The process of distributing federal assistance through grants is complicated and involves many different parties, both public and private, with different organizational structures and sizes as well as varying missions. Federal grants are disbursed and managed by 26 different federal agencies as well as by some smaller federal entities, and grants are used to implement about 1,000 different federal programs. Grant programs have different objectives and strategies—reflected in the application, selection, monitoring, and reporting processes—that are intended to assure accountability to the federal agencies. The universe of potential applicants for grants is also large and varied. It includes governments from the smallest school district to the largest state. According to information from the Census Bureau and the Department of Interior, there are approximately 88,500 units of government in the United States, including states, tribal governments and county governments, municipalities, townships, school districts, and various other special purpose governments. Grant recipients also include nonprofit organizations, described in one study as ranging from small organizations with annual budgets less than $25,000 to multi-million-dollar health organizations. We reported in 2005 that over 460,000 nonprofit organizations filed tax forms in 2002. Some grants are also provided to individuals. While not all of these entities actually apply for grants, they are potentially eligible and do reflect the considerable diversity of grant recipients. The grants process is further complicated because state agencies may act as both grantees soliciting federal grant resources and as grantors distributing federal funds to other grantees. Thus states redistribute significant amounts of the federal aid they receive to local governments and nonprofit agencies in their states. Moreover, the grants themselves come in a wide variety of types and sizes. Grant types cover a broad spectrum from those narrowly targeted to fund a program to those that are broadly targeted and allow the grantee to make decisions regarding how funds are used. Mandatory grants are awarded under a program where the authorizing statute requires the award to be made to each eligible entity under the conditions and in the amount (or based on the formula) specified in statute. Discretionary grants are those in which the federal awarding agency may select the recipient from among all eligible recipients, may decide to make or not make an award based on the programmatic, technical, or scientific content of an application, and can decide the amount of funding to be awarded to each recipient. Grants can be small, such as the $1,100 National Science Foundation Social, Behavioral, and Economic Sciences Grant, or large, such as California’s $3.7 billion Temporary Assistance to Needy Families block grant. While there is substantial variation among grants, they generally follow a life cycle as shown in figure 1: announcement, application, award, postaward, and closeout. Once a grant program is established through legislation, which may specify particular objectives, eligibility, and other requirements, a grantor agency may impose additional requirements on it. For competitive grant programs, the public is notified of the grant opportunity through an announcement, and potential grantees must submit applications for agency review. In the award stage, the agency identifies successful applicants or legislatively defined grant recipients and awards funding. The postaward stage includes payment processing, agency monitoring, and grantee reporting, which may include financial and performance information. The closeout phase includes preparation of final reports, financial reconciliation, and any required accounting for property. Audits may occur multiple times during the life cycle of the grant and after closeout. Grantees have different approaches for managing their grants across their own internal subdivisions or departments. Grantees we visited had a variety of grant administration structures and degrees of centralization that were not dependent on the size of the organization or the number of grants they received. In a more decentralized structure, each department within the organization managed most aspects of its grants, including financial accounting and reporting. For example, in a municipality the police department might deal with federal Department of Justice grants; the health department might deal with Environmental Protection Agency grants; and the school administration might deal with Department of Education grants. Conversely, a more centralized structure might have a single grants office that coordinated all aspects of grant administration across the organization, including final submission of applications and general oversight of reporting and accountability compliance. Even for grantees we visited with a decentralized structure, some amount of central grant oversight was generally present. P.L. 106-107 was passed in response to the complicated nature of the grant process. To address these issues, the act required OMB to direct, coordinate, and assist federal agencies in establishing common applications, systems, and uniform rules to improve the effectiveness and performance of federal grants with the goal of improved efficiency and delivery of services to the public. For example, under P.L. 106-107 OMB is required to direct, coordinate, and assist federal agencies in developing and implementing a common application and reporting system, including electronic processes