Grants Management: EPA Has Opportunities to Improve Planning and Compliance Monitoring
Published: 2015-08-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2014, EPA disbursed about $4.6 billion in grants through its headquarters and 10 regional offices to states and others, in part to implement laws. In 2006, GAO identified weaknesses in EPA's grants management program, including the absence of goals, and made recommendations to address them. As part of its response to GAO's 2006 recommendations, EPA issued a 2009-2013 grants management plan.
GAO was asked to follow up on its 2006 review. This report examines (1) the extent to which EPA met the goals in its 2009–2013 plan, (2) the extent to which its draft 2016–2020 plan follows relevant leading practices for strategic grants management planning, and (3) the progress EPA has made since 2006 in monitoring agencywide compliance with grants directives.
GAO analyzed EPA's 2009–2013 plan and obtained EPA officials' responses to a standard set of questions regarding progress in achieving the goals; compared the draft 2016–2020 plan to four leading strategic planning practices relevant to grants management; compared 212 requirements from relevant grants directives to requirements tracked in EPA's grants management systems; and interviewed agency officials.
section_title: What GAO Found
paragraphs: Of the 17 performance goals in its 2009–2013 grants management plan, the Environmental Protection Agency (EPA) fully met 2, partially met 6, and did not meet 1. EPA did not measure its progress for the other 8 goals. EPA officials provided several reasons for meeting relatively few of the performance goals and not measuring the others. For example, according to officials, EPA did not measure progress for some goals because it redirected resources from achieving grants management goals to managing American Recovery and Reinvestment Act of 2009 grants, under which EPA more than doubled its grants in 2009. For 5 goals where EPA either did not meet the goal or did not measure performance, officials reported that there was no impact on the grants management program because EPA took mitigating actions or the negative effect of missing the goal was minimal. However, for 10 goals, GAO found a negative effect of EPA not measuring or partially meeting the goals, including an absence of data on compliance with policies, inefficient processes that increased workload, delayed processes for awarding grants, and delayed training and policy implementation.
As of May 2015, EPA's draft 2016–2020 grants management plan partially follows four relevant leading practices for federal strategic planning that GAO identified from prior work and Office of Management and Budget (OMB) guidance. Specifically, the draft plan
sets 5 strategic goals but has yet to link them to an overarching mission statement,
includes strategic objectives but has yet to define strategies to address management challenges or identify resources needed to achieve the goals,
ensures leadership accountability for just 1 of the 5 strategic goals, and
includes 11 performance measures but has so far only one measurable target.
By fully incorporating these leading practices, EPA could have better assurance that it has established an effective framework to guide and assess its efforts to meet its grants management goals and help address long-standing grants management weaknesses.
EPA has made progress monitoring grants management directives agencywide since GAO's 2006 report. For instance, EPA electronically tracks unspent grant funds and the timely submission of grantee reports. However, two key challenges hamper EPA's efforts to monitor such directives. First, 8 out of 10 regional offices use paper files to document compliance with grants management directives, so monitoring these offices' compliance requires resource-intensive manual file reviews. Second, the limited reporting and analysis capabilities of its IT systems leave EPA without agencywide information for most of the 212 directive requirements GAO reviewed. Although EPA deployed two web-based reporting tools to pull data from its IT system, it uses them to track 8 percent, or 17, of the 212 grants directive requirements GAO reviewed, making it difficult for managers to compare actual performance to expected results agencywide. EPA plans to fully implement an updated IT system by 2017, but it has had similar plans since 2009 and has not yet done so. By developing ways to more effectively use existing web-based tools until it implements its new IT system, EPA could better monitor compliance with grants management directives agencywide.
section_title: What GAO Recommends
paragraphs: GAO recommends, among other things, that EPA fully follow leading strategic planning practices in its draft 2016–2020 plan and develop ways to more effectively use its web-based tools for monitoring compliance with directives. EPA generally agreed with GAO's findings and recommendations.

section_title: Letter
paragraphs: The Environmental Protection Agency (EPA) distributed roughly $4.6  billion in fiscal year 2014—about half of its budget—in grants to states,  local governments, tribes, and other recipients, in part to implement  environmental statutes and regulations. In fiscal year 2014, the agency  awarded more than half of its total grant dollars to states and territories  for two programs, the Clean Water State Revolving Fund and Drinking  Water State Revolving Fund, which are the largest sources of federal   Grant  funds to repair and replace the nation’s aging water infrastructure.recipients may seek other grants for hazardous waste cleanup, air quality  improvements, pollution prevention, and other purposes.
EPA administers and oversees grants primarily through its Office of  Grants and Debarment (OGD) in the Office of Administration and  Resources Management, program offices in headquarters, and program  offices and grants management offices in EPA’s 10 regional offices. OGD  develops national grant policies and guidance, awards some grants, and  oversees EPA’s administrative grants management. Regional offices  award their own grants and oversee the requirements for those grants.
OGD provides guidance to grant management officials through several  management directives that reflect statutes, regulations, Office of  Management and Budget (OMB) guidance, and EPA policies and  procedures. These directives seek to ensure the timely awarding of  grants, appropriate use of funds, and achievement of the desired results  of protecting human health and the environment. Each management  directive contains multiple requirements, such as the frequency and type  of management reviews EPA officials perform, the steps necessary to  perform them, and the documentation of requirements.
