Grants Management: Additional Actions Needed to Streamline and Simplify Processes
Published: 2005-04-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal government distributed about $400 billion in federal grants in fiscal year 2003 through about 1,000 different federal grant programs administered by several federal agencies with different administrative requirements. Congress, concerned that some of these requirements may be duplicative, burdensome, or conflicting--and could impede cost-effective delivery of services--passed the Federal Financial Assistance Management Improvement Act of 1999, commonly called P.L. 106-107, and mandated that GAO assess the act's effectiveness. This report addresses (1) progress made to streamline and develop common processes for grantees and (2) the coordination among the Office of Management and Budget (OMB), the agencies, and potential grant recipients.
section_title: What GAO Found
paragraphs: More than 5 years after passage of P.L. 106-107, grant agencies have made progress in some areas of grant administration, but in other areas, particularly the development of common reporting systems, progress is just beginning. Grant-making agencies together developed a common plan for streamlining processes. Several cross-agency teams identified changes that should be made, and these plans are in various stages of completion. For example, a Web-based system, Grants.gov, is now available to help potential grantees identify grant opportunities and apply for them electronically. Common forms are being developed to eliminate duplication and unnecessary differences among agencies. However, efforts toward common electronic systems for reporting financial and performance information have not been developed, although the law requiring them sunsets in 2007. Further, individual agencies have not all reported on their progress annually, as required. The individual agencies and the cross-agency work groups have a mixed record of coordinating with grantees. For example, the cross-agency work groups solicited public input to their early plan. Grants.gov publicizes its plans and solicits ongoing grantee input through its Web site and user surveys. However, the work groups generally have not made information about their work public nor solicited ongoing grantee input. Without such input, reforms are less likely to meet the needs of grantees. In general, the oversight of streamlining initiatives has shifted, potentially contributing to the lack of progress on all aspects of grant management.

section_title: Letter
paragraphs: The federal government distributed about $400 billion in federal grants in  fiscal year 2003, which accounted for almost one-fifth of the federal budget.  Funds from these grants are used to implement about 1,000 different  federal grant programs, administered and overseen by 26 different federal  agencies as well as some smaller federal entities. These grant programs  generally have different objectives and strategies that are reflected in their  application, selection, monitoring, and reporting processes. In seeking out,  using, and reporting on these grants, grantees—with a wide variety of  resources and expertise—must adapt to the different requirements,  potentially spending valuable time and resources on administrative issues  rather than in advancing the causes that the grant funds were intended to  affect. Congress, concerned that some of these administrative  requirements may be duplicative, burdensome, or conflicting and could  impede the cost-effective delivery of services at the local level, passed the  Federal Financial Assistance Management Improvement Act of 1999,  commonly referred to by the grants community as P.L. 106-107.  The act  required coordination among federal grant-making agencies to streamline  administrative requirements and to improve coordination among federal  grantor agencies and their nonfederal partners.
When the act was passed, it specifically mandated a study by GAO that  would assess the act’s effectiveness, make specific recommendations to  improve its implementation, evaluate each grantor agency’s performance in  achieving its planned goals and objectives, and assess the coordination  among key players. In this report, we will address (1) what progress has  been made to streamline and develop common processes for grantees and  (2) the extent of coordination among the Office of Management and Budget  (OMB), the agencies, and potential grant recipients. We plan to focus future  work on assessing the impact of grant-process reforms on the diverse array  of grant recipients.
To address our objectives, we reviewed P.L. 106-107 to understand its  requirements. We also reviewed the common plan developed by the 26  grant-making agencies and the subsequent annual reports from the  agencies as submitted to OMB and Congress. We met with officials from (1) OMB, (2) cross-agency work groups established to address the  objectives of P.L. 106-107, and (3) two specific initiatives that are closely  related to the law’s streamlining objectives—a common Web portal for  potential grantees to identify and apply for grants (referred to as  Grants.gov) and an initiative to streamline grant management within  agencies (referred to as the Grants Management Line of Business  initiative). To assess agency progress we analyzed the agencies’ 2004  annual reports to identify significant progress.  We attempted to identify  tangible and quantifiable results that met the goals laid out in the common  plan, as well as the objectives of the act.  To provide more in-depth  perspective on the implementation of grant streamlining efforts and  coordination with other agencies and grantees, we met with officials from  four agencies—the Department of Transportation, the Department of  Health and Human Services (HHS), the National Endowment for the  Humanities, and the National Science Foundation. In selecting these  agencies, we considered the number of subagencies, the types and amounts  of grants dispersed, the types of grant recipients, and the level of  participation in specific streamlining activities. To analyze the coordination  within and among agencies and with grantees, we compared agency  coordination efforts with criteria developed in our prior work, and we  discuss the criteria in the report. Although we had some initial discussions  on grant administration with organizations representing grantees, we plan  to obtain views from a wider spectrum of grantees in a second study  responding to the P.L. 106-107 mandate. We conducted our work in  accordance with generally accepted government auditing standards from  March 2004 through March 2005.
subsections: section_title: Background
paragraphs: Congress, concerned about the burden on grantees of multiple, varying  requirements imposed by different grant programs, passed P.L. 106-107 in  1999. The act’s objective is to improve the effectiveness and performance  of federal financial assistance programs, simplify federal financial  assistance application and reporting requirements, improve the delivery of  services to the public, and facilitate greater coordination among those  responsible for delivering such services.  The act required agencies to  establish common applications, systems, and uniform rules to improve the  effectiveness and performance of federal grants with the goal of improved  efficiency and delivery of services to the public.  Under P.L. 106-107, OMB is  required to direct, coordinate, and assist federal agencies in developing and  implementing a common application and reporting system, including  electronic processes with which a nonfederal entity can apply for, manage,  and report on the use of funds from multiple grant programs that serve  similar purposes but are administered by different federal agencies.  The  act sunsets in November 2007.
The complexity and diversity of the grants system makes streamlining a  difficult endeavor.  Multiple federal entities are involved in grants  administration; the grantor agencies have varied grants management  processes; the grantee groups are diverse; and grants themselves vary  substantially in their types, purposes, and administrative requirements. The  federal grant system continues to be highly fragmented, potentially  resulting in a high degree of duplication and overlap among federal  programs. Hundreds of federal grant programs implement various  domestic policies and have administrative requirements that may be  duplicative, burdensome, or conflicting—which can impede the  effectiveness of grants programs.
