sufficient action to 

ensure that it can manage its grants effectively. 

We identified four key challenges that EPA continues to face in managing 

its grants. These challenges are (1) selecting the most qualified grant 

applicants, (2) effectively overseeing grantees, (3) measuring the results of 

grants, and (4) effectively managing grant staff and resources. In the 

past,15 EPA has taken a series of actions to address these challenges by, 

among other things, issuing policies on competition and oversight, 

conducting training for project officers and nonprofit organizations, and 

developing a new data system for grants management. However, these 

actions had mixed results because of the complexity of the problems, 

weaknesses in design and implementation, and insufficient management 

attention. 

EPA has not selected the most qualified applicants despite issuing a 

competition policy. The Federal Grant and Cooperative Agreement Act of 

197716 encourages agencies to use competition in awarding grants. To 

 13See 31 U.S.C. §3512. 

14U.S. Environmental Protection Agency, Fiscal Year 2002 Annual Report, EPA-190-R-03-

001 (Washington, D.C.: Jan. 31, 2003). 

15EPA took these actions through early 2002. 

16Federal Grant and Cooperative Agreement Act of 1977, Pub. L. No. 95-224, 92 Stat. 3 

(codified as amended at 31 U.S.C. §§ 6301-6308).

EPA Faces Four Key 

Grants Management 

Challenges, Despite 

Past Efforts to 

Address Them 
Page 9 GAO-04-510T EPA Grants Management 

encourage competition, EPA issued a grants competition policy in 1995. 

However, EPA’s policy did not result in meaningful competition 

throughout the agency, according to EPA officials. Furthermore, EPA’s 

own internal management reviews and a 2001 Inspector General report 

found that EPA has not always encouraged competition.17 Finally, EPA has 

not always engaged in widespread solicitation of its grants, which would 

provide greater assurance that EPA receives proposals from a variety of 

eligible and highly qualified applicants who otherwise may not have 

known about grant opportunities. 

EPA has not always effectively overseen grant recipients despite past 

actions to improve oversight. To address oversight problems, EPA issued 

a series of policies starting in 1998. However, these oversight policies 

have had mixed results in addressing this challenge. For example, EPA’s 

efforts to improve oversight included in-depth reviews of grantees but did 

not include a statistical approach to identifying grantees for reviews, 

collecting standard information from the reviews, and a plan for analyzing 

the results to identify and act on systemic grants management problems. 

EPA, therefore, could not be assured that it was identifying and resolving 

grantee problems and using its resources more effectively to target its 

oversight efforts. 

EPA’s efforts to measure environmental results have not consistently 

ensured that grantees achieve them. Planning for grants to achieve 

environmental results—and measuring results—is a difficult, complex 

challenge. However, as we pointed out in an earlier report,18 it is 

important to measure outcomes of environmental activities rather than 

just the activities themselves. Identifying and measuring the outcomes of 

EPA’s grants will help EPA better manage for results. EPA has awarded 

some discretionary grants before considering how the results of the 

grantees’ work would contribute to achieving environmental results.19 EPA 

has also not developed environmental measures and outcomes for all of its 

 17EPA Office of the Inspector General, EPA’s Competitive Practices for Assistance 

Awards, Report No. 2001-P-00008 (Philadelphia, PA: May 21, 2001). 

18U.S. General Accounting Office, Managing for Results: EPA Faces Challenges in 

Developing Results-Oriented Performance Goals and Measures, GAO/RCED-00-77

(Washington, D.C.: Apr. 28, 2000). 

19U.S. General Accounting Office, Environmental Protection: Information on EPA Project 

Grants and Use of Waiver Authority, GAO-01-359 (Washington, D.C.: Mar. 9, 2001). 
Page 10 GAO-04-510T EPA Grants Management 

grant programs.20 OMB found that four EPA grant programs lacked 

outcome-based measures—measures that demonstrated the impact of the 

programs on improving human health and the environment—and 

concluded that one of EPA’s major challenges was demonstrating program 

effectiveness in achieving public health and environmental results.21 

Finally, EPA has not always required grantees to submit work plans that 

explain how a project will achieve measurable environmental results. In 

2002, EPA’s Inspector General reported that EPA approved some grantees’ 