Our past reports have found that, despite efforts to address them, EPA  continues to face challenges managing its grants. In 2003, we found that  EPA faced challenges effectively overseeing grant recipients and  measuring the results of grants. We recommended that EPA meet the  goals, targets, and time frames in its 2003–2008 grants management  plan, and take specific actions to strengthen its grants management  efforts. In May 2006, we assessed EPA’s progress in implementing its  grant reforms and found weaknesses in four areas: (1) documenting  ongoing grants monitoring efforts, (2) timely grant closeouts, (3)  establishing performance measures for environmental results, and (4)   We concluded that  holding staff accountable for grants management.EPA could not be fully assured that grant recipients were on track to fulfill  the terms and conditions of their grants, among other things, and made  several recommendations to address these weaknesses. Implementing  these recommendations and following through on the actions in its 2003- 2008 grants management plan allowed the agency to remove grants  management as a material weakness in its annual financial filings in  2007.
EPA issued a new 2009–2013 grants management plan as part of its  implementation of our 2006 recommendations—which EPA used as a  strategic plan for grants management. In its 2009–2013 grants  management plan, EPA presented strategic goals, objectives, and  performance goals for addressing the agency’s long-standing grants  management problems, such as documenting environmental results from  grants. However, since EPA issued that plan, its Office of Inspector  General (OIG) has found further weaknesses in EPA’s grants  management. For example, from 2011 to 2014, the OIG found continued  weaknesses in EPA’s documentation of its grants monitoring efforts, as  well as weaknesses in EPA’s timely management of grant resources.
EPA did not have a grants management plan for 2014 and 2015 but is  drafting one for 2016–2020, according to EPA officials and agency  documents.
You asked us to review EPA’s grants management. This report examines  (1) the extent to which EPA met the performance goals in its 2009–2013  grants management plan; (2) the extent to which EPA’s 2016–2020 draft  grants management plan follows selected leading practices for federal  strategic planning; and (3) the progress, if any, EPA has made in  monitoring compliance with selected grants management directives  agencywide.
To examine the extent to which EPA met the performance goals in its  2009–2013 grants management plan, we reviewed the plan. We also  collected data and requested OGD responses to a standard set of  questions on EPA’s progress in achieving its 17 performance goals. We  provided the document to OGD officials to complete, including officials’  explanations of effects, if any, from not meeting these goals and steps  EPA took to mitigate the reported effects. We compared OGD responses  with supporting documentation provided by agency officials, such as  policies, internal briefings, EPA information technology (IT) analyses, and  other documents. As part of OGD responses to this instrument, OGD  officials provided grants management performance data on the  performance goals EPA measured, which we reviewed. To assess the  reliability of the data, we compared EPA data against supporting  documents provided by agency officials and determined that the data  were sufficiently reliable for our reporting purposes. We also interviewed  OGD management and staff.
To examine the extent to which EPA’s 2016–2020 draft plan follows  leading practices for federal strategic planning, we reviewed the draft plan  that agency officials provided in November 2014. We then identified  practices under the Government Performance and Results Act of 1993  (GPRA) as enhanced by the GPRA Modernization Act of 2010  (GPRAMA), OMB guidance, and prior GAO work. We have previously  reported that these strategic planning requirements at the federal  department/agency level and practices identified by GAO can also serve  as leading practices for planning at lower levels within federal agencies,  such as individual programs or initiatives. We selected four leading  practices based on their applicability to (1) program-level strategic  planning, (2) the content of the plan rather than the planning process, and  (3) grants management. We assessed the extent to which the draft plan  followed each element of these practices, and we interviewed EPA  officials involved with the draft plan.
To examine EPA’s progress in monitoring compliance with grants  management directives agencywide, we identified 24 management  directives, including relevant regulations, and EPA policies and  procedures, 9 of which were relevant to the areas where we had  previously identified weaknesses. We selected 7 of those 9 directives to  review. We excluded the other 2 directives because they applied to either  nonprofit or tribal grant recipients and, therefore, did not apply to most  grant recipients. From these 7 directives, we selected 212 requirements  that involved (1) the completion of tasks, (2) the content of tasks, (3)  documentation of tasks, and (4) EPA review of tasks. We excluded the  remaining directive requirements because they are not the primary  responsibility of OGD and exist outside of EPA’s grants management  databases or official grant files. We then compared the 212 requirements  with those requirements tracked in EPA’s agencywide grants  management systems. Appendix I provides additional information about  our objectives, scope, and methodology.
We conducted this performance audit from November 2014 through  August 2015 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.
subsections: section_title: Background
paragraphs: EPA’s 2009–2013 grants management plan contained five strategic goals  that addressed weaknesses we identified in our 2006 grants management  report related to: (1) demonstrating achievement of environmental results;  (2) fostering a high-quality grants-management workforce; (3) enhancing  the management process for grants policies and procedures; (4)  standardizing and streamlining EPA’s grants management processes;  and (5) leveraging technology to strengthen decision making and   Across the five strategic goals, the plan  increase public awareness.outlined 17 performance goals with targeted levels of performance or  timeframes to hold agency officials accountable for achieving results (see  table 1).
EPA is currently developing a 5-year plan for 2016–2020. Similar to its  2009–2013 plan, EPA’s draft plan also addresses five strategic goals: (1)  maintaining an effective grants management policy, (2) streamlining  grants management procedures, (3) fostering a high-quality grants  management workforce, (4) ensuring transparency and demonstrating  results, and (5) evaluating grants management performance (see app.  III).
As we have previously found, in developing new initiatives, agencies can  benefit from following leading practices for strategic plans.GPRA was enacted to improve Federal program effectiveness and public  accountability, among other purposes, and established a system for  agencies to set goals for program performance and to measure results.