with which a nonfederal entity can apply for, manage, and report on the use of funds from multiple grant programs that serve similar purposes but are administered by different federal agencies; and federal grant-making agencies are required to streamline and simplify their application, administrative, and reporting procedures and enable applicants to apply for and report on the use of federal grants funds electronically. As we reported previously, the federal government has undertaken several activities to implement P.L. 106-107. OMB has designated the Department of Health and Human Services as the lead agency responsible for assisting OMB in implementing the act. Activities are presently organized under two different groups—the Grants Policy Committee and the Grants Executive Board—who report to OMB’s Office of Federal Financial Management and Office of E-Government and Information Technology, respectively (see fig. 2). The Grants Policy Committee is currently responsible for formulating overall grant management reform policy and oversees the efforts of the cross-agency work groups. Work groups were organized shortly after the act was passed to develop policies for implementing the act’s goals related to their respective areas: Pre-Award Work Group, responsible for streamlining policies and practices that occur while grantees find grants, apply for grants, and receive notification of award decision; Mandatory Work Group, responsible for streamlining policies and practices for mandatory grants; Post-Award Work Group, responsible for streamlining policies and practices that occur while grantees perform awards, complete required reporting, acquire payments, and during the federal monitoring of grantees; Audit Oversight Work Group, responsible for improving OMB’s Circular A-133 single audit process; and Training and Oversight Work Group, responsible for addressing governmentwide issues concerning the grants management workforce. The Grants Executive Board consists of senior officials from federal grant- making agencies. They provide strategic direction and oversight of Grants.gov and the Grants Management Line of Business, which implement technological aspects of P.L. 106-107. Grants.gov is a single Web portal that enables users of all types to search for grants electronically. Agencies are required to post all discretionary grant opportunities on Grants.gov. Agencies are also able to provide the capability for potential grantees to apply for grants through this Web site. A Grants.gov official said that as of May 22, 2006, all but two agencies have provided this capability and that both agencies plan to post applications on the site in June 2006. Grants.gov continues to make improvements to its cross-agency systems at which potential grantees can find and apply for grant opportunities. A Grants.gov official told us they have started planning and designing upgrades to the computer hardware to meet the processing requirements as additional grant application packages and functions, including improved search capabilities, are added to the site. Further, a newly designed Grants.gov Web site was introduced in July 2006. The Grants Management Line of Business is an initiative begun in spring 2004 that intends to provide end-to-end management (that is, over the entire life cycle of a grant from announcement to closeout) of grants and address how best to consolidate the administration and management of grants across agencies. In 2005, the Department of Health and Human Services and the National Science Foundation were selected by OMB to be the managing partners to lead the Grants Management Line of Business effort. They plan to implement a consortia-based approach that builds on existing commercial systems and grants management systems in selected agencies to develop those agencies and their systems into shared service providers or centers of excellence to be used by other agencies. In late 2005, OMB and the Grants Executive Board chose three agencies—the National Science Foundation, the Administration for Children and Families within the Department of Health and Human Services, and the Department of Education—to lead three consortia in defining requirements and agency needs around a common end-to-end grants management system for members of each consortium. OMB officials told us that they, the cochairs of the Grants Management Line of Business, and the consortia leads have developed a process for agencies to join a consortium and that the consortia leaders are working with other agencies to discuss potential partnerships and develop memorandums of understanding. A cochair of the initiative said OMB may designate additional consortia based on agency interests in leading a consortium. Detailed plans for the initiative indicate a goal of September 2011 for completing the movement of agencies to the common systems. While OMB and the federal agencies have various efforts under way at the federal level to streamline grant administration, grantees continue to identify areas in which the goals of P.L. 106-107 have not been met. Areas grantees identified include the lack of standard forms and systems across agencies, federal processes that do not take into account the manner in which grantees conduct their grant administration, and technological aspects of the changes that have presented problems for grantees. Grantees continue to express frustration with having to work with varying systems to apply for and report on the use of grant funds, to respond to different administrative requirements, and to use different payment systems.