work plans without determining the projects’ human health and 

environmental outcomes.22 In fact, for almost half of the 42 discretionary 

grants the Inspector General reviewed, EPA did not even attempt to 

measure the projects’ outcomes. Instead, EPA funded grants on the basis 

of work plans that focused on short-term procedural results, such as 

meetings or conferences. In some cases, it was unclear what the grant had 

accomplished. In 2003, the Inspector General again found the project 

officers had not negotiated environmental outcomes in work plans. The 

Inspector General found that 42 percent of the grant work plans 

reviewed—both discretionary and nondiscretionary grants—lacked 

negotiated environmental outcomes.23

EPA has not always effectively managed its grants staff and resources 

despite some past efforts. EPA has not always appropriately allocated the 

workload for staff managing grants, provided them with adequate training, 

or held them accountable. Additionally, EPA has not always provided staff 

with the resources, support, and information necessary to manage the 

agency’s grants. To address these problems, EPA has taken a number of 

actions, such as conducting additional training and developing a new 

 20U.S. General Accounting Office, Environmental Research: STAR Grants Focus on 

Agency Priorities, but Management Enhancements Are Possible, GAO/RCED-00-170

(Washington, D.C.: Sept. 11, 2000). 

21The four EPA programs assessed were the Drinking Water State Revolving Fund, Leaking 

Underground Storage Tanks, Nonpoint Source Grants, and Tribal General Assistance 

programs. OMB evaluated these programs using its Program Assessment Rating Tool, a 

questionnaire that evaluated four critical areas of performance: purpose and design, 

strategic planning, management, results and accountability. These assessments were 

included in the President’s 2004 budget submission. 

22EPA Office of Inspector General, Surveys, Studies, Investigations, and Special Purpose 

Grants, Report No. 2002-P-00005 (Philadelphia, PA: Mar. 21, 2002). 

23EPA Office of Inspector General, EPA Must Emphasize Importance of Pre-Award 

Reviews for Assistance Agreements, Report No. 2003-P-00007 (Washington, D.C.: Mar. 31, 

2003). 
Page 11 GAO-04-510T EPA Grants Management 

electronic grants management system. However, implementation 

weaknesses have precluded EPA from fully resolving its resource 

management problems. For example, EPA has not always held its staff—

such as project officers—accountable for fulfilling their grants 

management responsibilities. According to the Inspector General and 

internal management reviews, EPA has not clearly defined project officers’ 

grants management responsibilities in their position descriptions and 

performance agreements. Without specific standards for grants 

management in performance agreements, it is difficult for EPA to hold 

staff accountable. It is therefore not surprising that, according to the 

Inspector General, project officers faced no consequences for failing to 

effectively perform grants management duties. Compounding the 

accountability problem, agency leadership has not always emphasized the 

importance of project officers’ grants management duties.24 

EPA’s recently issued policies on competition and oversight and a 5-year 

grants management plan to address its long-standing grants management 

problems are promising and focus on the major management challenges, 

but these policies and plan require strengthening, enhanced 

accountability, and sustained commitment to succeed. 

EPA’s competition policy shows promise but requires a major cultural 

shift. In September 2002, EPA issued a policy to promote competition in 

grant awards by requiring that most discretionary grants be competed.25 

The policy also promotes widespread solicitation for competed grants by 

establishing specific requirements for announcing funding opportunities 

in, for example, the Federal Register and on Web sites. 

This policy should encourage selection of the most qualified applicants. 

However, the competition policy faces implementation barriers because it 

represents a major cultural shift for EPA staff and managers, who have 

had limited experience with competition, according to EPA’s Office of 

Grants and Debarment. The policy requires EPA officials to take a more 

planned, rigorous approach to awarding grants. That is, EPA staff must 

determine the evaluation criteria and ranking of these criteria for a grant, 

develop the grant announcement, and generally publish it at least 60 days 

before the application deadline. Staff must also evaluate applications—

 24EPA Office of Inspector General, Report No. 2003-P-00007. 

25The policy applies to most discretionary grant programs or individual grants of more than 

$75,000. 

New Policies and Plan 

Show Promise but 

Require 

Strengthening, 

Enhanced 

Accountability, and 

Sustained 

Commitment to 

Succeed 
Page 12 GAO-04-510T EPA Grants Management 

potentially from a larger number of applicants than in the past—and notify 

applicants of their decisions. These activities will require significant 

planning and take more time than awarding grants noncompetitively. 

Oversight policy makes important improvements but requires 

strengthening to identify systemic problems. EPA’s December 2002 

policy makes important improvements in oversight, but it still does not 

enable EPA to identify systemic problems in grants management. 