In 1993,  The statutory framework for performance management in the federal  government was updated with the GPRA Modernization Act of 2010  (GPRAMA). OMB’s Circular A-11 provides guidance to agencies on how  to prepare these plans in accordance with GPRA and GPRAMA  requirements. We found that these requirements also can serve as  leading practices at lower levels within federal agencies, such as planning  for individual divisions, programs, or initiatives. We identified 17 leading  practices related to strategic planning and selected 4 based on their  applicability to (1) program-level strategic planning, (2) the content of the  plan rather than the planning process, and (3) grants management. See  table 2 for selected leading practices in federal strategic planning.
section_title: EPA Met Few Performance Goals in Its 2009–2013 Grants Management Plan for Various Reasons
paragraphs: Of the 17 performance goals in its 2009–2013 grants management plan,  EPA fully met 2, partially met 6, and did not meet 1, according to our  review of EPA grants management performance data. EPA did not  measure its progress for the remaining 8 performance goals, according to  OGD responses to our standard set of questions.
EPA made the most progress toward achieving the performance goals  under its strategic goals of standardizing and streamlining the grants  business process and enhancing the management process for grants,  according to our review of EPA data, planning documents, and OGD  responses to a standard set of questions. Specifically, under its strategic  goal of standardizing and streamlining the grants business process, EPA  fully met 2 of its 6 performance goals—share of grants awarded in a  timely manner and share of eligible dollars and awards that were  competitively awarded. EPA partially met 3 other performance goals  under this strategic goal—share of expired grants closed out in a timely  manner, reduction in the amount of unexpended expired funds, and share  of applications processed in a timely manner—because it met its  performance goal for many, but not all of the years from 2009-2013.
In addition, EPA partially met 2 of its 3 performance goals—reviewing  guidance for consistency and completing a comprehensive guidance  manual—under its strategic goal of enhancing the management process  for grants policies and procedures. EPA partially met these performance  goals because it completed the activities under both goals but missed the  deadline in its grants management plan for these goals by 2 years and 4   Finally, EPA partially met its goal of migrating its IT  years, respectively.system to a governmentwide grants management system. Specifically,  EPA analyzed system alternatives but did not implement a new system by  the March 2012 deadline in the GMP.
In addition, EPA did not meet 1 performance goal—preparing a long-term  training plan—under the strategic goal of fostering a high-quality  workforce. According to OGD officials, OGD determined that it did not  have available resources to develop a long-term training plan. However,  OGD reported that it took steps to mitigate any negative effect by  implementing new training tools, such as webinars, online training, and  lectures to meet the agency’s needs and provide more efficient and  flexible methods for a changing training environment.
For the remaining 8 performance goals, which span all five strategic  goals, EPA did not measure its performance. Specifically, EPA did not  measure its performance for
2 performance goals under its strategic goal of demonstrating  achievement of environmental results,
2 of the 3 performance goals under its strategic goal of fostering a  high-quality grants management workforce,
1 of the 3 performance goals under its strategic goal of enhancing the  management process for grants policies and procedures,
1 of the 6 performance goals under its strategic goal of standardizing  and streamlining the grants business process, and
2 of the 3 performance goals under its strategic goal of leveraging  technology to strengthen decision making and increase public  awareness.
Table 3 shows the status of EPA’s 17 performance goals and our  assessment of whether they met, partially met, or did not meet the goal.
EPA officials provided five reasons why, for 15 of the 17 performance  goals, the agency either did not measure (8), partially met (6), or did not  meet (1) goals. These five reasons included redirected resources,  process delays, IT constraints, budget constraints, and errors requiring  rework (see app. II for more detail).
Redirected resources. According to OGD responses to our standard  set of questions, of the 8 performance goals not measured, EPA did  not measure 5 because it redirected some of its grants management  resources to managing American Recovery and Reinvestment Act of  2009 (ARRA) funds. Under ARRA, EPA more than doubled its  grants awards from $3.7 billion in fiscal year 2008 to $9.8 billion in  2009. Although ARRA provided EPA with additional funds to manage  these grants, the EPA OIG found that the additional workload for  ARRA activities impacted non-ARRA work. According to OGD  responses to a standard set of questions, for all 5 performance goals,  EPA had to redirect resources from implementing its grants  management plan to meet additional requirements under ARRA. For  example, EPA typically monitors key aspects of grants annually, but  for ARRA grants, EPA required routine monitoring every 90 days to  support ARRA quarterly reporting requirements and required more in- depth monitoring twice a year, according to an agency assessment of  EPA’s ARRA activities.
Of the 5 performance goals that EPA did not measure, 2 addressed  increasing the share of state workplans and progress reports  consistent with EPA’s environmental results directives (OGD  responses show that budget constraints were also a factor); 2  addressed increasing staff satisfaction with EPA’s performance  appraisal system and available IT tools; and 1 addressed increasing  the share of grants management staff with performance plans that  include grants management (OGD responses show that budget  constraints were also a factor).
Process delays. For 4 performance goals that EPA either partially  met (3) or did not measure (1), OGD responses to our standard set of  questions and supporting documents indicate that it was because the  activities took longer than expected. For example, 1 performance goal  was for EPA to migrate its IT system to a governmentwide grants  management system by March 31, 2012. OGD responses and  documented analysis of EPA’s IT systems show that the agency  partially met this performance goal because the systems EPA initially  identified either did not meet its needs or were too expensive. As a  result, the agency had to identify and analyze alternative systems,  which led to EPA missing its 2012 deadline. Delays in approving  and revising policies also caused EPA to partially meet 2 performance  goals related to its strategic goal of enhancing the management  process for grants policies and procedures, according to OGD  responses to our standard set of questions. For the performance goal  that EPA did not measure, OGD responses state that the agency did  not measure its performance goal for improving training timeliness  because approving policies took longer than expected.
