Recovery Act: Grant Implementation Experiences Offer Lessons for Accountability and Transparency
Released: 2014-01-24T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: In response to the recent serious recession, Congress enacted the Recovery Act to promote economic recovery, make investments, and minimize or avoid reductions in state and local government services. Approximately $219 billion was distributed as grants for use in states and localities, making grants a major component of the act. These grants covered a broad range of areas including education, transportation, energy, infrastructure, the environment, health care, and housing.

GAO was asked to examine grant management lessons learned resulting from the Recovery Act. This report examines federal, state, and local experiences with implementing grants funded by the Recovery Act by identifying examples of good practices employed and challenges faced in meeting the act's accountability and transparency requirements. GAO reviewed relevant documents including OMB and Recovery Board guidance, relevant literature, and previous reports by GAO, federal inspectors general, and others. GAO also interviewed officials from OMB, the Recovery Board, four federal agencies, three state governments, and two local governments, among others. This report also draws on GAO's past bi-monthly reviews of selected states' and localities' use of Recovery funds.

section_title: What GAO Found
paragraphs: Federal, state, and local officials responsible for implementing grants funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act) as well as the external oversight community reported lessons learned regarding both useful practices and challenges to ensuring accountability. Faced with aggressive timelines for distributing billions of dollars, they adopted a number of practices to foster accountability including (1) strong support by top leaders; (2) centrally-situated collaborative governance structures; (3) the use of networks and agreements to share information and work towards common goals; and (4) adjustments to, and innovations in, usual approaches to conducting oversight such as the increased use of up-front risk assessments, the gathering of "real time" information, earlier communication of audit findings, and the use of advanced data analytics. For example, in 2009, the Recovery Accountability and Transparency Board (Recovery Board) established the Recovery Operations Center which used advanced data analysis techniques to identify potential fraud and errors before and after payments were made. The Recovery Act's emphasis on accountability also presented challenges for several states and federal agencies. These included limited resources for oversight at the state and local levels, and the speed with which Recovery Act funds were distributed. One state addressed the challenge of limited resources by transferring funds from its central administration account to Recovery Act oversight. To facilitate the quick distribution of funds, maintenance-of-effort provisions concerning transportation projects (which prevented Recovery funds from being used for planned state projects) were rolled out before the Department of Transportation had time to issue sufficiently detailed definitions of what constituted "state funding." To address this challenge, the department had to issue clarifying guidance to states seven times during the first year of the Recovery Act.

Federal, state, and local officials also developed practices and encountered challenges related to the transparency of Recovery Act funds. An example of one good practice that was required by the Recovery Act was the creation of the Recovery.gov website. This site, as well as similar portals created by states and localities, demonstrated several leading practices for effective government websites. These included (1) establishing a clear purpose, (2) using social networking tools to garner interest, (3) tailoring the website to meet audience needs, and (4) obtaining stakeholder input during design. Efforts to increase transparency also led to challenges for several states and federal agencies. For example, some recipients lacked knowledge or expertise in using the data systems needed to report grant spending, while others faced challenges with reporting the same data to multiple systems. Early GAO reviews also found several problems with job reporting data including discrepancies in how full time equivalents were recorded and the capacity of recipients to meet reporting deadlines. The Office of Management and Budget (OMB) addressed these challenges by issuing additional guidance and providing technical support. Finally, agencies receiving Recovery Act funds were required to submit performance plans that identified measures on a program-by-program basis. The level of detail and the specificity of outcomes in these plans varied greatly for the agencies GAO examined, making it difficult to determine the extent to which some were making progress toward their goals and demonstrating results.

section_title: What GAO Recommends
paragraphs: GAO is not making any recommendations in this report. We provided a draft of this report to relevant agencies for comment. They generally agreed with our findings and provided technical comments.

section_title: Letter
paragraphs: In response to the recent serious recession, Congress enacted the  American Recovery and Reinvestment Act of 2009 (Recovery Act) to,  among other purposes, promote economic recovery, make investments,  and minimize and avoid reductions in state and local government  services. A significant component of the Recovery Act was grants for use  in states and localities. As of the end of October 2013, the Department of  the Treasury had awarded approximately $219 billion of Recovery Act  funds in the form of grants. These grants covered a broad range of areas  including education, transportation, infrastructure, energy, the  environment, health care, and housing. The importance of spending  Recovery Act funds quickly was highlighted by the President’s goal of  spending 70 percent of the funds by September 30, 2010. You asked us  to examine grant management lessons learned resulting from the  Recovery Act and to provide examples of what worked well, as well as  what challenges were experienced by federal, state, and local  governments.

To better understand grant management lessons learned resulting from  the Recovery Act, we focused on two key issues involving grant  implementation—accountability and transparency—where Congress  and the administration placed unprecedented emphasis when they  crafted the Recovery Act. Specifically, this report identifies and provides  examples of good practices employed and the challenges faced in  meeting the Recovery Act’s accountability and transparency requirements  by select federal, state, and local agencies implementing grant programs  funded by the Recovery Act. Additionally, in September 2013, we issued  a related report examining federal efforts to increase the transparency of  federal data and identifying lessons learned from operating existing data  systems that could contribute to these efforts.

To accomplish our objectives, we conducted a detailed literature review to  identify relevant prior work by us and others regarding Recovery Act  challenges and lessons learned. We then interviewed federal, state, and local officials involved in the implementation of the Recovery Act and  obtained supporting documentation. The federal entities that we  contacted with broad jurisdiction for the Recovery Act were the Recovery  Implementation Office, the Office of Management and Budget (OMB), and  the Recovery Accountability and Transparency Board (Recovery Board).

We developed criteria to select a subset of four federal agencies, three  state governments, and two local governments.  We then contacted these  entities in order to obtain a more in-depth understanding of their  experiences with grant programs funded by the Recovery Act as well as  to identify examples of challenges and good practices. Our selection  criteria included factors such as the nature, type, and value of the grants  handled by the organization; whether the grants involved were already  well-established, greatly increased in size, or entirely new; and the extent  to which the organizations were identified in our previous work or in the  broader literature. The federal agencies we selected were the  Departments of Education, Energy, Transportation, and Housing and  Urban Development. We deemed Medicaid out of scope for the purposes  of this review. Although it was the largest grant program funded by the  Recovery Act, it is primarily an entitlement and is subject to specific rules  that are not typical of program grants.

The state and local governments we selected included California,  Georgia, and Massachusetts, as well as New York, New York and  Denver, Colorado. These three states are part of a core group of 16  states and the District of Columbia that we selected for our series of  bimonthly reviews of how Recovery Act funds were being used by  recipients. The Recovery Act required that we conduct these bimonthly  reviews of how these funds were used by selected states and localities.  This report also fulfills this requirement in that we examined the use of  Recovery Act funds in the previously mentioned states and cities. To  obtain a broader state perspective, we interviewed officials from the state  Recovery Act coordinators’ network, which included key state officials  responsible for implementing the Recovery Act from several states. For  additional context, we supplemented these interviews by meeting with  officials from state and local advocacy organizations such as the National  Association of State Auditors and Comptrollers; the National Association  of State Budget Officers; and the National Association of Counties. We  reviewed and synthesized the information provided by these officials, as  well as previously issued work regarding challenges and good practices  that relate to our two key themes, and we developed descriptive  examples. We also reviewed and applied criteria established by  HowTo.gov, a source of guidance and leading practices for government  websites, to Recovery.gov and state and local Recovery websites. A full  description of our objectives, scope, and methodology is provided in  appendix I.

We conducted this performance audit from December 2012 to January  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The stated purposes of the Recovery Act are to: preserve and create jobs and promote economic recovery; assist those most impacted by the recession; provide investments needed to increase economic efficiency by  spurring technological advances in science and health;  invest in transportation, environmental protection, and other  infrastructure that will provide long-term economic benefits; and  stabilize state and local government budgets, in order to minimize and  avoid reductions in essential services and counterproductive state and  local tax increases.

While many Recovery Act projects focused on immediately jumpstarting  the economy, some projects—such as those involving investments in  technology, infrastructure, and the environment—are expected to  contribute to economic growth for many years. The Recovery Act  established the Recovery Accountability and Transparency Board  (Recovery Board) to provide additional monitoring and oversight. The  board was originally scheduled to terminate operations by September 30,  2013, but its mission has been extended until September 30, 2015, to  provide oversight and monitoring of assistance provided in response to  Hurricane Sandy, which hit the northeast in October 2012.in figure 1 displays selected events related to the Recovery Act and its  requirements.
subsections: section_title: Recovery Act Funding
paragraphs: The Congressional Budget Office (CBO) initially estimated the cost of the  Recovery Act to be approximately $787 billion; however, CBO’s most  recent estimate projects that the Recovery Act will cost approximately  $830 billion over the 2009-2019 time period. As of October 31, 2013,  the federal government provided a total of approximately $812 billion  related to Recovery Act activities. This includes funding to 28 federal  agencies that were distributed to states, localities, and other entities;  individuals through a combination of tax benefits and cuts; entitlements;  and loans, contracts, and grants. See figure 2 for an overview of  Recovery Act spending by category and program. Although Medicaid was  the single largest Recovery Act grant program, we did not include it in our  review because it is primarily an entitlement program and subject to  specific rules that are not typical of program grants. Accordingly, we  included the Recovery Act funds directed to Medicaid in the entitlement  category, rather than the grant category, in figure 2. Emphasizing the  importance of spending Recovery Act funds quickly, the President  established a goal that by September 30, 2010, 70 percent of Recovery  Act funding should be spent (that is, both obligated and outlayed).  Therefore, agencies had approximately 19 months to spend almost three- quarters of their Recovery funds.

section_title: Grant Programs Funded by the Recovery Act
paragraphs: Grants have played a key role in providing Recovery Act funds to  recipients, with approximately $219 billion being awarded for use in states  and localities through a wide variety of federal grant programs. With the  intent of disbursing funds quickly to create and retain jobs and stabilize  state and local budgets, a large majority of Recovery Act grant funding  went to states and localities within 3 years of the law’s enactment.  Recipients reported receiving approximately 88 percent of their grant  awards by the end of the 2nd quarter of calendar year 2013. State and  local spending was as follows:

Fiscal year 2009: spending totaled approximately $53 billion in actual  outlays.