Specifically, the policy does not (1) incorporate a statistical approach to 

selecting grantees for review so EPA can project the results of the reviews 

to all EPA grantees, (2) require a standard reporting format for in-depth 

reviews so that EPA can use the information to guide its grants oversight 

efforts agencywide, and (3) maximize use of information in its grantee 

compliance database to fully identify systemic problems and then inform 

grants management officials about oversight areas that need to be 

addressed.26 

Grants management plan will require strengthening, sustained 

commitment, and enhanced accountability. We believe that EPA’s grants 

management plan27 is comprehensive in that it focuses on the four major 

management challenges—grantee selection, oversight, environmental 

results, and resources—that we identified in our work. For the first time, 

EPA plans a coordinated, integrated approach to improving grants 

management. The plan is also a positive step because it (1) identifies 

goals, objectives, milestones, and resources to achieve the plan’s goals; (2) 

provides an accompanying annual tactical plan that outlines specific tasks 

for each goal and objective, identifies the person accountable for 

completing the task, and sets an expected completion date; (3) attempts to 

build accountability into grants management by establishing performance 

measures for each of the plan’s five goals;28 (4) recognizes the need for 

greater involvement of high-level officials in coordinating grants 

management throughout the agency by establishing a high-level grants 

 26The grantee compliance database, developed by the Office of Grants and Debarment, is 

used to store EPA’s in-depth reviews of grant recipients. 

27For further details, see EPA Office of Grants and Debarment, Grants Management Plan 

2003 – 2008, Report No. EPA-216-R-03-001 (Washington, D.C.: April 2003). 

28The plan’s five goals are: (1) promote competition in awarding grants, (2) strengthen 

EPA’s grants oversight, (3) support the identification and achievement of environmental 

outcomes, (4) enhance the skills of EPA personnel involved in grants management, and (5) 

leverage technology to improve program performance. 
Page 13 GAO-04-510T EPA Grants Management 

management council to coordinate, plan, and set priorities for grants 

management; and (5) establishes best practices for grants management 

offices. According to EPA’s Assistant Administrator for Administration 

and Resources Management, the agency’s April 2003 5-year grants 

management plan is the most critical component of EPA’s efforts to 

improve its grants management. 

In addition to the goals and objectives, the plan establishes performance 

measures, targets, and action steps with completion dates for 2003 through 

2006. EPA has already begun implementing several of the actions in the 

plan or meant to support the plan; these actions address previously 

identified problems. For example, EPA now posts its available grants on 

the federal grants Web site http://www.fedgrants.gov. In January 2004, 

EPA issued an interim policy to require that grant funding packages 

describe how the proposed project supports the goals of EPA’s strategic 

plan. 

Successful implementation of the new plan requires all staff—senior 

management, project officers, and grants specialists—to be fully 

committed to, and accountable for, grants management. Recognizing the 

importance of commitment and accountability, EPA’s 5-year grants 

management plan has as one of its objectives the establishment of clear 

lines of accountability for grants oversight. The plan, among other things, 

calls for (1) ensuring that performance standards established for grants 

specialists and project officers adequately address grants management 

responsibilities in 2004; (2) clarifying and defining the roles and 

responsibilities of senior resource officials, grant specialists, project 

officers, and others in 2003; and (3) analyzing project officers’ and grants 

specialists’ workload in 2004. 

In implementing this plan, however, EPA faces challenges to enhancing 

accountability. Although the plan calls for ensuring that project officers’ 

performance standards adequately address their grants management 

responsibilities, agencywide implementation may be difficult. Currently, 

project officers do not have uniform performance standards, according to 

officials in EPA’s Office of Human Resources and Organizational Services. 

Instead, each supervisor sets standards for each project officer, and these 

standards may not include grants management responsibilities. Once 

individual project officers’ performance standards are established for the 

approximately 1,800 project officers, strong support by managers at all 

levels, as well as regular communication on performance expectations and 

feedback, will be key to ensuring that staff with grants management duties 

successfully meet their responsibilities. Furthermore, it is difficult to 
Page 14 GAO-04-510T EPA Grants Management 

implement performance standards that will hold project officers 

accountable for grants management because these officers have a variety 

of responsibilities and some project officers manage few grants, and 

because grants management responsibilities often fall into the category of 

“other duties as assigned.” 