IT constraints. According to OGD responses to our standard set of  questions, EPA did not measure (2) and partially met (1) of its  performance goals because of IT constraints. Specifically, EPA did  not measure the share of grants that receive routine monitoring  annually because its IT system could not sufficiently track the  variation in due dates for individual awards. In addition, EPA did not  measure its performance goal to increase the share of certain state  and tribal grants offered via Grants.gov because the website could not  handle the increased demand during ARRA implementation,  according to OGD responses and supporting documents.  EPA  partially met its performance goal to reduce unexpended expired  funds because EPA officials said that their IT system could not  produce accurate data for the end of the fiscal year in 2013.
Budget constraints. EPA partially met 1 performance goal and did  not meet 1 goal due to budget constraints, according to OGD  responses to our standard set of questions and supporting  documents. Specifically, EPA partially met its goal to improve the  share of expired grants closed in a timely manner because it  redirected resources from closing grants due to furloughs associated  with sequestration, according to OGD responses and supporting  documents. EPA did not meet its performance goal to develop a long- term training plan because the agency determined that it did not have  the resources to do so, according to OGD responses and budget  data. For example, OGD’s workforce decreased from 79 full-time  equivalent staff in 2009 to 71 full-time equivalent staff in 2013.
Errors requiring rework. EPA officials said that EPA partially met its  performance goal to increase the share of applications processed in a  timely manner, because errors in processing application packages  required the agency to rework several packages. According to EPA  officials and agency workload analyses, in some cases, these errors  resulted from a large workload for staff who also managed ARRA  grants. In other cases, staff that had a small grants management  workload made errors because they were not familiar with policy and  IT requirements. These officials said that the complexity of some grant  projects was also a factor.
For five performance goals, EPA and OGD reported that not meeting or  not measuring the goals did not affect EPA’s grants management  activities because the agency either mitigated the potential negative effect  of missing the performance goal, or the negative effect was minimal,  according to our analysis of OGD responses and supporting documents  (see app. II). For example, EPA reported that it mitigated the potential  effect of missing EPA’s performance goal to increase the share of grants  management staff whose performance plans include grants management.  Specifically, EPA determined that it could build staff’s grants management  activities into their performance by providing staff managers with (1)  additional performance guidance and (2) individual and agency-level  grants management performance data for comparison, according to OGD  responses and EPA performance guidance documents.
For another performance goal, to mitigate the effect of not measuring staff  satisfaction with an IT application, EPA addressed the low ratings of the  IT application’s operation in its 2010 baseline survey by adding more  user-friendly features, such as a web-based reporting tool, according to  OGD responses to our standard set of questions, and an internal  memorandum. For its performance goal of developing a long-term training  plan, EPA mitigated negative effects of missing its goal by implementing  new training tools such as webinars, online training, and lectures to meet  the agency’s training needs and provide more efficient and flexible  methods for a changing training environment, according to OGD  responses and training documents. EPA’s actions are consistent with our  March 2004 guidance for assessing training, which states that agencies  should modify their efforts to fit their unique circumstances and  conditions.
For the other two performance goals, the effect of not measuring them  was minimal, according to our review of OGD responses to our standard  set of questions. Specifically, EPA did not measure employee satisfaction  with its performance appraisal system, which likely had a minimal effect  on grants management activities. Similarly, for its performance goal to  increase the share of expired grants closed out in a timely manner, EPA  missed the target in 2013 by less than 1 percent, which also likely had a  minimal effect on grants management.
However, for 10 performance goals, our review of OGD responses to our  standard set of questions and supporting documents found negative  effects of the agency not measuring or partially meeting them, as follows:
Limited the agency’s data on compliance. For three performance  goals, not measuring them led to the absence of agencywide data on  compliance with directives intended to ensure that grant funds  achieve the desired results of protecting human health and the  environment, according to OGD responses to our standard set of  questions and supporting documents. Specifically, because of ARRA  demands and budget constraints, EPA did not measure its two  performance goals to increase grant recipients’ workplans and  progress reports consistent with EPA’s environmental results  directive, according to OGD responses and agency planning  documents. Additionally, although EPA collects real-time data on  compliance with routine monitoring requirements, because of IT  constraints, EPA did not measure its performance goal on the share  of grants that receive routine monitoring annually on a cumulative  basis, according to OGD responses. As a result, EPA does not have a  complete picture of its compliance with certain directives—directives  that are designed to ensure that funds are used appropriately and  achieve the desired results. EPA planning documents indicate the  agency plans to review state workplans and progress reports in fiscal  year 2017, and EPA officials said that they are looking into capturing  annual data on compliance with routine monitoring requirements.
Inefficient processes. For two performance goals, not measuring or  partially meeting them led to less efficient processes remaining in  place, according to OGD responses to our standard set of questions  and supporting documents. For example, EPA did not establish a  baseline or measure its performance goal on the share of certain state  and tribal grants offered via Grants.gov, according to OGD responses.  Consequently, some applicants continued to apply for these grants by  e-mail or on paper, according to OGD responses and policy  documents. Additionally, EPA partially met its performance goal to  migrate its IT system to a governmentwide grants management  system, which led to EPA’s continued use of an IT system that EPA IT  analyses state is aging, inefficient and, in some cases, requires data  entry in multiple databases to document a single action. According to  these analyses, these inefficient processes result in a greater  workload for a grants management workforce that is already strained.