Fiscal year 2010: spending was at its highest level with approximately  $112 billion in actual outlays.

Fiscal year 2011: spending decreased from its peak, with  approximately $69 billion in actual outlays.

The 28 federal agencies that received Recovery funds developed specific  plans for spending the money. The agencies then awarded grants and  contracts to state governments or, in some cases, directly to schools,  hospitals, or other entities. OMB guidance directed these federal  agencies to file weekly financial reports detailing how the money was  being distributed. Recipients of the funds, in turn, were required by the  Recovery Act to file quarterly reports on how they were spending the  Recovery Act funds that they received.

Recovery Act grants provided to states and localities covered a broad  range of areas such as transportation, energy, and housing. Education  programs were the largest recipients of Recovery Act grant awards. Of  the education programs funded in the Recovery Act, the largest in terms  of funding was the newly created State Fiscal Stabilization Fund (SFSF)  program, which provided assistance to state governments to stabilize  their budgets by minimizing budgetary cuts in education and other  essential government services, such as public safety. The Recovery Act  appropriated $53.6 billion for the SFSF program.shows, grants represent over one-quarter of Recovery Act funding. Out of  that category, funding received in the program areas of education,  transportation, and energy and environment amount to approximately  $137 billion, or 70 percent, of Recovery Act grant spending to date.

As figure 2 (above)

section_title: Recovery Act Oversight and Accountability Responsibilities of Key Participants
paragraphs: The Recovery Act called for a large amount of federal funds to be spent  (that is, obligated and outlayed) in a short period of time—approximately  19 months—by the end of September 30, 2010. To assure the public that  their tax dollars were being spent efficiently and effectively, the Recovery  Act placed increased emphasis on accountability and transparency  through enhanced reporting, auditing, and evaluation requirements for  users of Recovery Act funds. The Recovery Act delineated some of these  increased accountability and transparency responsibilities to existing  organizations and entities as well as newly-created ones. See table 1 for  details regarding the primary accountability and oversight responsibilities  of key organizations involved in implementing the Recovery Act.

section_title: Practices at Federal, State, and Local Levels Contributed to Improved Accountability of Recovery Act Grant Programs but Challenges Existed
subsections: section_title: Strong Support by Top Leaders, a Collaborative Approach, and Systematic Use of Data Were Key to Managing Recovery Act Implementation
paragraphs: Under the Recovery Act, accountability for timely and effective  implementation of the law was a shared responsibility that included  agencies involved in directly implementing the law as well as the external  oversight community. On the operational side, among the practices that  facilitated accountability were (1) strong support by top leaders, (2)  centrally-situated collaborative governance structures, and (3) the regular  and systematic use of data to support management reviews.
subsections: section_title: Strong Support by Top Leaders
paragraphs: We have previously reported on the importance of having the active  support of top leadership when undertaking large and complex  activities. This was the case in the implementation of the Recovery Act  where, at the federal level, the President and Vice President made clear  that effective Recovery Act implementation was a high priority for them.  The President assigned overall management responsibility for the  Recovery Act to the Vice President and appointed a former OMB deputy  director to head the newly-created Recovery Implementation Office with  direct reporting responsibilities to both him and the Vice President. The  former head of the Recovery Implementation Office told us that his  position gave him access to top leadership in the administration. This  official said he participated in daily morning staff meetings with the White  House senior staff, briefing them on any issues related to the Recovery  Act. He briefed the President directly approximately once a month. In  addition, he typically met with the Vice President’s staff on a daily basis  after the President’s staff meeting. He also met with the Vice President  directly every 1 to 2 weeks. Finally, he frequently interacted with the head  of OMB and sometimes also sat in on his staff meetings.

In each of these roles he had direct access to, and support from, the  highest levels of government. The former head of the Recovery  Implementation Office stated this was key to his ability to ensure  cooperation and coordination with other federal departments during the  Recovery Act. For example, he told us that senior government leaders  knew that his office had the authority of the President and Vice President  behind it, and if they did not do what was requested, they would have to  explain their reasoning to senior White House officials. This awareness of  the Recovery Implementation Office’s line of authority helped to ensure  that federal officials coordinated and cooperated with the office. In turn,  the involvement and engagement of top leaders at individual federal  agencies was facilitated by OMB guidance that required each agency to  identify a senior accountable official—generally at the deputy secretary or  subcabinet level—to be responsible for Recovery planning,  implementation, and performance activities within the agency.senior agency leaders were regularly involved with overseeing and  reporting on Recovery Act efforts.

At the state level, several governors demonstrated top leadership support  by establishing specific positions, offices, or both that were responsible  for state Recovery efforts. For example, the Governor of Massachusetts  created the Massachusetts Recovery and Reinvestment Office as a  temporary program management office for the specific task of overseeing  Recovery activities. The former director of the office stated that he  reported directly to, and drew his authority from, the Governor. The  Governor also elevated the office to the rank of a senior level office. This  action increased the office’s visibility and gave it a seat at the Governor’s  weekly cabinet meetings, where its director would regularly report on the  status of Recovery Act projects. In addition, no state Recovery Act  program could be approved without the director’s consent. The former  director told us that the success of the office was attributable to the direct  line of authority it had with the Governor of Massachusetts. In fiscal year  2012, Massachusetts’ Office of Commonwealth Performance,  Accountability, and Transparency was created, in part, as a direct result   According to Massachusetts’ state officials, this  of the Recovery Act. office is the state’s attempt to take lessons from the state’s experience  with the Massachusetts Recovery and Reinvestment Office and apply  them post Recovery Act.

section_title: Centrally-Situated Collaborative Governance Structures
paragraphs: Mass. Gen. Laws ch. 7, § 4A(e). and to run competitions in a manner consistent with their individual  statutes, regulations, and agency practices. On the other hand, there was  also centralization of oversight as demonstrated by the direct involvement  of high-level officials such as the Vice President, cabinet secretaries, and  senior accountable officials in federal agencies receiving Recovery Act  funding, as well as centrally-placed policy and oversight organizations  such as OMB and the Recovery Board. This combination of a centralized  and decentralized approach to managing the implementation of the  Recovery Act represented a new method of managing grant oversight,  one which simultaneously recognized the importance of collaboration  while increasing the role of the center.

Officials in the Recovery Implementation Office employed a collaborative,  facilitative approach, while also leveraging the authority of the Vice  President to facilitate the participation of stakeholders. The office  functioned as a convener and problem-solver that engaged with a wide  range of federal, state and local partners. This approach was embodied in  the objectives identified by the Vice President when the office was  established. These objectives included the expectation that office staff  respond to requests and questions within 24 hours, cut across  bureaucratic silos by reaching out to a variety of partners, and always be  accessible. Toward this end, the office adopted the role of an “outcome  broker,” working closely with partners across organizational silos at all  levels of government in order to foster implementation of the Recovery   Another role of the Recovery Implementation  Act and achieve results. Office was to closely monitor Recovery Act spending. One way it did so  was to monitor grants to ensure that they were consistent with the  objectives identified by the Vice President. A second way the office  monitored spending was to review weekly financial reports on agency  obligations and expenditures for programs receiving Recovery Act funds  and to meet with the agencies on a regular basis.

For more information on the concept of an “outcome broker”, please see Frank  DiGiammarino, Can Government Work Like Open Table? Innovation in the Collaborative  Era (2012), accessed January 22, 2014,  http://www.scribd.com/doc/115361546/Can-Government-Work-Like-OpenTable.

OMB sought to facilitate effective implementation of the Recovery Act by  working to establish and strengthen relationships with state and local  governments that would ultimately implement the programs on the  ground.  This was done in two ways: (1) by soliciting feedback from state  and local partners when formulating and revising rules and policies  governing the implementation of Recovery Act programs and (2) by  developing its capacity to respond to questions from the many states and  localities that would be implementing those rules and policies. A senior  OMB official directly involved in this work told us the office had to move  out of its traditional role as mainly a policy-making organization to adopt a  more interactive and service-oriented approach. Under this approach, key  activities involved engaging with and obtaining feedback from states and  localities as well as providing technical support to these groups so that  they could meet the Recovery Act’s numerous reporting requirements.

For example, to obtain feedback from state and local partners when  developing key Recovery Act policies, OMB became actively involved in  weekly conference calls that included a diverse group of federal, state,  and local organizations. Starting in the spring of 2009, regular participants  in these calls included OMB; GAO; the National Association of State  Auditors, Comptrollers and Treasurers; the National Governors’  Association; the National Association of State Budget Officers; the  Recovery Board; the National Association of Counties; the National  Association of State Chief Information Officers; and the National  Association of State Purchasing Officers. These weekly calls were  scheduled after several of these organizations wrote to OMB and GAO to  express their strong interest in coordinating on reporting and compliance  aspects of the Recovery Act. An important outcome of this regular  information exchange was to make OMB aware of the need to clarify  certain reporting requirements. The Recovery Act required federal  agencies to make information publicly available on the estimate of the  number of jobs created and number of jobs retained as a result of  activities funded by the act. Our previous Recovery Act work in the states  raised the issue that some local officials needed clarification regarding  definitions when reporting on job data. The local partners participating in  these calls were able to corroborate what we reported and provide OMB  with specific information about what additional guidance was needed. To  obtain information to further guide refinements to the Recovery  implementation process, at the end of 2009, OMB officials said they (1)  interviewed and surveyed numerous stakeholders including governors  and state and local recipients, and (2) worked with GAO to identify best  practices. Based on these efforts, OMB subsequently revised its  guidance, which focused on lessons learned around enhancing recipient  reporting and compliance.

To improve technical support provided to state and local governments  implementing the Recovery Act, OMB worked with the Recovery Board to  establish an assistance center based on an “incident command” model.