Multiple federal entities are involved in grants management. The Federal  Grant and Cooperative Agreement Act of 1977 gives OMB the authority to  issue supplementary interpretive guidelines to promote consistent and  efficient use of grant agreements.  OMB publishes this guidance to federal  agencies in OMB circulars and federal agencies issue regulations  implementing the OMB guidance. The General Services Administration is  the lead agency in charge of disseminating information on funding  opportunities. It publishes, in both electronic and print form, the Catalog of  Federal Domestic Assistance, a searchable database of federal financial  assistance programs.
There is substantial diversity among the federal agencies that administer  grants. Some agencies administer many grants through multiple,  decentralized subagencies, while other agencies have small, centralized  grant-making offices that administer only a few, small grant programs. For  example, in fiscal year 2003, HHS administered 282 grant programs that  distributed approximately $246 billion through its 16 subagencies, while  the National Endowment for the Arts administered 3 grant programs that  distributed approximately $95 million.
Grant programs are diverse in their structure and purpose. Grants can be  grouped into three types based on the amount of discretion given to the  grantee for the use of funds.  Each type strikes a different balance between  the desire of the federal grantor that funds be used efficiently and  effectively to meet national objectives and the desire of the grantee to use  the funds to meet local priorities and to minimize the administrative  burdens associated with accepting the grant.  Categorical grants allow the  least amount of recipient discretion, general revenue-sharing grants the  most, and block grants an intermediate amount. Grant funds may also be  grouped by their method of allocating funds, that is, by formula, through  discretionary project grants, or both.  Formula grants allocate funds based  on distribution formulas prescribed by legislation or administrative  regulation.  Project grants are generally awarded on a competitive basis to  eligible applicants.  Grant programs fund a variety of types of programs,  including training, research, planning, evaluation, capacity building,  demonstration projects, construction, and service provision in many  different areas including health care, education, law enforcement, and  homeland security. The diversity of grant programs is matched by the  diversity of grant recipients.  Grant announcements identify the eligible  recipients, which may include states and their agencies, local governments,  tribal governments, nonprofit organizations, research institutions, and  individuals.
The opportunities to streamline grants administration differ throughout the  life cycle of a grant.  While there is substantial variation among grants,  generally grants follow the life cycle as shown in figure 1: announcement,  application, award, postaward, and closeout.  Once established through  legislation, which may specify particular objectives, eligibility, and other  requirements, a grant program may be further defined by grantor agency  requirements. For competitive grant programs, the public is notified of the  grant opportunity through an announcement, and potential grantees must  submit applications for agency review. In the awards stage, the agency  identifies successful applicants or legislatively defined grant recipients and  awards funding. The postaward stage includes payment processing, agency  monitoring, and grantee reporting, which may include financial and  performance information. The closeout phase includes preparation of final  reports, financial reconciliation, and any required accounting for property.  Audits may occur multiple times during the life cycle of the grant and after  closeout.
section_title: Some Progress Made in Streamlining Grant Administration across Agencies, but More Progress Is Needed
paragraphs: To implement P.L. 106-107’s requirement to improve the effectiveness and  performance of federal grants, a common plan was developed and most,  but not all, grant-making agencies have submitted reports annually on their  progress toward this plan as required by the law. The work groups have  identified several changes that should be made, but many of these are still  in the developmental or approval stages. One particular extensive effort— the development of a Web portal called Grants.gov that represents a  common face to grantees—has enabled grantees to identify relevant grant  opportunities and, to a limited extent, apply electronically for grants. For  the later phases of the grant life cycle, a new initiative is under way, the  Grants Management Line of Business, that will encompass all phases of the  grant life cycle and specifically address simplifying the administration and  management of grants.
subsections: section_title: In 2001 Agencies Developed a Common Plan to Guide Federal Grant Streamlining Efforts
paragraphs: P.L. 106-107 requires that under OMB leadership, agencies develop common  applications, systems, and administrative rules to improve the  effectiveness of federal grants.  To implement this requirement, a cross- agency committee established cross-agency work groups.  The work  groups then identified needed changes and developed a common plan for  implementing P.L. 106-107.  Twenty-six federal grant-making agencies  agreed to use this common plan to meet the law’s requirements, since  meeting its objectives required them to work together to a large extent.   The plan, submitted to Congress and OMB in May 2001, was developed  under the oversight of the initial interagency governance structure  established to implement P.L. 106-107.  A series of five public consultation  meetings was held with representatives from states, local governments,  Native American tribes and tribal organizations, universities and nonprofit  organizations that conduct research, and other nonprofit organizations.   Comments from these meetings were considered in developing the plan.
The common plan contained goals and objectives intended to meet the  requirements of P.L. 106-107.  It included progress, accomplishments, and  planned activities for streamlining and simplifying the award and  administration of federal grants.  The plan addressed the life cycle of the  grant process, supporting processes, systems and standards, as well as  other issues.  Some specific objectives included (1) streamlining,  simplifying, and improving announcements of funding opportunities and  related business processes, application requirements and procedures, and  award documents; (2) streamlining and simplifying standard and unique  report forms, allowing for electronic submission of reports, achieving  greater uniformity in federal business processes for reporting, and  improving reporting by recipients; (3) simplifying and standardizing, to the  extent appropriate, general administrative requirements and agency  treatment of them in the terms and conditions of award; and (4) fully  developing and implementing a portal for identifying and applying for  grants, and ensuring that any revised electronic data standards are  interoperable and present a common face to grant-making agencies,  applicants, and recipients.