Limited access to information. For two performance goals, partially  meeting them led to limited access for grants managers to accurate  information on grants management directives, according to OGD  responses to our standard set of questions. First, EPA partially met  its performance goal to develop comprehensive guidance (i.e., a  single manual containing all current guidance on grants management  policies) but not by 2009. Specifically, agency documents show that  EPA’s comprehensive guidance manual was last substantially  updated in 1988, and sections of the manual were out of date.  Although EPA issued a series of policy updates on EPA’s website,  these updates were not part of the manual.they communicated changes as they happened through EPA’s  internal website; however, OGD responses recognize that not having  comprehensive guidance negatively affected grants managers’   Agency officials said that  timeliness in processing grants. In 2013, EPA integrated and updated  all of its guidance online, providing grants managers access to up-to- date information on changing grants requirements, according to OGD  responses and an internal memorandum. Second, EPA partially met  its performance goal to review all of its guidance for consistency by  2011 and 2012, because it did not complete its review until 2013. As  part of its review, EPA policy documents show that the agency  identified 25 cases in which its policy updates were incorrect and  included obsolete or redundant policies. Therefore, because EPA did  not meet this goal in a timely manner and, until it completed its review,  identified errors, and corrected its guidance, grants managers did not  have readily available, accurate information.
Delayed process for awarding grants. In another instance, partially  meeting its performance goal for increasing the share of applications  processed in a timely manner increased the amount of time it took for  EPA to provide funding to recipients, according to OGD responses to  our standard set of questions and performance data. As a result, from  2010 to 2013, EPA did not process grant application packages  (commitment notices) within its 60-day target for an additional 10  percent of EPA applications, according to EPA performance data.
Delayed training and policy implementation. According to OGD  responses to our standard set of questions and EPA policy and  training documents, EPA did not measure its performance for  improving the timeliness of training and, in some instances, EPA  provided training to grants management officials for a new policy after  the policy was already in effect. This was not consistent with EPA’s  grants management plan that called for EPA to offer training on new  policies at least 4 weeks prior to implementing them. Although EPA  officials said that the negative effect in these cases was minimal  because the grant workload in October was low, without training prior  to these policies’ effective dates, EPA does not have reasonable  assurance that grants management officials applied the policies  consistently from the dates that they went into effect. In addition, EPA  policy documents show that, in some cases, EPA delayed the  implementation of new policies designed to simplify and streamline  the grants process for recipients to accommodate the training  schedule. Because of these delays, recipients could not immediately  benefit from these policy improvements as originally planned,  according to OGD responses to our standard set of questions and  supporting documents.
Inefficient use of grant funds. EPA could not confirm whether it met  its performance goal for reducing unexpended expired funds in 2013  and was $900,000 from meeting its goal in early September 2013.  According to EPA’s OIG, unexpended expired funds are missed  opportunities for EPA and grant recipients to efficiently fund projects  and efforts that meet EPA’s mission of protecting human health and  the environment.
section_title: EPA’s 2016–2020 Draft Grants Management Plan Partially Follows Selected Leading Practices for Federal Strategic Planning but Omits Key Information
paragraphs: As of May 2015, EPA’s November 2014 version of its draft 2016–2020  grants management plan partially follows four selected leading practices  for federal strategic planning that we identified from prior GAO work and  OMB guidance (see table 4). EPA officials said that they designed their  2016–2020 plan to be more high-level than the 2009–2013 plan so that it  would be more flexible and adaptive to changing circumstances, such as  legislation that changes EPA priorities. For example, unlike some of the  objectives in the 2009–2013 plan, EPA does not prescribe how the  agency should meet the objectives in its draft 2016–2020 plan, to give the  agency discretion in choosing the most efficient implementation method,  according to EPA officials and our analysis of the draft plan.
As shown in table 4, our analysis of EPA’s draft plan indicates that, as of  May 2015, it partially incorporated four leading planning practices relevant  to grants management:
Define the mission and goals. EPA’s draft plan partially follows this  leading practice in that it defines five strategic goals, which explain the  grants management program’s purpose and the results that the  agency intends to achieve. However, as of May 2015, the agency  does not yet link these goals to an overarching mission statement.  According to leading strategic management practices, a mission  statement explains why the program exists, what it does, and how.  We have previously found that a mission statement forms the  foundation for a coordinated, balanced set of strategic goals and  performance measures. Agency officials said that EPA has not yet  incorporated a mission statement into its draft plan because the  agency is awaiting stakeholder agreement on the underlying  framework but that it plans to do so. Ensuring that its plan has a  mission statement could help EPA better establish a framework to  guide effectively the agency’s overall vision for grants management.
Define strategies and identify resources needed to achieve  goals. EPA’s draft plan partially follows this leading practice because  it includes strategic objectives, but as of May 2015, the plan does not  yet define strategies that address management challenges, include  milestones for significant activities, or identify the resources  necessary for the agency to achieve its strategic goals. We have  previously found in leading federal strategic planning practices that it  is particularly important for agencies to define strategies that address  management challenges that may threaten their ability to meet long- term goals and include a description of the budgetary and human  resources, actions, and time frames needed to meet these goals.  EPA officials said that they would discuss the resources needed to  achieve their goals but had not considered including a discussion of  resources in their draft plan. By also including in its draft plan  strategies for addressing the management challenges facing the  agency and the resources needed to achieve its goals, EPA could  better ensure that its staffing and funding are sufficient to achieve  those goals. The agency could also better prepare for future changes  in workload or funding—problems that we found had constrained the  agency in the past.