One OMB official likened this approach to an extension of a traditional  response model used during natural disasters, where the country’s  economic condition during the Great Recession was the “incident” and  the Recovery Act was the intervention to be rolled out through many  partners. To help implement this approach, OMB worked with officials  from the Department of Agriculture who offered the services of one of  their national emergency management teams to help set up and  coordinate this effort. Given the large number of state and local  governments that needed to be supported, OMB requested that each  agency with grant programs receiving Recovery Act funds contribute  personnel to support the center. According to OMB officials, from  September to mid-December of 2009, the center responded to  approximately 35,000 questions from states and localities.

section_title: Regular and Systematic Use of Data to Support Management Reviews
paragraphs: Under the Recovery Act, some agencies used new data-driven  approaches to inform how they managed programs, and some of those  new approaches become institutionalized at the agencies post-Recovery.  While the Government Performance and Results Act (GPRA)  Modernization Act of 2010 (GPRAMA) laid out requirements for data- driven quarterly performance reviews, several Recovery Act efforts aided  agencies in implementing those requirements.  For example, in February 2013 we found that the Department of Energy (DOE) built on its Recovery  Act-related performance reviews and established quarterly performance  reviews, called business quarterly reviews, in 2011. Another control  DOE implemented for large dollar projects was a “Stage-Gate” process,  which did not allow the funds to be disbursed all at one time. It required  the recipient to meet certain metrics before receiving additional funding at  certain levels. DOE Office of Inspector General (OIG) officials believed  this Stage-Gate approach was an effective internal control tool. Post- Recovery, DOE has institutionalized both the business quarterly reviews  and Stage-Gate processes.

As part of the Department of Housing and Urban Development’s (HUD)  implementation of the Recovery Act, the agency piloted a new approach  to data management and accountability called HUDStat. HUD’s Recovery  Act team collected data about the status of projects and progress towards  financial goals. Armed with this information, HUD leaders could identify  and neutralize spending delays across the agency’s 80 field and regional  offices. In some cases, a senior HUD official would make a phone call to  a mayor or a governor to stress the need to spend funds quickly. In other  cases, staff would refocus on regions where progress was slow and  would work with grantees to move more quickly to promote economic  growth. After the Recovery Act, and in accordance with GPRAMA  requirements, HUD continued to use HUDStat to share data and  resources across the agency.

section_title: Heightened Accountability Requirements and Aggressive Implementation Timelines Led to Increased Coordination and Information Sharing
paragraphs: The Recovery Act contained increased accountability requirements in the  areas of reporting, audits, and evaluations to help ensure that tax dollars  were being spent efficiently and effectively. At the same time, the act  provided aggressive timelines—approximately 19 months—for the  distribution of funds. The combination of these two factors placed high  expectations on federal, state, and local governments and led to  increased coordination both vertically across levels of government and  horizontally within the same level of government to share information and  work towards common goals.
subsections: section_title: Networks Provided a Mechanism to Share Information
paragraphs: Organizations involved in overseeing and implementing grants funded by  the Recovery Act made use of both new and established networks to  share information. Shortly after the Recovery Act was signed into law, our  then Acting Comptroller General and the Chair of the Council of the  Inspectors General on Integrity and Efficiency hosted a coordination  meeting with the OIGs or their representatives from 17 federal agencies  to discuss an approach to coordination and information sharing going  forward. We also worked with state and local auditors and their  associations to facilitate regular conference calls to discuss Recovery Act  issues with a broad community of interested parties. Participants included  the Association of Government Accountants; the Association of Local  Government Auditors; the National Association of State Auditors,  Comptrollers, and Treasurers; the Recovery Board; and federal OIGs.

Another active venue for information sharing was the National  Intergovernmental Audit Forum (NIAF). The NIAF, led during this period  by our then Acting Comptroller General, is an association that has existed  for over three decades as a means for federal, state, and local audit  executives to discuss issues of common interest and enhance  accountability. NIAF’s May 2009 meeting brought together these  executives and others including OMB, to update them on the Recovery  Act and provide another opportunity to discuss emerging issues and  challenges. In addition, several Intergovernmental Audit Forum meetings  were scheduled at the regional level across the country and sought to do  the same. This regional coordination and information sharing directly  contributed to our Recovery Act work in the states. For example, our  western regional director made a presentation at the Pacific Northwest  Audit Forum regarding our efforts to coordinate with state and local  officials in conducting Recovery Act oversight. In conjunction with that  forum and at other related forums, she regularly met with the principals of  state and local audit entities to coordinate oversight of Recovery Act  spending.

Officials from New York City also played a role in creating networks to  share information. Believing that large cities were probably facing similar  issues and challenges, Recovery officials in New York City established  the American Recovery and Reinvestment Act Big City Network (BCN) to  serve as a peer exchange group and facilitate information sharing among  large municipalities across the country. The group was composed of over  20 large cities with geographical diversity, such as Los Angeles,  Philadelphia, Phoenix, and Seattle, that received a significant amount of  federal stimulus funding. The former head of the BCN told us that the  organization held frequent teleconferences and used this collaboration to  elevate issues unique to large cities with OMB, the White House’s  Recovery Implementation Office, and the Recovery Board. For example,  BCN informally surveyed its members in January 2010 concerning each  grant and associated funds they received. From this survey, BCN officials  assembled a list of cross-jurisdictional issues reflecting the perspectives  and experiences of large cities and shared them with the White House,  OMB, and the Recovery Board. Likewise, OMB, the Recovery  Implementation Office, and the Recovery Board used BCN as a vehicle  for getting information out to its partners on the ground.

Similarly, at the state level, a network was established where state  Recovery Act coordinators shared information and lessons learned on a  weekly basis. This state-level network also discussed ongoing Recovery  Act policy and operational issues with the White House, OMB, and the  Recovery Board to ensure successful implementation. Federal officials  joined the state calls on a regular basis. Both BCN and the state network  proved to be especially helpful in fostering intergovernmental  communications. For example, the former head of the BCN stated that in  response to a Senate Committee request in 2012, New York City  leveraged both BCN and the state Recovery Act coordinators’ network to  inform the current discussion on the Digital Accountability and  Transparency Act, proposed legislation which seeks to improve grant  transparency through increased reporting. Cities and states mobilized  quickly and came together on key consensus principles for Congress’  consideration.

section_title: Organizations Worked Together in New Ways to Achieve Common Goals
paragraphs: Under the tight time frames set for implementation of the Recovery Act,  federal agencies needed to work together to accomplish their goals. For  example, HUD and DOE shared a goal of weatherizing low-income  households through long-term energy efficiency improvements. To get the  projects under way as quickly as possible, they worked together to ensure  that homeowners met income standards. Before Recovery Act  implementation, both DOE and HUD conducted their own independent  income verifications. In May of 2009, DOE and HUD entered into a  memorandum of understanding that eliminated the need for separate  DOE income verification for people whose incomes had already been  verified by HUD. According to DOE officials, this collaboration helped  projects move faster, reduced the cost and administrative burden of  duplicative verifications, and helped DOE weatherize numerous homes  under the Recovery Act through 2013. DOE officials reported that  between fiscal years 2010 and 2013, the joint effort helped weatherize  approximately 1.7 million housing units, the majority of which were low- income. This policy of sharing low-income verifications for weatherizing  homes has continued post-Recovery Act.

At the state level, Massachusetts is an example where officials developed  new ways of working together to achieve Recovery Act goals. For  example, Massachusetts state officials established the Stimulus  Oversight and Prevention (STOP) Fraud Task Force in 2009 to fulfill the  Recovery Act’s goal of preventing fraud, waste, and abuse of Recovery  Act funds. This task force included the state OIG’s office, the Attorney  General’s office, and the State Auditor. Over the next 2 years, the group  met bimonthly to discuss fraud prevention and collaborated with several  federal agencies including the Department of Justice, the Federal Bureau  of Investigation, and HUD. The group also brought in federal OIGs  including DOE and Education, the state Comptroller’s office, and the  Massachusetts Recovery and Reinvestment Office to discuss our report  findings and OMB guidance. According to officials from the  Massachusetts Attorney General’s office, the task force improved  communication and furthered efforts to avoid overlap.

section_title: The Recovery Act Prompted Adjustments and Innovations in Oversight to Foster Accountability
paragraphs: Faced with the short time frames and accelerated roll out of Recovery Act  funds, both the oversight community and agencies adjusted their  oversight approach and innovated to foster accountability for Recovery  Act funds at the federal and state agency levels. These organizations  became more engaged in up-front analysis and monitoring of programs  under the Recovery Act and their reviews were often issued before  money was spent. These practices included (1) assessing and planning  for risks up front; (2) reviewing programs before and while they were  being funded rather than waiting until after programs were implemented;  (3) communicating findings quickly through informal processes as  opposed to regular full reports; and (4) using advanced data analytics.
subsections: section_title: Increased Use of Up-Front Risk Assessments and Planning
paragraphs: At the federal level, several agency OIGs conducted up-front risk planning  to proactively prepare for the influx of Recovery Act funds. For example,  the Department of Transportation’s (DOT) OIG instituted a three-phase  risk assessment process for DOT programs that received Recovery Act  funds. The OIG first identified existing program risks based on past  reports; it next assessed what the department was doing to address those  risks; and it then conducted the audit work. DOT’s OIG is continuing to  use this three-phase scan approach for its work on Hurricane Sandy.

At the Department of Education, when the OIG realized that Education’s  discretionary grant budget would increase from a typical allotment of $60  billion annually to over $100 billion under the Recovery Act, officials put  aside their initial work plan and developed a new one which focused on  the Recovery Act. Toward this end, the OIG conducted up-front risk  assessments by looking at its prior work to identify persistent  implementation issues going back to fiscal year 2003. The OIG then  issued a 2009 capping report that summarized these issues. This report  and additional risk assessments on Recovery Act-specific issues guided  the OIG's internal control audits that focused on the use of funds, cash  management, subrecipient monitoring, and data quality for Recovery Act  education programs.