The common plan also included some process improvements that began  before passage of P.L. 106-107 and were completed prior to adoption of the  plan or are still continuing today.  For example, since 1998 the federal  government has required grant-making agencies to transition from various  payment systems to one of three designated systems.   The common plan  included objectives and milestones directly related to such past activities  that have been incorporated into the plan.  The plan is also built on  successful models resulting from earlier initiatives of individual agencies or  interagency groups.   For example, one objective of the common plan was  to ensure that federal agencies’ grant financial systems comply with  requirements established by the Joint Financial Management Improvement  Program.
section_title: Agency Progress Varies, and Not All Have Filed Annual Reports
paragraphs: Annual governmentwide progress reports describe the collaborative efforts  of 26 federal agencies.  Each agency also reports annually on its progress  implementing the plan, although not all agencies have regularly submitted  these reports.  The annual governmentwide progress report describes the  collaborative efforts to streamline and simplify the award and  administration of federal grants.  The report includes the federal  government’s steps toward simplification of the grant policy framework.   For instance, the establishment of a central location for OMB guidance to  federal agencies and agency regulations implementing that guidance will  make it easier for the applicants and recipients to find and follow  administrative requirements.  It also includes completed initiatives, such as  the development and use of a standard format for agencies’ funding  announcements, which aims to make it easier for potential applicants to  quickly find specific information in the announcements.
P.L. 106-107 requires each federal grant-making agency to provide an  annual progress report that evaluates its performance in meeting the  common plan’s goals and objectives.  However, only 22 of the 26 agencies  have submitted their 2004 annual report to Congress. (See app. I for  information on agencies submitting reports for 2002 to 2004.)  Agencies  have reported progress in implementing some streamlining activities.  For  example, HHS has worked toward the internal consolidation from nine to  two grant management systems, one primarily supporting research grants  and the other primarily supporting nonresearch, or service grants.  Another  agency, the National Science Foundation, reported it is conducting a  comprehensive business analysis that will highlight areas where grant  processes can be streamlined and simplified.  Also, the National  Endowment for the Humanities reported it has streamlined the internal  agency clearance process, which is the mechanism by which all grant  applications’ guidelines and forms are reviewed and updated every year.
Some factors, both internal and external to the grant-making agencies, may  have slowed agencies’ progress in fully implementing streamlining  activities and have contributed to the lack of progress in adopting common  governmentwide systems.  The different business processes at various  agencies was one reason agencies reported a hesitation to migrate to a  common grant management system.  For example, the National Science  Foundation reported that it conducts peer reviews of broad research grant  programs, which require an entirely different type of management system  when compared to the Department of Transportation, which generally  manages noncompetitive formula grants to state and local governments.
The structure and size of an agency’s grant management program is another  factor that may affect the agency’s progress toward grant streamlining.  For  example, some smaller agencies such as the National Endowment for the  Humanities, which has a highly centralized grant management operation,  reported being able to more quickly adopt some of the governmentwide  grant streamlining initiatives.  However, other agencies that manage grant  programs from many different operating divisions may take longer to make  changes due to the decentralized organizational structure and the larger  number of grant programs.
Lastly, some agencies had existing online grant management systems  before the passage of P.L. 106-107 and the development of Grants.gov.  The  integration of preexisting grant streamlining achievements in some  agencies, such as the common announcement form adopted from National  Science Foundation and National Endowment for the Humanities work,  allows those agencies to realize more immediate benefits because much of  the work was completed prior to implementation of the common plan.   Agencies, such as the Department of Transportation, that have not fully  implemented internal streamlining initiatives need to do so before they can  fully benefit from the approaches adopted by other agencies or the cross- agency work groups.
P.L. 106-107 also required agencies to establish performance measures and  a process for assessing the extent to which specified goals and objectives  have been achieved.  In developing these performance measures, the  agencies were to consider input from applicants, recipients, and other  stakeholders.  The annual agency progress reports did not include any such  performance measures or evaluations.  Each of the agencies’ progress  reports varied in detail and included a narrative of some of the actions  taken to meet identified goals and objectives.  Attempts to compare the  progress of federal agencies to each other are difficult due to the missing  reports and the lack of performance measures.
section_title: Cross-Agency Work Groups Developed Policies to Streamline, but Many Are Not Implemented Yet
paragraphs: After P.L. 106-107 was enacted, several cross-agency work groups were  created to facilitate the law’s implementation; while some of their  developments have been implemented, others are still in progress. The  teams, which focused on different phases of the life cycle of grants,  identified initiatives that should be undertaken. To identify priorities for  action, the teams relied on comments from the grantee community on what  streamlining should occur and on their own knowledge of grants  management. With many potential areas on which to focus, some work  group representatives commented to us that they addressed the “low- hanging fruit,” preferring to work on those tasks that were more readily  accomplished while yielding strong results. The current work groups and  their responsibilities are shown in table 1.  In addition, some groups have  subgroups that have taken responsibility for key products. The work  groups are supported to some extent by additional contract staff funded  initially by the Chief Financial Officers Council.
The cross-agency work groups have accomplishments that are expected to  streamline grant activity for grantees, as described in table 2.  For example,  the Pre-Award Work Group focused on reducing the time a grantee must  spend searching for information on grants. One concern was inconsistent  announcement formats.  The team believed that a consistent format for  grant announcements would save time and reduce frustration for grantees  that applied to different programs. The group also developed the standard  set of data elements for the Grants.gov “find” feature, thereby ensuring that  users of Grants.gov will find similar information in the same places for  different grant descriptions.  The Audit Work Group developed and  distributed a pamphlet clarifying the single audit process. It also ensured  that OMB Circular A-133, Compliance Supplement, was updated annually.  This update should ensure that grantees’ auditors can more easily identify  the criteria that they should use as they assess whether grantees are in  compliance with grant requirements.
One area on which the work groups made progress was establishing a  common electronic system through which information on available grants  could be found and applicants could apply for grants, now called  Grants.gov. At that point, identifying grant opportunities required  searching information from many agencies and applying for them using a  variety of application forms and processes. The work groups developed a  common format for the full announcement to be used governmentwide and  a related set of data elements for an electronic synopsis of the  announcement. Grants.gov, now administered by a program management  office based in HHS, has provided the ability for potential grantees to  search open grant opportunities by these key components, such as by the  type of activity funded (e.g., education or the environment) and the agency  providing funds. Grantees also can request notification of grant  opportunities that meet certain parameters that they identify. Grant  opportunities were initially provided on the system in February 2003, and  in November 2003, OMB required that federal agencies post information on  all discretionary grant-funding opportunities at the Web site. The  Grants.gov Program Management Office reports that since October 2003 all  26 grant-making agencies have listed their discretionary grant  opportunities. They also report high growth in usage of the portal;  Grants.gov reports that in November 2004, the “find” activity on the site  received about 2.2 million page requests, up from about 633,000 in  November 2003, and applicant e-mail notifications have averaged 600,000  to 700,000 weekly.