Ensure leadership accountability. EPA’s draft plan partially follows  this leading practice in that one of the strategic goals is dedicated to  evaluating the agency’s performance at managing its grants, which  incorporates a degree of accountability into the plan. According to  leading federal strategic planning practices, successful organizations  use formal and informal practices to hold managers accountable and  create incentives for working to achieve the agency’s goals. However,  as of May 2015, the other four goals in the draft plan do not yet  include mechanisms to hold EPA managers accountable for achieving  the agency’s goals. For example, in 2012, we found that EPA had  ensured leadership accountability for its environmental justice  strategic plan by giving senior administrators lead responsibility for  implementing the plan, and incorporating relevant environmental  justice measures in its annual national program guidance. By including mechanisms to hold managers accountable for the other  four strategic goals, EPA will be better positioned to ensure that the  grants program achieves its goals.
Develop and use performance measures. EPA’s draft plan partially  follows the leading practice to develop and use performance  measures in that it has 11 performance measures but, as of May  2015, only one performance measure has a measurable or numeric  target associated with it. According to leading practices, performance  measures gauge the agency’s progress toward its mission and  strategic goals. They provide information on which the agency can  base decisions and create incentives that influence organizational and  individual behavior. We have previously found that one of the key  attributes for successful performance measures is a measurable  target and that such measurable targets could challenge the agency  to improve its results. According to agency officials, EPA is planning  to develop more measurable targets as part of an annual priority  planning process but, at the time of this report, that effort was not yet  complete.
As of May 2015, the draft 2016–2020 plan provides a road map that  builds on EPA’s progress standardizing and streamlining the grants  management process since 2009 and may help the agency continue to  work toward the goals set out in the 2009–2013 plan. We have previously  found that a primary purpose of federal strategic planning is to improve  federal agency management.practices for federal strategic planning, EPA could have better assurance  that it has established a framework to effectively manage and assess  efforts to accomplish its grants management strategic and performance  goals, without reducing the plan’s flexibility, and that may help the agency  address its long-standing grants management weaknesses.
section_title: EPA Has Made Some Progress Monitoring Its Compliance with Grants Management Directives Agencywide but Faces Two Key Challenges
paragraphs: EPA has made some progress monitoring its compliance with seven  selected postaward grants management directives—such as those  dealing with compliance, review, and monitoring, and achieving  environmental results from EPA grants—agencywide, but it continues to  face two key challenges. Specifically, since our 2006 report, OGD has  begun monitoring more grants management directives agencywide  through its IT systems, such as tracking unexpended grant funds and  grantees’ timely submission of reports. However, two key challenges  hamper EPA’s efforts to monitor directives agencywide: (1) most of its  regional offices rely on paper files and (2) its IT systems have limited  reporting and analytical capabilities.
Since 2006, OGD has developed the ability to monitor EPA’s compliance  with certain requirements in its grants management directives  electronically. For example, EPA has been monitoring administrative  activities of grant recipients, unexpended grant funds, and whether grant  recipients have submitted their final reports on time. As part of this  monitoring, OGD tracks the number of grants for which program officers  and grants specialists completed routine annual monitoring, as well as the  percentage of grants that received such monitoring against the agency’s  performance goal. OGD tracks this information in real time, which  provides a snapshot of routine annual monitoring activities. Additionally,  OGD monitors the number, dollar amount, and percentage of total  unspent grant funds for headquarters and all EPA regions. OGD tracks  the percentage of grantees’ final technical reports received in a given  fiscal year and compares it to the agency’s performance goal. OGD  officials also electronically review and verify certain administrative  monitoring actions, such as the percentage of closed-out grants for a  given calendar year.
However, EPA faces two key challenges in its agencywide monitoring  efforts. First, 8 of its 10 regional offices document their compliance with  grants management directives in paper files, according to EPA officials.
One additional regional office uses electronic record-keeping for interagency  agreements, but not for grants. with grants management directives generally requires paper file reviews,  which agency officials described as resource-intensive. As a result, EPA  officials told us that they deferred some planned compliance reviews due  to budget constraints. According to EPA officials, the agency recognizes  that paper records are outmoded and plans to transition to electronic  records management, but the officials did not provide a timetable for  completing this transition. EPA officials stated that EPA headquarters is  currently using an electronic grant records system, three regions have  agreed to develop electronic grant records systems, and EPA is  encouraging the remaining regions to adopt such systems; however,  according to OGD officials, the remaining regions are unable to do so due  to budget constraints. Second, we found that limitations in OGD’s IT  systems’ reporting and analysis capabilities mean that the systems do not  produce comprehensive, agencywide summary information for most of  the directive requirements we reviewed. This prevents managers from  comparing actual performance to expected results agencywide and  analyzing significant differences consistent with the federal standards for  internal control.
In 2009 and 2011, EPA deployed two web-based reporting systems to  pull certain information from its databases for analysis; however, as of  June 2015, EPA used these tools to monitor 8 percent (17 of 212) of its  requirements. OGD officials stated that they have the capability to use  their current web-based tools more broadly. However, they have not done  so. According to OGD officials, their process for determining which  requirements to track agencywide using these web-based tools is to  follow the measures in their grants management plan, as well as to take  into account the results of OIG and GAO audits. In addition to the limited  agencywide information, OGD’s IT systems require staff to manually  review information entered into the database to ensure its accuracy and  completeness for most of the requirements (117 of 212) in the seven  management directives we reviewed. However, such manual reviews are  not consistent with federal standards for internal control, which call for  control activities specific for information systems, including computerized  edit checks built into the system to review the format, existence, and  reasonableness of data (e.g., accuracy and completeness).