Shortly after the Recovery Act was signed, DOE’s OIG reviewed the  challenges the agency would need to address to effectively manage the  unprecedented level of funding and to meet the goals of the Recovery  Act. The resulting report was based on a body of work by the OIG to  improve operations and management practices. The OIG identified  specific risks that they discovered during past reviews and investigations.  The OIG also suggested actions that should be considered during  Recovery Act planning and program execution to help reduce the  likelihood that these historical problems would recur. Further, the OIG  described the department’s initial efforts to identify risks and to develop  strategies to satisfy the Recovery Act’s goals and objectives. In addition,  the report outlined the OIG’s planned oversight approach which adopted  a risk-based strategy that included, among other things, early evaluations  of internal controls and assessments of performance outcomes.

At HUD, regional offices conducted front-end risk assessments of  programs that would be receiving Recovery Act funds. The HUD OIG  considered these risk assessments when preparing its work plan and  carrying out audits. The office also conducted capacity reviews for  programs that field offices had identified as having known issues. The  purpose of these capacity reviews was to enable the office to actively  address and work to resolve known issues before Recovery Act funds  were distributed to programs.

At the state level, audit organizations also adjusted their usual  approaches when planning and conducting reviews of grant programs  that received Recovery Act funds. Several state auditors conducted extra  audit work of state programs up front in an effort to identify risks and  inform their work moving forward. For example, the Office of the  California State Auditor conducted “readiness reviews” that highlighted  known vulnerabilities in programs receiving Recovery Act money. The  office used the information coming out of these reviews to identify specific  issues to focus on in future work as well as to inform the oversight  committees of the state legislature and other state officials involved in  Recovery Act oversight and implementation. As a result of one such  review that focused on DOE’s Weatherization Assistance Program, the  State Auditor was able to identify key implementation issues that needed  attention at a joint meeting of state and federal officials organized by the  Governor’s Recovery Act Task Force. The readiness review identified  specific areas where the program needed to improve and informed the  frequency with which state auditors would go back to program officials to  check on progress. According to the California state auditor, among the  benefits of this approach was the feedback it provided to state agencies  on their level of readiness as well as the detailed information given to  both the state legislature and the Governor’s Recovery Act Task Force on  the agency’s progress. The use of readiness reviews has continued post- Recovery Act. Most recently, the office employed the approach in 2013 as  it prepared to audit the implementation of the Affordable Care Act in  California.

section_title: Increased use of “Real Time” Information
paragraphs: The Recovery Act’s short time frames prompted the oversight community  to carry out some of its reviews in “real time” as Recovery funds were  being rolled out, as opposed to the traditional approach of reviewing a  program after implementation. Under this approach, members of the  oversight community looked for ways to inform program officials of  challenges and needed improvements much earlier in the process. For  example, as described previously in table 1, the Recovery Act specified  several roles for us, including conducting bimonthly reviews of selected  states’ and localities’ use of funds made available under the Act. We  subsequently selected a core group of 16 states and the District of  Columbia to follow over the next few years to provide an ongoing  longitudinal analysis of the use of funds provided in conjunction with the  Recovery Act. The Recovery Act also assigned us a range of  responsibilities to help promote accountability and transparency. Some  were recurring requirements such as providing bimonthly reviews of the  use of funds made available under various provisions of the Recovery Act  by selected states and localities and reviews of quarterly reports on job  creation and job retention as reported by Recovery Act fund recipients.  Other requirements included targeted studies in several areas such as  small business lending, education, and trade adjustment assistance. In  total, we issued approximately 125 reports on, or related to, the Recovery  Act resulting in more than 65 documented accomplishments.

The interest in obtaining “real time” feedback concerning Recovery Act  implementation was not limited to the oversight community. For example,  DOT’s Federal Highway Administration (FHWA) established National  Review Teams (NRT) within 3 months of the Recovery Act’s passage to  help assist its division offices attain the greater level of accountability and  transparency called for under the Recovery Act. As we previously  reported, the NRTs were composed of FHWA staff—separated from the  rest of FHWA—to act as a neutral third party to conduct oversight. The  mission of the NRTs was to conduct quick reviews of FHWA programs  and assess processes and compliance with federal requirements in six  key risk areas: (1) preliminary plans, specifications, and estimates; (2)  contract administration; (3) quality assurance of construction materials;  (4) local public agencies; (5) disadvantaged business enterprises; and (6)  eligibility for payments. As a review progressed, the NRT discussed  findings with division office and state transportation staff. According to  FHWA officials, independent reviews had several benefits: a consistent, comparative perspective on the oversight regularly  conducted by division offices, and the collection of information at the  national level on both best practices and recurring trouble spots  across FHWA division offices; additional “boots on the ground” for project-level oversight and  increased awareness of federal oversight activity among states,  Metropolitan Planning Organizations, and other transportation  organizations receiving Recovery Act funds; and an independent outside voice to examine Recovery Act projects and  point out problems, keeping the partnering relationship between the  division offices and the state DOTs intact.

Division offices and state officials with whom we spoke responded  positively to the NRT reviews. The NRT was viewed as a success for  FHWA and it has since added independent reviews based largely on the  NRT model to provide independent corporate level review of projects and  programs in addition to providing other support services.

section_title: Earlier Communication of Audit Findings
paragraphs: The rapid pace at which Recovery Act funds were being distributed also  prompted audit organizations to communicate their findings earlier in the  audit process. For example, DOT’s OIG issued periodic advisories within  the agency rather than waiting until an audit was completed to share its  findings. According to OIG staff, these advisories informed the  department of issues or concerns shortly after they were discovered,  thereby permitting program staff to take corrective action much more  quickly.

In our first report on our bimonthly reviews of the use of Recovery Act  funds by selected states and localities, we determined that the Single  Audit process needed adjustment to provide the necessary level of focus  and accountability over Recovery Act funds in a timelier manner than the  current schedule. Subsequently, we recommended that the director of  OMB adjust the Single Audit process to provide for review of the design of  internal controls during 2009 over programs to receive Recovery Act  funding, before significant expenditures in 2010. In response, in October  2009 OMB implemented the Single Audit Internal Control Project—a  collaborative effort between 16 volunteer states receiving Recovery Act  funds, their auditors, and the federal government—to achieve more timely  communication of internal control deficiencies for higher-risk Recovery  Act programs. The project encouraged auditors to identify and  communicate significant deficiencies and material weaknesses in internal  controls over compliance for selected major Recovery Act programs 3  months sooner than the 9-month time frame required under statute. The  project allowed program management officials at an audited agency to  expedite corrective action and help mitigate the risk of improper Recovery  Act expenditures. In May 2010, we reported that the project met some of  its objectives and was helpful in identifying critical areas where further  OMB actions were needed to improve the Single Audit process over  Recovery Act funding.

Auditors at the local level also communicated their findings early. For  example, the Denver City Auditor’s Office adopted new practices to  provide more timely information on Recovery Act programs to the Mayor  and other key officials, particularly on issues affecting compliance with  Recovery Act reporting requirements. Using a tiered notification process,  the auditor’s office would initially notify the appropriate city department  informally through e-mail or a similar means of potential issues they were  finding during an on-going audit. The auditor’s office would revisit the  issues later and, if the office determined the issue had not been  addressed, it would then formally communicate any substantive issue on  a real-time basis through an “audit alert.” These alerts were typically brief  documents and went to the affected departments as well as directly to the  Mayor’s work group that oversaw the city’s Recovery Act implementation.  If appropriate action was still not forthcoming, the city auditor might issue  a public alert or maybe a full public audit report. According to a senior city  audit official, the alerts were beneficial because the city auditor did not  have to conduct a full audit to communicate risks and findings to decision  makers, allowing them to more quickly address problems. The city auditor  issued its first audit alert in October 2009 and subsequently issued  another one in February 2010 when problems from the first one had not  been addressed. After the second alert, the city administration corrected  the identified problems.

section_title: Use of Advanced Data Analytics
paragraphs: To further increase accountability under the Recovery Act, the Recovery  Board utilized innovative data analytics in carrying out its oversight  responsibilities. Data analytics is a term typically used to describe a  variety of techniques that can be used to analyze and interpret data to,  among other things, help identify and reduce fraud, waste, and abuse.  Specifically, predictive analytic technologies can be used to identify  potential fraud and errors before payments are made, while other  techniques, such as data-mining and data-matching of multiple  databases, can identify fraud or improper payments that have already  been awarded, thus assisting agencies in recovering these dollars. In  October 2009, the Recovery Board established an innovative center to  analyze the use of Recovery Act funds by employing data analytics (see  figure 3). The Recovery Operations Center (ROC) served as a centralized  location for analyzing Recovery Act funds and their recipients through the  use of such predictive analytic technologies.

According to Recovery Board staff, the results of these approaches  provided the OIG community and other oversight authorities with  information they could use to focus limited resources on cities, regions,  and high-risk government programs where historical data and current  trends suggested the likelihood of future risk. ROC analysts would cross- reference lists of grant recipients or sub-recipients against a variety of  databases to look for risk indicators such as criminal convictions,  lawsuits, tax liens, bankruptcies, risky financial deals, or  suspension/debarment proceedings.

One tool used to do this is link analysis, which assists the analyst in  making connections by visually representing investigative findings. Link  analysis charts visually depict how individuals and companies are  connected, what awards an entity has received, and how these actors  may be linked to any derogatory information obtained from the databases  described above . Such tools, when combined with enhanced Geographic  Information System capabilities, enable ROC analysts to conduct  geospatial analysis by displaying data from multiple datasets on maps to  help them make linkages and discover potential problems.

For example, the ROC helped a federal agency investigate possible  contract fraud related to over-billing on multiple contracts. ROC analysts  found 99 recipient awards made to a single company totaling over $12  million. In another example, the ROC helped to investigate allegations of  false claims and major fraud against the United States. ROC analysts  found officers of one company were also executives of more than 15  other companies, many of which were located at the same address, and  collectively received millions in Recovery Act funds.

More recently, the ROC has been used to track funds and help reduce  fraud, waste, and abuse related to the tens of billions of dollars that have  been awarded to states and communities to assist in their recovery after  Hurricane Sandy hit in October 2012. Recovery Board staff have sought  to leverage the expertise they have developed in analyzing financial  spending and identifying potential fraud and high-risk indicators based on  their experience with the Recovery Act.