More recently, Grants.gov has provided the capability to apply for grants  electronically at a common portal and, to some extent, use common forms  across agencies. Applicants can download an application package;  complete the application off-line; and submit it electronically to Grants.gov,  which transmits the application to the funding agency. Grant-making  agencies work with the program management office staff to identify the  forms needed, sometimes using the same forms as other programs and  other agencies use. Grant applicants are notified electronically when  agencies receive their applications. In some cases, agencies can download  the grant application data directly to their own internal systems, thus  eliminating the need for staff to input data. Use of the online applications,  however, has been slow to grow. As of April 6, 2005, 6 of the 26 key grant- making agencies had not yet posted “apply” packages, and about 2,600  electronic applications had been received. Use of the system requires  agencies to set up internal systems and, to some extent, have their forms  loaded onto the site. Grantees must also complete a registration process,  which we were told is time-consuming and might be viewed by some  applicants as intimidating but is necessary, according to OMB officials, to  ensure privacy and to maintain the security of the system.
Funding for Grants.gov has shifted from obtaining contributions from key  partners to obtaining a set amount from grant-making agencies. For fiscal  years 2002 through 2004, Grants.gov was funded by contributions totaling  about $29.4 million. Beginning with fiscal year 2005, it will be funded with  payments from 26 grant-making agencies, based on an agency’s total grant  dollars awarded. For 2005 and 2006, the 6 large agencies will be assessed  $754,467, the 10 medium agencies will be assessed $452,680, and the 10  small agencies will be assessed $226,340, for a total of about $11,300,000  each year. Appendix II provides more detailed information on Grants.gov  and individual agency information on progress toward implementing its  “apply” component.
Several reforms are partially under way but have not yet completed the  approval process or been implemented, as shown in table 2. For example, a  separate standard application form for research (and related) grants has  been proposed, which will ensure that multiple agencies will be able to use  the same application. This should simplify applications for grantees who  apply for grants at multiple agencies, but this form is not yet approved.  Similarly, the Post-Award Work Group has developed a common  Performance Progress Report for nonresearch grants and has received  agency comments on the proposed form. The group expects that this will  reduce the concern that too many different progress reports are used,  which poses a substantial administrative burden for grantees.  The work  group also developed several common forms, such as a Real Property  Report (which addresses real property built with grant funds) and a federal  financial report, which, as of December 22, 2004, was with OMB for  approval. The Mandatory Work Group is developing a set of core data  elements that could be used to post mandatory awards to the Grants.gov  Web site, which an OMB official commented would enable potential  contractors to be aware of funds that states and other entities were  receiving. Additionally, based on an initiative begun by the Pre-Award Work  Group, OMB has moved one of its circulars, which provides guidance, to a  newly created Title 2 of the Code of Federal Regulations and plans that  agencies will eventually colocate their grant regulations in the same title.
subsections: section_title: Common Systems for Managing Later Parts of Grant Life Cycle Are at Early Stages of Development
paragraphs: Although the Grants.gov portal has provided a common, electronic system  for helping grantees identify and apply for grants, development of common,  electronic systems for managing later stages of the grant life cycle has not  progressed. When originally planned, the Grants.gov portal was envisioned  as providing a common face to grantees for managing all phases of grants,  from grantees’ identification of appropriate grant opportunities through  application, awarding, and management of the grants. However, in early  2004, OMB instructed Grants.gov officials to cease their efforts to develop  common systems for the grant phases beyond application and to  concentrate on ensuring that electronic applications were fully  implemented at all grant-making agencies, since some agencies still were  not participating or were participating at minimal levels.
In March 2004, OMB initiated a governmentwide analysis of five lines of  business that would support the President’s Management Agenda goal of  expanding electronic government, with one of them focusing on grants  management. The team was to draft and finalize common solutions and a  target architecture and present them for the fiscal year 2006 budget review.  The grants management initiative was headed by representatives from the  Department of Education and the National Science Foundation.
The Grants Management Line of Business initiative has the specific  objective of developing a governmentwide solution to support end-to-end  grants management activities that promote citizen access, customer  service, and agency financial and technical stewardship. To provide  information, the team requested and analyzed information from interested  parties on possible solutions and approaches. The team also surveyed  grant-making agencies on their internal grant-making systems and found  that about 40 different internal agency systems were operating, ranging  from systems operating with almost no automation to systems that are fully  automated. In evaluating the information, the team did not identify any end- to-end business or technical solution for grants management that would be  able to meet the needs of all 26 agencies without large investments in  configuring and customization. Further, it found that while the early stages  of the grant life cycle (i.e., connecting potential grantees with grant  opportunities and the application process) were already handled  consistently across grantor agencies, postaward activities are handled less  consistently across agencies and would require flexibility in business rules.
As a result, the team is proposing a consortia-based approach to continue  streamlining and consolidating the end-to-end grant management process,  but development of this system is not yet under way. It would use  Grants.gov as a “storefront” to support grantees and would expand it  beyond the current processes to include additional functions that interface  with the grantees. Rather than develop one system that all agencies would  use to manage grants internally, consortia of agencies with similar systems,  such as agencies that primarily fund research grants, would be formed.  Government, industry, or both will provide information technology service  centers for agencies throughout the grant life cycle, an approach that is  expected to reduce or eliminate the costs of multiple agencies developing  and maintaining grants management systems.
section_title: Coordination Activities Established across Agencies, but Initiatives Lack Continuing Input from Grantees
paragraphs: As P.L. 106-107 and the common plan emphasized, coordination among the  agencies and with grantees in the planning and implementation of grant- streamlining initiatives can increase the likelihood that the standard  processes and policies developed will meet the diverse needs of all the  stakeholder groups.  While the agencies have established cross-agency  processes to facilitate coordination activities, progress has been hampered  by frequent changes in the groups that are implementing and overseeing  the implementation of P.L. 106-107.  The various grant-streamlining  initiatives have had different levels of coordination activities with grantees.  The P.L. 106-107 work groups solicited input from the grantee community  during their early planning stages, but do not have ongoing coordination  activities. The Grants.gov initiative solicits ongoing input from grantees in a  variety of ways. It is not yet clear if the Grants Management Line of  Business initiative will include coordination activities with grantee groups.