According to EPA officials, the agency currently plans to adopt an  updated grants management system by 2017, and it is transitioning to the  new system in phases that correspond to the grants lifecycle. The  agency’s 2016 draft grants management plan incorporates IT system  improvements suggested in a 2014 study of EPA’s grants management  process. As part of its plans for an updated grants management system,  EPA has included establishing a single official electronic file to house all  grant information for each individual grant. However, EPA has planned to  update its grants management IT system since its 2009 plan but has not  yet done so. According to EPA officials, analyzing IT alternatives took  longer than they expected and they had to reprioritize their grants  management activities due to the additional workload required under  ARRA. Nonetheless, agency officials said that the IT system that they  plan to implement will save the agency $27 million.
In the meantime, however, EPA has limited information on its agencywide  compliance with certain grants management directives intended to  provide internal controls over how funds are used and how results are  obtained. Better monitoring of agencywide compliance with these  directives through electronic record-keeping and using its existing web- based tools more effectively could help EPA better meet federal  standards for internal control and help ensure that funds reach grantees  quickly, are used appropriately, and achieve the desired results of  protecting human health and the environment.
section_title: Conclusions
paragraphs: EPA has developed several strategies for addressing its past challenges  managing the roughly several billion dollars it distributes each year in  grants to help protect human health and the environment. EPA  incorporated these strategies into its 2009–2013 plan and made some  progress toward achieving its strategic goals. To build on its progress,  EPA has developed a draft 2016–2020 grants management plan which,  as of May 2015, partially follows several leading strategic planning  practices but has not yet included certain key elements, such as defining  strategies that address management challenges that may threaten EPA’s  ability to meet long-term goals and identifying the resources, actions, and  time frames needed to meet these goals. We recognize that EPA is  designing its draft 2016–2020 plan to be more flexible and adaptable to  changing circumstances to address some of the constraints that  prevented the agency from meeting all of its 2009–2013 plan goals.  Nonetheless, our past work shows that incorporating more leading  practices into the final plan could provide EPA with reasonable assurance  that it has established a framework to effectively guide and assess efforts  to accomplish its grants management goals, without reducing its flexibility.  Doing so could also help EPA address long-standing grants management  weaknesses, such as tracking environmental results. Since the draft plan  is still under development, EPA has the opportunity to incorporate more of  these selected leading practices into the final plan.
EPA has made progress monitoring its compliance with certain grants  management directives agencywide, yet the two key challenges it faces— dependence on paper files and limitations in its IT systems—continue to  hamper its ability to monitor certain requirements agencywide. EPA plans  to transition to electronic records management for all 10 of its regional  offices, but it does not have a timetable for doing so, and some regional  offices have not implemented electronic records management due to  budget constraints. EPA also currently plans to adopt an updated grants  management system by 2017, and it has incorporated addressing  potential IT improvements as part of its draft 2016–2020 plan. However,  EPA has had similar plans to improve its IT system since 2009 but has  not done so because the systems the agency initially identified either did  not meet its needs or were too expensive, resulting in a need to identify  and analyze alternative systems. In the meantime, EPA has made limited  use of its existing web-based tools for analyzing and reporting  agencywide compliance, in part because it has focused its analytical  efforts on the measures in its grants management plan. By using existing  web-based tools more effectively until it implements its new IT system,  EPA can better monitor agencywide compliance with grants management  directives.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the EPA Administrator direct OGD to take the  following four actions:   Incorporate all leading practices in federal strategic planning relevant  to grants management as it finalizes its draft 2016–2020 grants  management plan, such as defining strategies that address  management challenges that may threaten the agency’s ability to  meet long-term goals and identifying the resources, actions, and time  frames needed to meet these goals.
Develop a timetable with milestones and identify and allocate  resources for adopting electronic records management for all 10  regional offices.
Implement plans for adopting an up-to-date and comprehensive IT  system by 2017 that will provide accurate and timely data on  agencywide compliance with grants management directives.
Until the new IT system is implemented, develop ways to more  effectively use existing web-based tools to better monitor agencywide  compliance with grants management directives.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this product to EPA for comment. In its written  comments, reproduced in appendix IV, EPA generally agreed with our  findings and recommendations, with the following exceptions.
With respect to our recommendation that EPA implement plans for  adopting an up-to-date and comprehensive IT system by 2017 that will  provide accurate and timely data on agencywide compliance with grants  management directives, EPA agreed with the recommendation except  with the 2017 completion date. EPA said that the agency will need time to  prioritize which grants management directives requirements to include in  the system, which IT approaches to take, and to identify resources  through the budget process. EPA said that implementation is therefore  likely to extend beyond 2017. The 2017 completion date is based on an  EPA internal planning document, which stated that the agency currently  plans to adopt an updated grants management system by 2017. We also  note that EPA had difficulty meeting its deadlines from its 2009–2013  Grants Management Plan. We continue to believe that EPA should  implement an up-to-date and comprehensive IT system as expeditiously  as possible to improve agencywide oversight of the several billions of  dollars the agency distributes each year.