Figure 3. An Analyst Working in the Recovery Board’s Recovery Operations Center and a Sample Output of One of ROC’s  Link Analysis Tools.

To assure the public that their tax dollars were being spent efficiently and  effectively, the Recovery Act called for increased oversight and  accountability of those funds by oversight and program entities at the  federal, state, and local levels. This increased emphasis on oversight and  accountability presented challenges for those entities stemming from (1) a  lack of financial resources to conduct oversight at the state and local  levels, (2) human capital issues, and (3) the accelerated roll out of  Recovery Act funds.

section_title: Limited Resources to Conduct Oversight at the State and Local Levels
paragraphs: Officials with whom we spoke in several states expressed concerns that  the Recovery Act did not provide funding to state oversight entities,  although it placed additional federal requirements on them to provide  proper accounting and to ensure transparency. Federal agency OIG  offices received a significant amount to conduct oversight of Recovery Act  funds—ranging anywhere from $1 million to $48.25 million distributed to  more than 28 agencies. In contrast, states and localities relied on their  existing budgets and human capital resources (and, in some cases,  supplemented by a small percentage of administrative funds) to carry out  their additional oversight activities.

Due to fiscal constraints, states reported significant declines in the  number of management and oversight staff—limiting states’ ability to  ensure proper implementation and management of Recovery Act funds.  With oversight capacity already strained in many states, the situation was  further exacerbated by increased workloads resulting from  implementation of new or expanded grant programs funded by the  Recovery Act. For example, Massachusetts officials explained that the  state oversight community faced budget cuts of about 10 percent.  According to officials from the OIG and the State Auditor’s office, their  budgets are almost entirely composed of salaries, and any cuts in funding  resulted in fewer staff available to conduct oversight. As a result of the  cuts, the Inspector General stated that his department did not have the  resources to conduct any additional oversight related to Recovery Act  funds. Further, the Massachusetts State Auditor described how his  department had to furlough staff for 6 days in fiscal year 2009. In  recognition of this situation and reflective of the state’s desire to pursue  fraud in the Recovery Act program, for state fiscal years 2009 through  2012, the Massachusetts Recovery and Reinvestment Office allocated  funds from the state’s central administration account to the Attorney  General, State Auditor, and OIG offices to ensure that oversight would  take place.

The California State Auditor also cited the lack of federal funding for state  and local oversight as a challenge to ensuring accountability in the  implementation of the Recovery Act. In a 2009 testimony to the California  state budget committee, the State Auditor said that her office would need  to conduct an additional 14 audits based on an initial analysis of the  estimated stimulus funds that California would receive. Furthermore, the  programs that the office was auditing at the time received additional  funds, which potentially increased the workload and cost to audit those  programs as well. Finally, new requirements created by the Recovery Act  for existing programs also impacted the State Audit Office’s efforts. The  California State Auditor noted that given the additional responsibilities her  office faced due to the influx of stimulus funds, any budget cuts would  adversely affect the office’s ability to conduct audits.

In another example, Colorado’s state auditor reported that state oversight  capacity was limited during Recovery Act implementation, noting that the  Department of Health Care Policy and Financing had three controllers in  4 years and the state legislature’s Joint Budget Committee cut field audit  staff for the Department of Human Services in half. In addition, the  Colorado DOT’s deputy controller position was vacant, as was the  Department of Personnel & Administration’s internal auditor position.  Colorado officials noted that these actions were, in part, due to  administrative cuts during a past economic downturn in an attempt to  maintain program delivery levels.

section_title: Accelerated Rollout of Recovery Act Programs Presented Oversight Challenges
paragraphs: The President’s goal for quickly spending Recovery Act funds created a  large spike in spending for a number of programs in the 28 agencies  receiving Recovery Act funds. The act also created a number of new  programs—requiring agencies to move quickly. As a result, under the  Recovery Act’s accelerated rollout requirements, some federal agencies  and states faced oversight challenges.

For example, DOT and states faced numerous challenges in  implementing the Recovery Act’s maintenance-of-effort oversight  mechanism due to the accelerated rollout of funds. The Recovery Act  contains maintenance of effort provisions designed to prevent recipients,  such as state DOTs, public housing agencies, and private companies,  from substituting planned spending for a given program with Recovery  Act funds. That is, the provisions ensured that the increased federal  spending would supplement rather than replace state, local, or private  spending. The maintenance-of-effort provision for DOT in the Recovery  Act required the governor of each state to certify that the state would  maintain its planned level of transportation spending from February 17,  2009, through September 30, 2010. Twenty-one states did not meet  their certified planned spending levels, and a January 2011 preliminary  DOT report found that some of these states were unclear on what  constituted “state funding”. DOT also found some of the states were  unclear about how well DOT guidance on calculating planned  expenditures would work in the many different contexts in which it would  have to operate. As a result, many problems came to light only after DOT  had issued initial guidance and states had submitted their first  certifications. DOT issued guidance seven times during the first year after  the act was signed to clarify how states were to calculate their planned or  actual expenditures for their maintenance-of-effort certifications. Further,  many states did not have an existing means to identify planned  transportation expenditures for a specific period, and their financial and  accounting systems did not capture that data. Therefore, according to  DOT and some state officials, a more narrowly focused requirement  applying only to programs administered by state DOTs or to programs  that typically receive state funding could have helped address the  maintenance-of-effort challenges. DOT and state officials told us that  while the maintenance-of-effort requirement can be useful for ensuring  continued investment in transportation, allowing more flexibility for  differences in states and programs, and adjustments for unexpected  changes to states’ economic conditions, should be considered for future  provisions.

At DOE, the department initially encountered some challenges with fully  developing a management and accountability infrastructure because of  the large amount of Recovery Act funding it received in a short period of  time. According to an official in the DOE OIG’s office, this was especially  true with the new Energy Efficiency Conservation Block Grant program.This official told us that some states and localities also did not have the  infrastructure in place (including the necessary training) to manage the  large amount of additional federal funding. Further, DOE required  recipients’ weatherization plans to address how the respective state’s  current and expanded workforce (employees and contractors) would be  trained. In May 2010, according to DOE, the agency was in the process of  developing national standards for weatherization certification and  accreditation. DOE estimated that developing the standards would take  about 2 years—a time frame that did not match the accelerated timing of  the Recovery Act’s funds’ distribution. Several years after the Recovery  Act was implemented, DOE reported that it had completed certain  milestones toward developing national standards for weatherization,  training, certification, and accreditation, but was still working to finalize  other elements such as its national certification program.

section_title: The Recovery Act Resulted in Increased Transparency but Also Presented Challenges
subsections: section_title: Recovery Act Transparency Websites Embody Several Leading Practices
paragraphs: In an April 2009 memorandum, OMB directed agencies to follow leading  practices for federal website development and management, such as  those listed on HowTo.gov, a website managed by the Federal Web  Managers Council and the General Services Administration.makes available a list of the “Top 10 Best Practices” for federal websites  as a resource to improve how agencies communicate and interact with   HowTo.gov  customers and provide services.state and city Recovery websites, demonstrated several of these leading  practices including establishing a clear purpose of the website, using  social networking tools to garner interest in the website, tailoring websites  to meet audience needs, and obtaining stakeholder input when designing  the website. In addition, we found that some websites enabled place- based performance reporting.
subsections: section_title: Establish a Clear Purpose of the Website
paragraphs: Consistent with leading practices for the development of federal websites  on HowTo.gov, Recovery.gov and selected state Recovery websites  clearly identify for the user the purposes of the site and the ways it can be  used to accomplish tasks efficiently. According to HowTo.gov, this is  important because people often visit government websites with a specific  task in mind, and if it is not easy to find the information quickly that they  need to complete that task, they will leave the site. Recovery.gov contains  an entire page that outlines what users can do on the site, including how  to use the raw data available through the website; report waste, fraud,  and abuse; or find job and grant opportunities. Further, Recovery.gov has  a “Get Started” page with an overview of the information on the site  including Recovery Act goals, the Recovery Board’s mission, what  information is not available on the website, and what users can do on the  website.

Similarly, Massachusetts’ Recovery website has tabs on its homepage  that link to information on how to use the website to track Recovery Act  jobs, spending, vendors, and the impact of Recovery Act dollars in the  state. For example, the “track jobs” page informs users how they can  track jobs created and retained in their community and provides a user  guide to assist them in their query.

section_title: Use Social Networking Tools to Garner Interest in the Website
paragraphs: Another leading practice for federal websites includes the use of social  networking tools. According to Howto.gov, social media is transforming  how government engages with citizens, allowing agencies to share  information and deliver services more quickly and effectively than ever  before. Recovery.gov and selected state and local Recovery websites  use social networking tools to garner interest in their websites. These  websites integrated Web 2.0 technologies to help people share and use  the information they provide. For example, to develop web-based  communities of interest, Recovery.gov has a dedicated social media web  page that has links to Recovery’s presence on various social-networking  tools such as Facebook, Twitter, YouTube, and Flickr. Recovery.gov’s  social media page enables users to (1) download a Recovery application  for iPhones and for iPads with a mapping feature showing how Recovery  Act funds were being spent, (2) sign up for a Recovery.gov month-in- review email, and (3) sign up to receive Recovery RSS web feeds.

Finally, Recovery.gov also has a blog, written by Recovery Board staff,  with a stated purpose to further a dialogue on transparency and  accountability in government, as well as to provide a forum for thoughts,  comments, and suggestions from the public.

New York City also made use of social networking to communicate  information regarding Recovery Act implementation through the use of a  Tumblr blog. City officials used this blog to communicate stories and  examples to its residents about how it was using Recovery Act funds and  the impact of those investments. City officials said the blog allowed  them to get behind full-time equivalent numbers and dollar expenditures  so that people could better understand how the Recovery Act was helping  them tackle problems where they work and live. For example, the blog  described one project that had no net increase in jobs but still made a  valuable difference for the city because Recovery Act funds were used to  repair 300,000 potholes and move to zero diesel fuel emissions for city  vehicles.

section_title: Tailor Website to Meet Audience Needs
paragraphs: Organizing a website according to the needs of its audience is also a key  leading practice for federal websites since an agency’s goal is to build the  right website for the people who need it and serve them effectively by  learning as much as possible about the website’s customers and what  they do. Recovery.gov has dedicated pages for different audiences that  compile and organize relevant resources according to their needs and  interests. On its home page, Recovery.gov has a tab which provides links  to pages designed with specific users in mind such as citizens, the press,  and grant recipients. There are also links to pages on neighborhood  Recovery Act projects, information on the Recovery Board, and other  information users are looking for. For example, grant recipients have a  dedicated page that provides resources such as reporting timelines, user  guides, a service/help desk, recipient reporting information, and a  recipient awards map. (See figure 4.)