P.L. 106-107 requires OMB to direct and coordinate the federal agencies in  establishing an interagency process for achieving grant streamlining and  simplification.  Furthermore, the act directs the federal agencies to actively  participate in this interagency grant-streamlining and simplification  process. Because the agencies are developing common policies and  processes to meet their diverse grants management needs, a well- implemented interagency process can improve the likelihood of success of  the grant-streamlining initiatives. In examining coordination issues, we  have identified key practices that affect the likelihood for success of cross- organizational initiatives.  These practices include establishing a  collaborative organizational structure, maintaining collaborative  relationships, and facilitating communication and outreach.
subsections: section_title: Agencies and OMB Coordinated Initiatives to Implement P.L. 106-107
paragraphs: A collaborative organizational structure, characterized by strong  leadership and a comprehensive structure of participants’ roles and  responsibilities, can facilitate coordination activities. As shown in figure 2,  OMB established several groups to lead and coordinate the effort to  implement P.L. 106-107. The act allows OMB to designate a lead agency and  establish interagency work groups to assist OMB in implementing the  requirements of the act. OMB designated HHS as the lead agency for the  implementation of P.L. 106-107.  In the spring of 2000, OMB charged the  Grants Management Committee of the Chief Financial Officers Council  with coordinating and overseeing the governmentwide implementation of  P.L. 106-107. The Grants Management Committee included two  representatives from each of the grant-making agencies. The committee  established four working subcommittees: the Pre-Award Work Group, the  Post-Award Work Group, the Audit Oversight Work Group, and the  Electronic Work Group. In addition, the committee established the General  Policy and Oversight Team, which was co-chaired by OMB and HHS, and  included the chairs of each of the work groups. The team was intended to  oversee the progress of the work groups and examine issues that cut across  the responsibilities of the individual work groups.
According to officials involved with P.L. 106-107 implementation, the  Grants Management Committee was ineffective, creating a stumbling block  for the initiative. In May 2004, the Grants Executive Board assumed the  responsibility for the coordination and oversight of P.L. 106-107 initiatives.  In an update to its charter, the Grants Executive Board (previously the  Grants.gov Executive Board) expanded its oversight to include both the  Grants.gov initiative and the P.L. 106-107 initiative. The Grants Executive  Board has 13 members, one representative from each of the 11 larger grant- making agencies and two seats that rotate among the other 15 grant-making  agencies.  The Grants Executive Board meets monthly and, with the  assistance of the HHS-led grant streamlining Program Management Office,  oversees the work of the interagency grant streamlining work groups. The  board’s oversight duties include reviewing work group recommendations  to determine if they should be referred to OMB for governmentwide  implementation, defining accountability and reporting requirements to be  met by the work groups, and preparing the annual progress reports for  Congress. The Grants Executive Board also oversees the Grants.gov  initiative, which is charged with implementing the grant-streamlining  policies in the preaward phase of grants administration.
The P.L. 106-107 Planning and Oversight Committee is the coordinating  body for the grant-streamlining work groups and advises the Grants  Executive Board. Its membership consists of the chairs of each of the work  groups, a representative of the Grants.gov Program Management Office,  the P.L. 106-107 Program Manager, and an OMB representative.  Agency  volunteers staff the work groups. Volunteer staffing is a challenge for the  work groups because the volunteers maintain their regular agency  responsibilities. According to work group chairs, the volunteer staff  members are dedicated, knowledgeable, and experienced in grants policy  and processes. HHS selects the chair of each work group, but does not limit  the size of the work groups so that all interested agencies may participate.  According to the P.L. 106-107 Program Manager, not all agencies are  participating in the work groups. Agencies that do not participate will not  have input into the design of governmentwide grant policies, increasing the  risk that the new policies will not meet the needs of all grant-making  agencies.
Interagency efforts toward a second key element of coordination— maintaining collaborative relationships—have been mixed. The major  elements of maintaining collaborative relationships include a shared vision  among participants and formal agreements with a clear purpose, common  performance outputs, and realistic performance measures. The agencies  helped to establish a cooperative, shared vision by jointly developing the  initial implementation plan, which establishes goals and objectives to meet  the requirements of P.L. 106-107.  However, while the plan outlines  preliminary steps toward achieving its objectives, it does not outline a  comprehensive plan beyond those first steps. Furthermore, the time targets  in the plan are primarily short-term targets related to preliminary steps.  The annual cross-agency progress report can be a tool to maintain the  shared vision established in the initial plan. According to work group  leaders, the work group volunteers from the agencies are committed to the  goals of grant streamlining and simplification. In addition to the cross- agency progress report, each agency is required to submit an annual agency  progress report. This requirement has the potential to be an effective  management tool for monitoring the compliance and progress of individual  agencies.  However, because the reports do not frame annual achievements  in the context of a comprehensive plan and use performance measures to  track progress, they are not an effective management tool.  Furthermore,  not all the agencies have submitted their annual reports, and OMB’s  position is that it is not their role to police agency compliance with this  requirement.  Because the agencies have not developed a comprehensive  plan and are not reporting on their progress using common performance  measures, they are less likely to maintain the shared vision that was  established with the common plan.