EPA also disagreed with our conclusion that long-standing grants  management weaknesses continue to exist, such as tracking  environmental results, and that EPA, with the concurrence of the OIG,  eliminated long-standing grants management as a material or agency  weakness in 2007. The grants management weaknesses referenced in  our conclusions are issues that the OIG found since EPA issued its 2009– 2013 grants management plan and not those material or agency  weaknesses that were eliminated in 2007. We continue to believe this  conclusion is valid.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees, the Administrator of the  Environmental Protection Agency, and other interested parties. In  addition, the report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or gomezj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examines (1) the extent to which the Environmental Protection  Agency (EPA) met the performance goals in its 2009–2013 grants  management plan; (2) the extent to which EPA’s 2016–2020 draft grants  management plan follows selected leading practices for federal strategic  planning; and (3) the progress, if any, EPA has in made in monitoring  compliance with grants management directives agencywide.
To examine the extent to which EPA met the performance goals in its  2009–2013 grants management plan, we reviewed the plan. We collected  data and requested responses from the Office of Grants and Debarment  (OGD) for a standard set of questions on EPA’s progress in achieving its  17 performance goals, including officials’ explanations of effects, if any,  from not meeting these goals and steps EPA took to mitigate the reported  effects. We compared OGD responses with supporting documentation  provided by agency officials, such as policies, internal briefings, EPA  analyses of its information technology systems, and other documents. As  part of OGD responses, OGD officials provided data on the performance  goals EPA measured, which we reviewed. To assess the reliability of the  data, we compared EPA data against supporting documents provided by  agency officials and determined that the data were sufficiently reliable for  our reporting purposes. For one performance goal, EPA could not provide  accurate data as of the end of fiscal year 2013, so we used EPA-reported  data through September 3, 2013, which we note in the report. We also  interviewed OGD management and staff.
To examine the extent to which EPA’s 2016–2020 draft plan follows  leading practices for federal strategic planning, we reviewed the draft plan   We then identified  that agency officials provided from November 2014.leading practices from the Government Performance and Results Act of  1993 as enhanced by the GPRA Modernization Act of 2010 (GPRAMA),  Office of Management and Budget (OMB) guidance, and prior GAO work.  We have previously reported that strategic planning requirements at the  federal department/agency level and practices identified by GAO can also  serve as leading practices for planning at lower levels within federal  agencies, such as individual programs or initiatives.  We identified 17  leading practices related to strategic planning and selected 4 based on  their applicability to (1) program-level strategic planning, (2) the content of  the plan rather than the planning process, and (3) grants management.  Based on these selection criteria, we excluded 9 practices because they  overlapped with other practices, excluded 2 practices because they  focused on process rather than the plan’s content, and excluded 2 others  because they were not relevant to grants management or program-level  strategic planning. We then compared the draft plan EPA officials gave us  from November 2014 with these 4 selected leading practices. We  assessed the extent to which the draft plan followed each of the elements  of these four practices, and interviewed EPA officials involved with the  draft plan.
To examine EPA’s progress in monitoring compliance with grants  management directives agencywide, we identified 24 management  directives that help EPA implement relevant statutes, regulations, and  EPA policies and procedures. Nine of these directives were relevant to  the areas where we had previously identified weaknesses, such as  ongoing monitoring of grant activities, tracking environmental results, and  timely grant closeouts. We selected 7 of those 9 grants management  directives. We excluded the other 2 directives because they applied to  nonprofit and tribal grant recipients and therefore did not apply to most  grant recipients. From these 7 directives, we selected 212 requirements  that involved (1) the completion of tasks, (2) the content of tasks, (3) the  documentation of tasks, and (4) EPA’s review of tasks. We excluded the  remaining directive requirements because they are not the responsibility  of OGD and exist outside of EPA’s grants management databases or  official grant files. We then compared the 212 requirements to the  requirements tracked in EPA’s agencywide grants management systems.  Specifically, we examined the requirements in EPA’s Integrated Grants  Management System (IGMS) and Grantee Compliance Database and in  its web-based State Grant IT Application. We also evaluated the  information in the two web-based systems that EPA uses to pull data from  IGMS for analysis, Datamart and Quikreports.
We conducted this performance audit from November 2014 to August  2015 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.
section_title: Appendix II: GAO Analysis of EPA Progress Against Its 17 Performance Goals
paragraphs: Tables 5 through 9 show the Environmental Protection Agency’s (EPA)  progress against the performance goals in its 2009–2013 grants  management plan. These tables incorporate Office of Grants and  Debarment’s (OGD) responses to our standard set of questions on its  progress against the 17 performance goals in its 2009–2013 grants  management plan. We provided these questions to OGD officials to  complete, including officials’ explanations of effects, if any, from not  meeting these goals and steps EPA took to mitigate the reported effects.  We compared OGD responses with supporting documentation provided  by agency officials, such as policies, guidance, EPA analyses of its  information technology (IT) systems, and other documents.
section_title: Appendix III: EPA’s 2016 Draft Grants Management Plan
paragraphs: Tables 10 through 14 show the Environmental Protection Agency’s (EPA)  objectives and performance measures in its draft 2016–2020 grants  management plan, as of November, 2014.
section_title: Appendix IV: Comments from the Environmental Protection Agency
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Michael Hix (Assistant  Director), Elizabeth Curda, Ellen Fried, Cindy Gilbert, Thomas James,  Jerry Leverich, Benjamin Licht, Gary Mountjoy, Jonathan Munetz, Alison  O’Neill, Kiki Theodoropoulos, and Lisa Van Arsdale made key  contributions to this report.