On Recovery.gov’s “Developer Center” web page, users can access data  reported by recipients of Recovery awards through the Recovery  application program interface (API) and the Mapping API. Users can  also find widgets providing data summaries by state, county,  congressional district, or ZIP code as reported by recipients. The web  page also has a tool for users to build customized charts and graphs  displaying information such as funds awarded and received by state,  agencies by number of awards, and spending categories by funds  awarded.

The state of Massachusetts also tailored its Recovery Act website to meet  its audience’s needs. Prior to its implementation of the Recovery Act’s  transparency provisions, Massachusetts had little experience with  electronic reporting and disclosure of federal contracts, grants, and loans.  The MassRecovery website provided weekly citizen updates and  testimonials of how spending has benefited lives. The Citizens’ Update  web page provides a summary of where the state’s Recovery Act dollars  are going, where jobs are being created and retained, and information on  beneficiaries of funds received. In December 2009, MASSPIRG, an  independent consumer research group, issued a brief pointing to the  strengths of the Massachusetts Recovery website including the ability of  the Citizens’ Update web page to show money spent and jobs created  and retained in easy-to-read pie charts and tables; a summary of funds  distributed through the state; and an interactive state map of Recovery  Act spending. Further, in January 2010, Good Jobs First, a national policy  resource center, reviewed and evaluated states’ Recovery Act websites.  The organization ranked Massachusetts’ Recovery website on its top 10  list citing such beneficial features as the site’s comprehensive search  engine, data download capability, and information on five key Recovery  Act project elements—description, dollar amount, recipient name, status,  and the text of the award.

section_title: Obtain Stakeholder Input When Designing the Website
paragraphs: Leading website practices also recommend that developers obtain  stakeholder input when designing federal websites by engaging potential  users through focus groups and other outreach; regularly conducting  usability tests to gather insight into navigation, the organization of  content, and the ease with which different types of users can complete  specific tasks; and collecting and analyzing performance, customer  satisfaction, and other metrics. According to leading website practices,  these efforts are important for collecting and analyzing information about  audiences, their needs, and how they are using, or want to use, the  website.

The developers of Recovery.gov followed this leading practice by using  input from user forums, focus groups, and usability testing with interested  citizens to collect feedback and recommendations, which then inform the  development of the website from its initial stages. For example, teaming  with OMB and the National Academy of Public Administration, the  developers of Recovery.gov hosted a week-long electronic town hall  meeting at the end of April 2009 entitled “Recovery Dialogue on  Information Technology Solutions.” Over 500 citizens, information  technology specialists, and website development experts registered for  the event and submitted numerous ideas. Recovery.gov adopted some of  the ideas right away and included others in the re-launched version of the  website in September 2009. These changes included a standardized  reporting system for recipients, a greater use of maps, and a feedback  section for users. Additionally, in October 2009, Recovery.gov developers  conducted remote usability testing with 72 users, where the developers  received suggested changes, some of which they later implemented.  Further, in 2012, significant changes were made to Recovery.gov based  on user feedback on the website. These changes included creating a  recipient and agency data page, agency profiles, and a new Recipient  Projects Map with a series of dropdown menus and checkboxes that  enable users to filter data so they can see it in a targeted fashion (for  example, by state, agency, or category).

section_title: Enable Place-Based Performance Reporting
paragraphs: For websites covering numerous projects at various locations, a place- based geographic information system can be a useful tool. According to  the White House’s Digital Government Strategy, the federal government  needs to be customer-centric when designing digital service platforms  such as websites. In other words, agencies need to be responsive to  customers’ needs by making it easy to find and share electronic  information and accomplish important tasks. From the beginning,  recipient reported data on Recovery.gov was geo-coded in a way that  made it possible for users to find awards and track the progress of  projects on a block-by-block basis. The presentation of information on  Recovery.gov and on many state websites generally targeted individual  citizens who were not experts in data analysis. The format and content of  data prioritized mapping capabilities and invited people to enter their ZIP  code and locate projects in their immediate area. For example, figure 5  shows the map a user sees if ZIP code 30318 in Georgia is entered into  this web page. From this map, the user can click on any of the dots that  represent Recovery projects to find out information such as the project  recipient name, award amount, project description, number of jobs  created, and completion status. Additional information available to users  includes the amount of funds received by recipients as well as the overall  distribution of grants by funding categories for that area.

States and localities also utilized mapping features on their Recovery  websites. For example, in New York City, Recovery officials launched a  Recovery Act website, the NYCStat Stimulus Tracker, as an interactive,  comprehensive reporting tool. The federal government’s website,  Recovery.gov, served as the design inspiration and, according to a senior  city official, Stimulus Tracker was one of the first publicly-accessible  websites to report Recovery Act data for a local jurisdiction. City  Recovery officials were able to develop and launch New York City’s  stimulus website more quickly than other locations—approximately 6  weeks from start to completion—because they were able to leverage a  previously implemented information technology platform to support  citywide performance reporting. Stimulus Tracker allowed the public to  explore several levels deeper than what was at Recovery.gov, which  reported at the funding award level. For example, Stimulus Tracker broke  down each award into several projects, each of which had its own  dashboard page that displayed information such as (1) the status of the  project, (2) the percentage of total funds spent, (3) start date and  spending deadlines, and (4) the number of jobs created or retained.  Visitors to the site could drill into a record of every payment made with  stimulus funds through the additional feature “Payment Tracker” and  every contract to carry out stimulus-funded work through “Contract  Tracker.”

Stimulus Tracker also offered an interactive map for site visitors who were  interested in knowing how stimulus dollars were allocated geographically  and where specific projects were located. This information was layered on  top of the city’s existing online map portal. It included such items as the  locations of schools, libraries, hospitals, and subways, as well as online  property, building, statistics, and census information. As New York City’s  existing online map portal could already be navigated either by entering a  specific address or simply using zoom and scroll tools, city Recovery Act  officials were able to build on this application and include a city mapping  tool for Recovery Act funds where the public could find any project with a  discrete location. See figure 6 for a screen shot of New York City’s  mapping tool depicting the city’s Recovery Act projects.

section_title: Recovery Act Performance Was Mostly Measured by Outputs Rather than Outcomes, and Challenges with Both Existed
subsections: section_title: Recipients and Agencies Were Required to Report Amount and Speed of Funding but Faced Challenges in Doing So
paragraphs: The Recovery Act requires recipients to report on their use of funding and  agencies that provide those funds to make the reports publicly available.  The Recovery Act’s recipient reporting requirements apply only to  nonfederal recipients of funding, including all entities other than  individuals receiving Recovery Act funds directly from the federal  government such as state and local governments, private companies,  educational institutions, nonprofits, and other private organizations. As  required by section 1512(c) of the Recovery Act, recipients were to  submit quarterly reports that included the total amount of Recovery Act  funds received, the amount of funds expended or obligated to projects or  activities, and a detailed list of those projects or activities. For each  project or activity, the detailed list was to include the project’s name,  description, and an evaluation of its completion status. Also, the recipient  reports were to include detailed information on any subcontracts or  subgrants as required by the Federal Funding Accountability and  Transparency Act of 2006. For example, recipient reports are required  to also include details on sub-awards and other payments.

With the Recovery Act’s enhanced reporting requirements on spending,  agencies and recipients faced several challenges. Many agencies and  state and local partners were limited in their capacity to meet the  enhanced reporting requirements due to a lack of knowledge and  expertise. Others struggled with the burden of double reporting when they  had to report to federal systems tracking Recovery dollars as well as to  agency systems because, in some cases, agencies required more data to  manage their programs. Finally, some had trouble reporting data for  certain projects within the operational limitations of place-based data  mapping systems.

Capacity to meet reporting requirements. Many state and local  partners were limited in their capacity to meet spending reporting  requirements because they lacked knowledge and expertise. Using a  centralized mechanism like FederalReporting.gov to capture recipient  reporting information was a new process that recipients and agencies had  to learn. We have previously reported on the questions raised by state  officials regarding the reporting capacities of some local organizations,  particularly small rural entities, boards, or commissions, and private  entities not used to doing business with the federal government. In  addition, some state officials said that the Recovery Act’s requirement  that recipients report on the use of funds within 10 days after a quarter  ends was a challenge because some sub-recipients were unable to send  them the needed data on time.

Officials at several agencies suggested that if FederalReporting.gov had  allowed certain key award and identifying data fields to be pre-populated  each quarter, it would have likely resulted in fewer data errors for  agencies to address and eased the reporting burden on recipients. In our  September 2013 report and testimony on federal data transparency, we  concluded that the transparency envisioned under the Recovery Act for  tracking spending was unprecedented for the federal government,  requiring the development of a system that could track billions of dollars  disbursed to thousands of recipients. Such a system needed to be  operational quickly to enable posting of spending information rapidly for a  variety of programs. However, because agency systems did not collect  spending data in a consistent manner, the most expedient approach for  Recovery Act reporting was to collect data directly from fund recipients.  Recipients had the additional burden of having to provide this information  and when the data had to be entered manually, it could impact the  accuracy of the data. Thus, in September 2013 we recommended that  the director of OMB, in collaboration with members of the Government  Accountability and Transparency Board, develop a plan to implement  comprehensive transparency reform, including a long-term timeline and  requirements for data standards, such as establishing a uniform award  identification system across the federal government.