Implementation of a third key element of coordination practices,  communication and outreach, has not always been effective.  Leaders of  the initiatives hold regular meetings to share information with one another.  For example, the P. L. 106-107 Planning and Oversight Committee meets  monthly to facilitate coordination between the work groups. However, the  Audit Oversight Work Group Chair position has been vacant for the past 18  months, so although the audit subgroups continue their work, they have  little contact with the other grant-streamlining groups. Informal  coordination between the various grant-streamlining initiatives occurs  because often the same people serve on multiple committees. Outreach  from the initiatives to the agencies has also not always been effective. For  example, the Post-Award Work Group sends proposals or draft reports to  the agencies, but they do not always reach the necessary people because  some agencies are very large and have complex organizational structures.
section_title: OMB and Grant Executive Board Working on Resolving Governance Issues, but Overlapping Responsibilities and Lack of Clarity Are Hampering Progress
paragraphs: The future relationship between the Grants Management Line of Business,  P.L. 106-107 work groups, and the Grants.gov Program Management Office  is unclear. This management situation appears to have hampered progress.  OMB plans to form a Grants Governance Committee to oversee three  program management offices working on grant streamlining and  simplification. The Grants Governance Committee will oversee the  Grants.gov initiative, the P.L. 106-107 initiative, and the Grants Management  Line of Business initiative. However, there will be a separate program  management office for each initiative, and there appears to be overlap  between the responsibilities of the three initiatives. Representatives of two  of the work groups reported that there has been little communication  between the Line of Business initiative and the P.L. 106-107 work groups.  Work group members said they are reluctant to go forward with new  projects because they do not know if their priorities will be consistent with  those of the Line of Business initiative. For example, the Line of Business  initiative appears to be planning to rely on Grants.gov for its “find” and  “apply” functions, but it is not yet clear if Grants.gov will be the portal used  by the grantee in the later stages of the grant life cycle. In anticipation of  the start of the Line of Business initiative, OMB has directed Grants.gov to  focus its efforts on the functionality of the “find” and “apply” functions. The  Grants.gov Program Manager reported that, accordingly, the Grants.gov  office is holding off on efforts to incorporate processes related to the later  stages of the grants life cycle. Because grant management and reporting  rely on information gathered in the “apply” stage, there should be some  integration between these functions.
section_title: Efforts to Solicit and Use Input from Grantees Have Been Mixed
paragraphs: P.L. 106-107 obligates OMB and the agencies to consult with  representatives of nonfederal entities during the development and  implementation of grant-streamlining plans, policies, and systems. In  addition to its general directive to consult and coordinate with grantees,  the act requires the agencies to publish the implementation plan in the  Federal Register for public comment; hold public forums on the plan; and  cooperate with grantees to define goals, objectives, and performance  measures related to the objectives of the act. In prior work, we have found  that collaborative activities include communication strategies that  facilitate two-way communication among the project team, partners, and  other stakeholders, and that outreach programs keep those affected by the  initiative informed of new developments and provide structured means for feedback and questions.  By failing to involve important stakeholders, the  initiatives increase the risk that they will not fully achieve the objectives  defined in P.L. 106-107 and the common plan.
In its early work, the groups established by OMB and its lead grant  streamlining agency, HHS, undertook efforts to coordinate and consult  with the grantee communities. The Grants Management Committee created  a Web site that provided information about the work groups’ activities in  implementing the act and invited public input. Individual agencies also  sought input through invitations to comment posted on their Web sites. In  the fall of 2000, the Grants Management Committee held a series of five  interagency public consultation meetings with (1) states, (2) local  governments, (3) Native American tribes and tribal organizations,  (4) universities and nonprofit organizations that conduct research, and (5) other nonprofit organizations. Throughout this process, the teams built  a database of the public comments and used them to develop the common  plan. The plan considers those comments and, in large part, is based on  them. In January 2001, the agencies jointly published the interim/draft plan  in the Federal Register and requested public comment.
The common plan outlines two processes for maintaining ongoing  communication with grantee groups. First, it envisions the establishment of  an ombudsman, a third party operating apart from the individual grant- making agencies and OMB that could provide grantees with an avenue for  making their concerns known if agency requirements appear to exceed the  standards adopted. Second, the agencies planned to establish performance  measures related to the purposes and requirements of the act and a  process for assessing the extent to which specified goals and objectives  have been achieved. In developing the performance measures, the agencies  were to consider input from applicants, recipients, and other stakeholders.  The agencies planned to develop multiple measures to assess performance,  including progress as perceived by the public and federal staff as well as  objective process and outcome measures. The agencies expected to use  these performance measures to evaluate their performance in meeting the  plan’s goals and objectives and report annually on their progress as  required by P.L. 106-107.
As the streamlining reforms have been developed and implemented, the  agencies and work groups have not fulfilled the envisioned processes for  soliciting ongoing input from grantees. By failing to involve important  stakeholders, the initiatives increase the risk that they will not fully achieve  the objectives defined in P.L. 106-107 and the common plan. The plan  envisioned the establishment of an ombudsman that could provide  applicants/recipients an avenue for making their concerns known if agency  requirements appear to deviate from the common systems or standard  processes. The common plan set a target date of March 31, 2002, for  finalizing the job description of the ombudsman. The agencies have not  established the ombudsman position and do not currently plan to establish  one due to changing priorities. In addition, the agencies have neither set  specific annual goals and objectives nor used concrete performance  measures in the annual progress reports, as was required by P.L. 106-107  and envisioned in the common plan. However, the P.L. 106-107 Program  Manager is currently conducting an analysis of progress to date in meeting  the requirements of P.L. 106-107 and an analysis of how the reforms have  addressed the concerns expressed in the public comments.
Furthermore, only one of the four active cross-agency work groups  consistently uses the public comments during the development of its  initiatives. The Pre-Award Work Group, which addresses the streamlining  of announcements, applications, and award processes, has continued to  use the public comments to inform its work. The other work groups  informally vet their proposals with selected grantee groups. Grantees are  not formally involved in the development of grant-streamlining proposals.  The grant-streamlining teams solicit public comment only once a proposal  is posted in the Federal Register. Representatives from a group of research  grantees told us that this one-way communication is not sufficient to  produce reforms that simplify the grant process for recipients.  For  example, they commented that the reform of the cost principles focused  only on reducing the discrepancies in definitions used by the three different  cost principles circulars and actually increased the administrative burden  for the research community.  The work groups have expressed concern that  in seeking public input, they must take care not to violate the Federal  Advisory Committee Act of 1972 (FACA), which establishes requirements  pertaining to the creation, operation, duration, and review of covered  advisory committees.  However, because nonfederal participants do not act  as full members, the work groups should not be subject to the FACA requirements. Furthermore, FACA would not limit the work groups’  ability to widely publicize their initiatives and invite public comment on an  ongoing basis.