Although EPA’s current performance management system can 

accommodate development of performance standards tailored to each 

project officer’s specific grants management responsibilities, the current 

system provides only two choices for measuring performance—

satisfactory or unsatisfactory—which may make it difficult to make 

meaningful distinctions in performance. Such an approach may not 

provide enough meaningful information and dispersion in ratings to 

recognize and reward top performers, help everyone attain their maximum 

potential, and deal with poor performers. 

EPA will also have difficulty achieving the plan’s goals if all managers and 

staff are not held accountable for grants management. The plan does not 

call for including grants management standards in managers’ and 

supervisors’ agreements. In contrast, senior grants managers in the Office 

of Grants and Debarment as well as other Senior Executive Service 

managers have performance standards that address grants management 

responsibilities.29 However, middle-level managers and supervisors also 

need to be held accountable for grants management because they oversee 

many of the staff that have important grants management responsibilities. 

According to Office of Grants and Debarment officials, they are working 

on developing performance standards for all managers and supervisors 

with grants responsibilities. In November 2003, EPA asked key grants 

managers to review all performance standards and job descriptions for 

employees involved in grants management, including grants specialists, 

project officers, supervisors, and managers, to ensure that the complexity 

and extent of their grant management duties are accurately reflected. 

Further complicating the establishment of clear lines of accountability, the 

Office of Grants and Debarment does not have direct control over many of 

the managers and staff who perform grants management duties—

particularly the approximately 1,800 project officers in headquarters and 

regional program offices. The division of responsibilities between the 

 29The senior managers include the Director of the Office of Grants and Debarment, the 

Director of the Grants Administration Division, and the Grants Competition Advocate. 
Page 15 GAO-04-510T EPA Grants Management 

Office of Grants and Debarment and program and regional offices will 

continue to present a challenge to holding staff accountable and improving 

grants management, and will require the sustained commitment of EPA’s 

senior managers. 

If EPA is to better achieve its environmental mission, it must more 

effectively manage its grants—which account for more than half of its 

annual budget. While EPA’s new 5-year grants management plan shows 

promise, given EPA’s historically uneven performance in addressing its 

grants management challenges, congressional oversight is important to 

ensure that the Administrator of EPA, managers, and staff implement the 

plan in a sustained, coordinated fashion to meet the plan’s ambitious 

targets and time frames. 

To ensure that EPA’s recent efforts to address its grants management 

challenges are successful, in our August 2003 report, we recommended 

that the Administrator of EPA provide sufficient resources and 

commitment to meeting the agency’s grants management plan’s goals, 

objectives, and performance targets within the specified timeframes. 

Furthermore, to strengthen EPA’s efforts we recommended 

• incorporating appropriate statistical techniques in selecting grantees for 

in-depth reviews; 

• requiring EPA staff to use a standard reporting format for in-depth reviews 

so that the results can be entered into the grant databases and analyzed 

agencywide; 

• developing a plan, including modifications to the grantee compliance 

database, to use data from its various oversight efforts—in-depth reviews, 

significant actions, corrective actions taken, and other compliance 

information—to fully identify systemic problems, inform grants 

management officials of areas that need to be addressed, and take 

corrective action as needed; 

• modifying its in-depth review protocols to include questions on the status 

of grantees’ progress in measuring and achieving environmental outcomes; 

• incorporating accountability for grants management responsibilities 

through performance standards that address grants management for all 

managers and staff in headquarters and the regions responsible for grants 
Page 16 GAO-04-510T EPA Grants Management 

management and holding managers and staff accountable for meeting 

these standards; and 

• evaluating the promising practices identified in the report and 

implementing those that could potentially improve EPA grants 

management. 

To better inform Congress about EPA’s achievements in improving grants 

management, we recommended that the Administrator of EPA report on 

the agency’s accomplishments in meeting the goals and objectives 

developed in the grants management plan and other actions to improve 

grants management, beginning with its 2003 annual report to Congress. 

EPA agreed with our recommendations and is in the process of 

implementing them as part of its 5-year grants management plan. 

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

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

have. 

For further information, please contact John B. Stephenson at (202) 512-

3841. Individuals making key contributions to this testimony were Carl 

Barden, Andrea W. Brown, Christopher Murray, Paul Schearf, Rebecca 

Shea, Carol Herrnstadt Shulman, Bruce Skud, and Amy Webbink. 

Contacts and 

Acknowledgments 

(360447) 
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