Earlier this year, the Recovery Board noted that agencies and OIGs also  experienced difficulties adapting to the more frequent reporting (every  quarter) and more detailed reporting (e.g., jobs created or individual  project activities) required of most government grant recipients. Agency officials acknowledged spending considerable staff hours training  recipients, providing technical assistance to them, verifying and validating  their data, and following up with them when issues arose. Despite efforts  to streamline and enhance existing review protocols, agencies still  needed skilled people to review and process applications for awards.  Although agencies and OIGs credited outreach to recipients for reducing  noncompliance with reporting requirements, the amount of staffing  resources it took to conduct that outreach was significant.

Double reporting. We have previously noted that recipients of Recovery  Act funds were required to report similar information to both agency  reporting systems and FederalReporting.gov. Several federal agency  and state government officials we spoke with also mentioned that  reporting to FederalReporting.gov resulted in double reporting for their  agency and grantees as several of them deemed their existing internal  systems superior and therefore would end up reporting to both. For  example, at HUD, program offices were unable to abandon their  established reporting systems because the agency’s systems collected  data necessary to support HUD’s grants management and oversight  processes. HUD officials told us that requiring grantees to report using  two systems resulted in double reporting of data and proved burdensome  to recipients and to HUD staff who spent many hours correcting  inaccurate entries.

At DOT, officials preferred using the agency’s own data because it was  more detailed and was reported monthly—more frequently than the  Recovery.gov data. In a focus group involving state transportation  officials, several echoed the redundancy of reporting systems. These  officials indicated that having to report to three systems—the internal  state system, DOT’s system, and FederalReporting.gov—increased their  agencies’ burden. As we reported in our previously mentioned September  2013 report and testimony on federal data transparency efforts, the lack  of consistent data and standards and commonality in how data elements  are defined places undue burden on federal fund recipients. This can  result in them having to report the same information multiple times via  disparate reporting platforms. procedures for reporting on the use of federal funds, it directed recipients  of covered funds to use a series of standardized data elements. Further,  rather than report to multiple government entities, each with its own  disparate reporting requirements, all recipients of Recovery Act funds  were required to centrally report into the Recovery Board’s inbound  reporting website, FederalReporting.gov.

GAO-13-871T and GAO-13-758. the geospatial reporting presentation format on the website. For example,  according to Recovery Board officials, the website only allowed one  location to be reported per project even though some projects spanned  multiple locations. Therefore, if a DOT highway project crossed multiple  ZIP codes, only one location of performance could be reported. Further,  certain locations were difficult to map such as rural roads, post office  boxes, county level data, and consultant contractors who worked out of  their homes.

section_title: Recipients Were Required to Report Outcome Measure of Jobs Created and Retained but Faced Some Challenges
paragraphs: The other major performance measure required under the Recovery Act  focused on the estimate of the number of jobs created or number of jobs  retained as a result of funding provided by the act. In addition to the  previously described reporting on funds spent and activities, recipients  were required in their quarterly reports to estimate the number of jobs  created or retained by that project or activity. OMB issued clarifying  guidance for recipient reporting in June 2009 and recipients began  reporting on jobs starting in October 2009. Among other things, the  guidance clarified that recipients of Recovery Act funds were to report  only on jobs directly created or retained by Recovery Act-funded projects,  activities, and contracts. Recipients were not expected to report on the  employment impact on materials suppliers (“indirect” jobs) or on the local  community. Recipients had 10 days after the end of each calendar  quarter to report. OMB’s guidance also provided additional instruction on  calculating the number of jobs created or retained by Recovery Act  funding on a full-time equivalent (FTE) basis.

Recipients faced several challenges meeting these requirements. They  had difficulty accurately defining FTEs, as various recipients interpreted  and applied the FTE guidance from OMB differently. Further, many  recipients struggled to meet reporting deadlines as they had little time to  gather, analyze, and pass on information to the federal government at the  end of each fiscal quarter.

Definitional challenges and discrepancies in reporting FTEs. Under  OMB guidance, jobs created or retained were to be expressed as FTEs.  In our November 2009 report we found that recipients reported data  inconsistently even though OMB and federal agencies provided  significant guidance and training. Specifically, we found that while FTE  calculations should allow for different types of jobs—part time, full time or  temporary—to be aggregated, differing interpretations of the FTE  guidance compromised the recipients’ ability to aggregate the data. For  example, in California, two higher education systems calculated FTEs  differently. One chose to use a 2-month period as the basis for the FTE  performance period. The other chose to use a year as the basis. The  result was almost a three-to-one difference in the number of FTEs  reported for each university system in the first reporting period. Although  the Department of Education provided alternative methods for calculating  an FTE, in neither case did the guidance explicitly state the period of  performance of the FTE. We recommended that OMB clarify the definition  of FTE jobs and encourage federal agencies to provide or improve  program-specific guidance for recipients. Further, we recommended that  OMB be more explicit that jobs created or retained are to be reported as  hours worked and paid for by the Recovery Act. In general, OMB and  agencies acted upon our recipient reporting-related recommendations  and later reporting periods indicated significant improvements in FTE  calculations. OMB’s guidance changed the original formula and  consequently, agencies had to rush to educate recipients about the  changes. Agencies spent extra time and resources that quarter reviewing  and validating recipient data to reduce errors. In some cases, agencies  communicated daily with recipients via phone or e-mail to ensure their  report submissions were accurate.

Capacity of recipients to meet deadlines. The requirement to regularly  report on jobs created and retained further strained the capacity of some  recipients. Recipients only had 10 days after the end of each fiscal  quarter to determine this information and pass it on to the federal  government.reporting should have been extended by 1 to 2 weeks so they were not  rushing to input data. One of these officials said she was directed by  other state officials to put in “the best data you have, even if it’s not  correct…and go back and correct it later.” City officials also reported  concerns with the quick turn-around time for reporting. For example, one  city official stated that, in order to meet reporting deadlines, it was  necessary had to enter data manually, which created additional work. The  Recovery Board accepted these post-correction actions as it extended  the quality assurance period to provide more time for agencies to review  reports and recipients to make corrections in FederalReporting.gov. As a  result, recipients could change their reports up to about 2 weeks before  the start of the next reporting period.

section_title: Program Specific Performance Measures Varied by Program and Agency with Some Focusing More on Outputs than Outcomes
paragraphs: The administration required agencies receiving Recovery Act funds to  submit performance plans that identified additional measures on a  program-by-program basis. Consistent with existing GPRA requirements  for agencies to set outcome-oriented performance goals and measures,  OMB’s initial Recovery Act implementation guidance required federal  agencies to ensure that program goals were achieved. OMB required  agencies to measure specific program outcomes, supported by  corresponding quantifiable output measures, and improved results on  broader economic indicators. agencies typically resorted to existing measures in their grant programs’  performance plans. This information is reported by agency and by  program within each agency, as opposed to government-wide. While  Recovery.gov provided a template for facilitating the reporting of this  information, the level of detail and specificity of outcomes varied greatly  for some of the agencies we reviewed, making it difficult to determine the  extent to which some were making progress toward their goals and  demonstrating results.

See OMB Memorandum M-09-10 (2009). This information was to be provided by all  agencies receiving Recovery Act funds, covering each grant program using these funds,  in the agencies’ “Recovery Program Plans” submitted to OMB. Initially due on May 1,  2009, the plans were to be updated by the agencies as needed and were to be published  on Recovery.gov as well as agency websites. These plans included information on each  Recovery Act program’s objectives, activities, delivery schedule, accountability plan,  monitoring plan, and program performance measures.

For example, Education’s performance plan described the agency’s  accountability mechanisms, the type and scope of project activities, and  specific program performance measures. With the exception of the  number of jobs created or retained, Education’s plan stated the agency  was primarily using existing established agency performance measures  that applied to both Recovery and non-Recovery funds. For example to  measure the success of one type of education grant fund (specifically,  Title I of the Elementary and Secondary Education Act of 1965, as  amended) which the Recovery Act made available to local educational  agencies, Education used existing agency performance measures, such  as the percentage of economically disadvantaged students in grades 3 to  8 scoring at the proficient or advanced levels on state reading and  mathematics assessments.

On the other hand, DOT filled out the templates to report on its 12  programs, and its performance measures were generally less specific and  outcome oriented. For example, DOT’s Capital Assistance for High Speed  Rail Corridors and Intercity Passenger Rail Service performance plan  metrics included whether interim guidance was published within time  frames, the number of applicants received for the program, and the  number of grants awarded for the program. Further, as we previously  reported, DOT released a series of performance plans in May 2009 to  measure the impact of Recovery Act transportation programs, but these  plans generally did not contain an extensive discussion of the specific  goals and measures to assess the impact of Recovery Act projects. For  example, while the plan for the highway program contained a section on  anticipated results, three of its five measures were the percent of funds  obligated and expended and the number of projects under construction.  The fourth measure was the percentage of vehicle miles traveled on  pavement on the National Highway System rated in good condition, but  the plan said that goals for improvement with Recovery Act funds were  yet to be determined. The fifth goal was number of miles of roadway  improved, and DOT’s plan reported that even with the addition of  Recovery Act funds, the new target would remain the same as previously  planned. As a result, we recommended in May 2010 that DOT ensure that  the results of these projects were assessed and a determination made  about whether these investments produced long-term benefits. DOT did  not implement our recommendation.

section_title: Concluding Observations
paragraphs: Created in response to the recent serious recession, the Recovery Act  represents a significant financial investment in improving the economy.  Grant programs were a key mechanism for distributing this support. By  increasing accountability and transparency requirements while at the  same time setting aggressive timelines for the distribution of funds, the  Recovery Act created high expectations as well as uncertainty and risk for  federal, state, and local governments responsible for implementing the  law.

Faced with these challenges, some of these organizations looked beyond  their usual way of doing business and adjusted their usual practices to  help ensure the accountability and transparency of Recovery Act  funds. The oversight community adopted a faster and more flexible  approach to how they conducted and reported on their audits and reviews  so that their findings could inform programs of needed corrections before  all Recovery funds were expended. They leveraged technology by using  advanced data analytics to reduce fraud and to create easily accessible  Internet resources that greatly improved the public’s access to, and ability  to make use of, data about grants funded by the Recovery Act. These  and other experiences, as well as the challenges identified in this report,  provide potentially valuable lessons for the future. Underlying many of  these lessons is the importance of increased coordination and  collaboration, both vertically—transcending federal, state, and local levels  of government—and horizontally—across organizational silos within the  federal community—to share information and work towards common  goals.