The Grants.gov initiative has been more active in soliciting grantee input,  but it is unclear if the Line of Business initiative will include activities to  coordinate with grantees. In contrast to the P.L. 106-107 initiative, the  Grants.gov initiative has institutionalized processes to inform the grantee  community about its plans and activities and to gather ongoing input from  the grantee community. Throughout development and implementation of  Grants.gov, users’ comments from pilots and actual systems have been  used to identify and address problems.  Grants.gov has also conducted  three user satisfaction surveys and maintains a Web portal for user  comments. The Web site of the grant-streamlining teams was recently  integrated into the Grants.gov Web site.  The site invites public comment on  both the Grants.gov system and broader grant-streamlining issues and  initiatives. In addition, the Grants.gov Program Management Office  conducted training and outreach to the various applicant constituencies  and to agency staff to increase awareness of the Grants.gov initiative.  Outreach efforts included monthly stakeholder meetings, train-the-trainer  workshops, and grantor workshops.  A help desk was established to  address federal staff and applicants’ questions and provide assistance. At  this time, it is unclear if the Grants Management Line of Business initiative  will include a process for consultation and coordination with grantee  groups.
section_title: Conclusions
paragraphs: Several initiatives to simplify and streamline the administration of grants  have been proposed in response to P.L. 106-107. Some of these have been  implemented and likely will help grantees to identify and apply for grants  and meet the needs of federal grant-making agencies when they receive  grants. The Grants.gov common portal is clearly used by many to identify  grants and undoubtedly has simplified that process for grantees. As more  agencies allow for electronic application through Grants.gov and more  grantees begin to use the system, it should also simplify grant management.  However, other initiatives that have been proposed have not yet been  completed. Some have languished in the approval process. Others have not  yet been adequately developed to even reach the approval stage. The lack  of clear goals and timelines for the cross-agency work groups to complete  tasks and for agencies to implement systems undoubtedly has contributed  to the lack of progress in implementing these proposals. Further, agencies  need to be held accountable internally for implementing these programs  and should have performance measures and clear deadlines on which they  report. To date, agencies have not even been held accountable for  submitting annual reports required by P.L. 106-107, which may indicate to  agencies that moving forward quickly on grant administration streamlining  is not a high priority.
In addition, the lack of continuity toward meeting P.L. 106-107’s  requirement to develop a common reporting system (including electronic  processes) for similar programs administered by different agencies may  potentially prevent agencies from reaching the act’s goals before it sunsets  in November 2007.  As overarching committees have evolved and  management of the cross-agency programs have been moved around  among various parties, progress has been slowed. Clearer governance is  needed to ensure that each group sunderstands its roles and coordinates  with the others to prevent overlap and collaborate on common initiatives.
The various initiatives that are implementing P.L. 106-107 have a mixed  record of coordinating with grantees. Grants.gov publicizes its plans and  meeting minutes on its Web site and solicits ongoing grantee input through  its Web site, regular satisfaction surveys, and outreach meetings with  grantees. In planning for the implementation of the act, the cross-agency  work groups also solicited and used grantee input. In addition, they  incorporated several means for soliciting ongoing grantee input in the plan.  However, they did not implement the portions of the initial plan that would  have provided for ongoing coordination with grantees. Unlike Grants.gov,  the work groups have neither made information about their work public  nor solicited ongoing grantee input, and approaches outlined in the  common plan, such as establishing an ombudsman position, have not been  implemented.  Without ongoing grantee input, the reforms are less likely to  meet the needs of the grantees and achieve the purposes of the act.
section_title: Recommendations for Executive Action
paragraphs: In order to augment the progress toward meeting the goals of P.L. 106-107  for streamlining grant administration, we recommend that the Director,  OMB, take the following five actions:  ensure that individual agency and cross-agency initiatives have clear  goals for completion of their initiatives;  ensure that agency annual progress reports to Congress and OMB on  implementation of P.L. 106-107 are prepared and contain information on  their progress toward goals;  ensure that efforts to develop common grant-reporting systems are  undertaken on a schedule that will result in significant progress by the  time P.L. 106-107 sunsets in November 2007;   ensure that OMB’s strategy for addressing P.L. 106-107 integrates the  three individual initiatives: HHS’s overarching P.L. 106-107 efforts, the  Grants.gov program, and the Grants Management Line of Business  initiative; and  solicit grantee input and provide for coordination with grantees on an  ongoing basis.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to OMB for comment. OMB’s formal  comments are reprinted in appendix III.  In addition to written comments,  OMB provided us with technical comments verbally, which we  incorporated as appropriate.
In its formal comments, OMB stated that it agreed with many of the report’s  recommendations and provided comments on the status of grant reform  efforts. OMB stated it will continue to work aggressively with agencies to  meet their annual reporting responsibilities and is committed to achieving  E-Gov solutions and deploying technical solutions for streamlining policies  and practices. Further, OMB commented that it will continue to facilitate  the integration of the three grants initiatives related to P.L. 106-107  requirements and will continue to seek grantee input on an ongoing basis.
We believe that these steps constitute progress toward ensuring that the  goals of P.L. 106-107 are attained, although OMB needs to aggressively push  forward. For example, while it has established a new grants committee, it  needs to ensure that progress does not slow while this transition occurs.  Although the Grants Management Line of Business initiative is under way,  OMB needs to ensure that efforts to address P.L. 106-107 requirements,  such as the development of common electronic systems to manage and  report on the use of funding from similar federal grant programs  administered by different agencies, move forward. Similarly, while public  input was sought heavily during the development of the common plan and  is sought once proposals are developed, the grantee community’s views  need to be solicited throughout these processes and as new initiatives are  selected.
We are sending copies of this report to the Director of OMB. In addition, the  report will be available at no charge on the GAO Web site at  http://www.gao.gov. Should you have any questions about this report,  please contact me at (202) 512-6806 or Thomas James, Assistant Director,  at (202) 512-2996. We can also be reached by e-mail at posnerp@gao.gov  and jamest@gao.gov, respectively. Additional key contributors to this  report are listed in appendix IV.
section_title: P.L. 106-107 Annual Reports Submitted to Congress as of March 1, 2005
paragraphs: P.L. 106-107 requires each agency to report annually on its progress  implementing the plan, although not all agencies have regularly submitted  these reports.  The annual agency progress report summarizes agency  efforts in meeting the goals and objectives of the common plan.
The annual governmentwide progress reports describe the collaborative  efforts of 26 federal agencies to streamline and simplify the award and  administration of federal grants.  (See table 3.)
section_title: Detailed Information on Grants.gov
paragraphs: As cross-agency teams identified the need for streamlining, agency  representatives and the Office of Management and Budget (OMB)  recognized that potential grantees needed a simpler and more consistent  way to identify and apply for federal grant opportunities. The process in  place for identifying grant opportunities resulted in applicants searching  for applications from many different agencies and then having to apply to  the various agencies using different application forms and processes.  Public comments from the grantee community identified the lack of a  central source for obtaining information about all federal agencies’ current  funding opportunities and the variation in the way agencies’ grant  announcements were organized.  P.L. 106-107 required that OMB  coordinate grant-making agencies in establishing an interagency process to  streamline and simplify these procedures for nonfederal entities. Further, it  required that the agencies allow applicants to electronically apply and  report on the use of funds from grant programs they administer. The E- grant initiative, along with other E-government approaches, was  undertaken to meet these needs. It was implemented initially by the E- Grants Program Management Office based in the Department of Health and  Human Services, which was the lead agency for P.L. 106-107  implementation. More recently, it has been referred to as Grants.gov, the  Internet portal through which it is accessed.
The first service that Grants.gov implemented was the “find” capability,  which established a single Web site to provide information on federal grant- funding opportunities. This enabled applicants to search these  opportunities by several components, such as the type of activity funded  (e.g., the arts and humanities, education, and the environment) and the  agency providing funds. Further, it provided the capability of notifying  potential fund recipients by e-mail of new opportunities that met  parameters they identified. In addition, descriptions of funding  opportunities were organized uniformly to simplify finding key  information. Agencies began posting summaries in February 2003. A key  aspect of its full implementation was OMB’s requirement that by November  7, 2003, all federal agencies were to electronically post information on  funding opportunities that award discretionary grants and cooperative  agreements at the Grant.gov Web site, using a standard set of data  elements. Grants.gov’s program management office reports that since  October 2003, all 26 grant-making agencies have listed grant opportunities  in the “find” activity of Grants.gov. The public’s use of the portal has grown  significantly; according to the Program Management Office, the “find”  activity on Grants.gov received about 2.2 million page requests in  November 2004 and applicant e-mail notifications have averaged 600,000 to  700,000 weekly.
More recently, Grants.gov has provided the capability to apply for grants  electronically through the portal. The “apply” activity allows an applicant  to download an application package from Grants.gov and complete the  application off-line. After an applicant completes the required forms, they  can be submitted electronically to Grants.gov, which transmits the  application to the funding agency. Grant-making agencies must take several  steps to provide the capability to apply electronically. They work with  Grants.gov Program Management Office staff to identify the forms needed  and make them accessible. Previous forms that grant-making agencies have  used for similar application packages are readily available as are forms that  other agencies have used that might be appropriate, thus simplifying the  process of adding new applications. The agencies identify how long they  would like the application packages to be retained on the site after they  close; after that, they are archived on the site. While some agencies have  enabled applicants to apply electronically directly on Grants.gov, some  announcements link to a grant announcement in the Federal Register or  link to more detail on the “find” site, which the applicant completes in hard  copy. To apply for grants electronically, the applicant must download  specific free software—Pure Edge Viewer. After an application is  submitted, the Grants.gov system checks the application to ensure all the  required forms are included and sends the applicant an e-mail saying that it  has been accepted, or rejected if a problem has been identified. If accepted,  the application is then forwarded from Grants.gov to the grantor agency;  when that agency downloads the data, it informs the Grants.gov system and  the applicant is informed by Grants.gov that data have been downloaded to  the agency. In some cases, agencies can download data directly to their  own grant management systems, thus eliminating the need for staff time to  input data.
Usage of the electronic “apply” component has been slower to grow than  the use of the “find” component for a number of reasons. As shown in table  4, as of April 6, 2005, 20 of the 26 key federal grant-making agencies have  posted “apply” packages, 723 electronic application packages were  available, and 2,621 electronic applications have been received. For  agencies, forms must be uploaded to the system. Further, some are  struggling with setting up their systems to handle the data from Grants.gov.  For grantees, some necessary registration steps require lead time—an  estimated 6 days that must be allowed for the entire registration process  the first time. This verifies that the grantee point of contact is the  appropriate person to submit an application. Grant.gov’s surveys to  determine users’ satisfaction with the system have also identified  dissatisfaction on other aspects, such as the adequacy of the status page  and the ease of submitting the applications.
Grants.gov staff members have reached out to both agencies and the  grantee community, sometimes through the use of a contractor, to solicit  input and to increase its usage. They have provided training and workshops  to grant-making agencies and have hosted monthly stakeholder meetings to  update users on changes. The Grants.gov Program Manager meets monthly  with the Grants.gov Executive Board, comprising senior executives of  partner agencies, to update them on activities and get guidance on strategic  issues. As outreach to the grantee community, staff members have given  presentations and provide resources to agencies to inform their grantee  communities. Also, a “contact center” is available for grant applicants to  assist with the electronic applications.
With the growth of its services, the operations of the Grants.gov office  Program Management Office have evolved. As of December 2004, the  Program Management Office has several full-time employees, including a  Program Manager and a Deputy Program Manager, and additional detailees  from grantor agencies. It has not received direct appropriations but was  funded during the period from 2002 to 2004 by contributions from 13 grant- making agencies, the Chief Financial Officers Council, and the General  Services Administration (for maintenance of the Grants.gov “find”  mechanism). Funding for those 3 years totaled about $29.4 million.  Beginning with fiscal year 2005, Grants.gov has moved to a fee-for-service  model. Funding will be from 26 grant-making agencies, with payments  based on an agency’s total grant dollars awarded. Based on natural break  points in data on funds that the agencies award, the grant-making agencies  were divided into three categories. For 2005 and 2006, the 6 large agencies  will be assessed $754,467, the 10 medium agencies will be assessed  $452,680, and the 10 small agencies will be assessed $226,340, for a total of  about $11,300,000 each year.
section_title: Comments from the Office of Management and Budget
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to the above contacts, Jack Burriesci, Martin De Alteriis,  Patricia Dalton, Susan Etzel, Ronald La Due Lake, Hannah Laufe, Donna  Miller, Melissa Mink, and Carol Patey also made key contributions.