One question that remains unresolved is the extent to which good  practices developed in response to the Recovery Act’s special challenges  and conditions can ultimately be incorporated in everyday practice for  managing and overseeing grants. Some of the practices we found, such  as the use of the Recovery Operations Center and state readiness  reviews, have been able to make this transition. Others, such as some of  the information sharing networks established during the Recovery Act,  have had more difficulty in doing so. Proposals under consideration by  Congress and the administration to extend Recovery Act requirements for  spending transparency to all federal grants suggest that this has been the  case for tracking dollars. Still to be seen is whether it will be possible to  provide this type of government-wide transparency to other measures of  performance, such as grant outcomes.

section_title: Agency Comments
paragraphs: We provided a draft of this report to the Secretaries of the Departments of  Education, Energy, Housing and Urban Development, and  Transportation; and to the Director of the Office of Management and  Budget. We also provided drafts of the examples included in this report to  cognizant officials from the relevant state and local agencies to verify  accuracy and completeness, and we made technical changes and  clarifications where appropriate. The agencies generally agreed with our  findings and provided technical comments which were incorporated in the  report.

We are sending copies of this report to other interested congressional  committees; the Secretaries of the Departments of Education, Health and  Human Services, Housing and Urban Development, and Transportation;  and the Director of the Office of Management and Budget. In addition, the  report will be available on our web site at http://www.gao.gov.

If you or your staff have any questions regarding this report, please  contact me at (202) 512-6806 or by email at czerwinskis@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this report. Key contributors to  this report are listed in appendix I.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To better understand grant management lessons resulting from the  American Recovery and Reinvestment Act of 2009 (Recovery Act), we  focused on two key issues involving grant implementation during the  Recovery Act: accountability and transparency. Specifically, this report  identifies and provides examples of good practices employed and the  challenges faced by select federal, state, and local agencies  implementing grant programs funded by the Recovery Act, in the areas of  accountability and transparency.

To obtain a broad view of lessons learned during the implementation of  grants funded by the Recovery Act, we conducted a detailed literature  review of relevant reports describing lessons learned from implementing  grants funded by the Recovery Act from GAO; federal and state  inspectors general; federal agencies; state and local governments;  accountability boards; state and local government advocacy  organizations; think tanks; and academia. We developed selection  criteria to identify relevant federal agencies and state and local  governments to obtain their views related to the implementation of grant  programs funded by the Recovery Act. We then selected four federal  agencies, three states, and two localities based on the extent to which  they had information related to our focus areas of accountability and  transparency; information from our colleagues, subject matter experts,  and academics; and citations in the literature. To capture a diverse mix of  Recovery Act grants and identify potential good practices and challenges,  we selected a variety of grants—some that had their funding structures  already well established, others that had their funding greatly increased  as a result of the Recovery Act, as well as new programs. Although  Medicaid was the largest grant program funded by the Recovery Act, we  deemed it out of scope for the purposes of this review since it is primarily  an entitlement and subject to specific rules that are not typical of program  grants. Further, Medicare and unemployment insurance were not  included in the recipient reports we examined.

To obtain illustrative examples of the good practices employed and the  challenges faced during the implementation of grants funded by the  Recovery Act related to accountability and transparency, we conducted  interviews with a wide range of officials and experts. We interviewed  cognizant officials and obtained supporting documentation from  government-wide oversight entities at the federal level including the  Recovery Implementation Office, Office of Management and Budget, and  the Recovery Accountability and Transparency Board. In addition, we  interviewed and obtained supporting documentation from select federal  agency officials from the Departments of Education; Energy; Housing and  Urban Development; and Transportation; and their respective inspectors  general. At the state level, we interviewed and obtained supporting  documentation from agency and audit officials from the states of  California, Georgia, and Massachusetts. To get a broader state  perspective, we also interviewed officials from the state Recovery Act  coordinators’ network, which included key state officials involved in  implementing the Recovery Act from several states. interviewed officials from Denver, Colorado and New York, New York.

The states represented in the state Recovery Act coordinators’ network meeting were  Arizona, Arkansas, Delaware, Florida, Maryland, Massachusetts, Michigan, Minnesota,  Missouri, Nebraska, Nevada, Oregon, Rhode Island, Tennessee, Texas, Utah, and  Wisconsin.

Association of State Budget Officers, and the National Association of  Counties. We obtained additional information on lessons learned related  to the Recovery Act from officials representing the Government  Accountability and Transparency Board, Sunlight Foundation, Council of  Government Relations, National Council of Non-profits, Center for  Effective Government, the Federal Demonstration Project, and National  Association of State Chief Information Officers. In addition, we conducted  seven focus groups representing a range of federal fund recipients.  Focus groups included: (1) state comptrollers; (2) state education and  transportation officials; and (3) local government officials from both large  and small municipalities. Each focus group had between four and eight  participants who were recruited from randomized member lists provided  by the recipient associations we interviewed.

Lastly, we reviewed and synthesized information provided in previously  issued reports related to the Recovery Act that included the following  sources: our previous work; inspectors general from the Departments of  Education, Energy, Housing and Urban Development, and  Transportation; the Recovery Accountability and Transparency Board; the  White House; and various non-governmental sources including the IBM  Center for The Business of Government. In addition, we reviewed and  applied criteria established by HowTo.gov, a source of guidance and  leading practices for government websites, to Recovery.gov and state  and local Recovery websites. The scope of our work did not include  independent evaluation or verification of the effectiveness of the  examples we identified. We also did not attempt to assess the prevalence  of the practices or challenges we cite either within or across levels of  government. Therefore, entities other than those cited for a particular  practice may or may not have employed the same or similar practice, and  it is not possible to generalize how prevalent the practices and challenges  may be across all Recovery Act grants.

We conducted this performance audit from December 2012 through  January 2014, in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.

section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Peter Del Toro, Assistant  Director; Mark Abraham; and Jyoti Gupta made significant contributions  to this report. Also contributing to this report were Tom Beall, Robert  Gebhart, Jacob Henderson, Donna Miller, Robert Robinson, Beverly  Ross, and Andrew J. Stephens.


Question-summary annotations: questions: question: What practices did officials adopt to implement grants?
answer: Faced with aggressive timelines for distributing billions of dollars, they adopted a number of practices to foster accountability including (1) strong support by top leaders; (2) centrally-situated collaborative governance structures; (3) the use of networks and agreements to share information and work towards common goals; and (4) adjustments to, and innovations in, usual approaches to conducting oversight such as the increased use of up-front risk assessments, the gathering of "real time" information, earlier communication of audit findings, and the use of advanced data analytics.
child_questions: question: What example is there of one of these practices?
answer: For example, in 2009, the Recovery Accountability and Transparency Board (Recovery Board) established the Recovery Operations Center which used advanced data analysis techniques to identify potential fraud and errors before and after payments were made.

question: What challenges did the Recovery Act's emphasis on accountability present?
answer: These included limited resources for oversight at the state and local levels, and the speed with which Recovery Act funds were distributed.
child_questions: question: How were these challenges addressed?
answer: One state addressed the challenge of limited resources by transferring funds from its central administration account to Recovery Act oversight. To facilitate the quick distribution of funds, maintenance-of-effort provisions concerning transportation projects (which prevented Recovery funds from being used for planned state projects) were rolled out before the Department of Transportation had time to issue sufficiently detailed definitions of what constituted "state funding." To address this challenge, the department had to issue clarifying guidance to states seven times during the first year of the Recovery Act.

questions: question: What was one practice developed related to transparency of Recovery Act funds?
answer: An example of one good practice that was required by the Recovery Act was the creation of the Recovery.gov website.
child_questions: question: What practices for effective websites did this practice show?
answer: These included (1) establishing a clear purpose, (2) using social networking tools to garner interest, (3) tailoring the website to meet audience needs, and (4) obtaining stakeholder input during design.

question: What challenges were created by trying to increase transparency?
answer: For example, some recipients lacked knowledge or expertise in using the data systems needed to report grant spending, while others faced challenges with reporting the same data to multiple systems. Early GAO reviews also found several problems with job reporting data including discrepancies in how full time equivalents were recorded and the capacity of recipients to meet reporting deadlines.
child_questions: question: How were these challenges addressed?
answer: The Office of Management and Budget (OMB) addressed these challenges by issuing additional guidance and providing technical support. Finally, agencies receiving Recovery Act funds were required to submit performance plans that identified measures on a program-by-program basis.

question: Why was it difficult for GAO to determine the progress agencies made?
answer: The level of detail and the specificity of outcomes in these plans varied greatly for the agencies GAO examined, making it difficult to determine the extent to which some were making progress toward their goals and demonstrating results.

questions: question: Why did Congress enact the Recovery Act?
answer: In response to the recent serious recession, Congress enacted the Recovery Act to promote economic recovery, make investments, and minimize or avoid reductions in state and local government services.
child_questions: question: How were the funds disbursed?
answer: Approximately $219 billion was distributed as grants for use in states and localities, making grants a major component of the act.
child_questions: question: What does these grants deal with?
answer: These grants covered a broad range of areas including education, transportation, energy, infrastructure, the environment, health care, and housing.

questions: question: What was GAO asked to examine?
answer: GAO was asked to examine grant management lessons learned resulting from the Recovery Act.

question: What does this report examine?
answer: This report examines federal, state, and local experiences with implementing grants funded by the Recovery Act by identifying examples of good practices employed and challenges faced in meeting the act's accountability and transparency requirements.
child_questions: question: How did GAO get information for this report?
answer: GAO reviewed relevant documents including OMB and Recovery Board guidance, relevant literature, and previous reports by GAO, federal inspectors general, and others. GAO also interviewed officials from OMB, the Recovery Board, four federal agencies, three state governments, and two local governments, among others.

question: What does this report use from the GAO's past work?
answer: This report also draws on GAO's past bi-monthly reviews of selected states' and localities' use of Recovery funds.