Congress, concerned about the burden on grantees of multiple, varying requirements imposed by different grant programs, passed P.L. 106-107 in 1999. The act’s objective is to improve the effectiveness and performance of federal financial assistance programs, simplify federal financial assistance application and reporting requirements, improve the delivery of services to the public, and facilitate greater coordination among those responsible for delivering such services. The act required agencies to establish common applications, systems, and uniform rules to improve the effectiveness and performance of federal grants with the goal of improved efficiency and delivery of services to the public. Under P.L. 106-107, OMB is required to direct, coordinate, and assist federal agencies in developing and implementing a common application and reporting system, including electronic processes with which a nonfederal entity can apply for, manage, and report on the use of funds from multiple grant programs that serve similar purposes but are administered by different federal agencies. The act sunsets in November 2007. The complexity and diversity of the grants system makes streamlining a difficult endeavor. Multiple federal entities are involved in grants administration; the grantor agencies have varied grants management processes; the grantee groups are diverse; and grants themselves vary substantially in their types, purposes, and administrative requirements. The federal grant system continues to be highly fragmented, potentially resulting in a high degree of duplication and overlap among federal programs. Hundreds of federal grant programs implement various domestic policies and have administrative requirements that may be duplicative, burdensome, or conflicting—which can impede the effectiveness of grants programs. Multiple federal entities are involved in grants management. The Federal Grant and Cooperative Agreement Act of 1977 gives OMB the authority to issue supplementary interpretive guidelines to promote consistent and efficient use of grant agreements. OMB publishes this guidance to federal agencies in OMB circulars and federal agencies issue regulations implementing the OMB guidance. The General Services Administration is the lead agency in charge of disseminating information on funding opportunities. It publishes, in both electronic and print form, the Catalog of Federal Domestic Assistance, a searchable database of federal financial assistance programs. There is substantial diversity among the federal agencies that administer grants. Some agencies administer many grants through multiple, decentralized subagencies, while other agencies have small, centralized grant-making offices that administer only a few, small grant programs. For example, in fiscal year 2003, HHS administered 282 grant programs that distributed approximately $246 billion through its 16 subagencies, while the National Endowment for the Arts administered 3 grant programs that distributed approximately $95 million. Grant programs are diverse in their structure and purpose. Grants can be grouped into three types based on the amount of discretion given to the grantee for the use of funds. Each type strikes a different balance between the desire of the federal grantor that funds be used efficiently and effectively to meet national objectives and the desire of the grantee to use the funds to meet local priorities and to minimize the administrative burdens associated with accepting the grant. Categorical grants allow the least amount of recipient discretion, general revenue-sharing grants the most, and block grants an intermediate amount. Grant funds may also be grouped by their method of allocating funds, that is, by formula, through discretionary project grants, or both. Formula grants allocate funds based on distribution formulas prescribed by legislation or administrative regulation. Project grants are generally awarded on a competitive basis to eligible applicants. Grant programs fund a variety of types of programs, including training, research, planning, evaluation, capacity building, demonstration projects, construction, and service provision in many different areas including health care, education, law enforcement, and homeland security. The diversity of grant programs is matched by the diversity of grant recipients. Grant announcements identify the eligible recipients, which may include states and their agencies, local governments, tribal governments, nonprofit organizations, research institutions, and individuals. The opportunities to streamline grants administration differ throughout the life cycle of a grant. While there is substantial variation among grants, generally grants follow the life cycle as shown in figure 1: announcement, application, award, postaward, and closeout. Once established through legislation, which may specify particular objectives, eligibility, and other requirements, a grant program may be further defined by grantor agency requirements. For competitive grant programs, the public is notified of the grant opportunity through an announcement, and potential grantees must submit applications for agency review. In the awards stage, the agency identifies successful applicants or legislatively defined grant recipients and awards funding. The postaward stage includes payment processing, agency monitoring, and grantee reporting, which may include financial and performance information. The closeout phase includes preparation of final reports, financial reconciliation, and any required accounting for property. Audits may occur multiple times during the life cycle of the grant and after closeout. To implement P.L. 106-107’s requirement to improve the effectiveness and performance of federal grants, a common plan was developed and most, but not all, grant-making agencies have submitted reports annually on their progress toward this plan as required by the law. The work groups have identified several changes that should be made, but many of these are still in the developmental or approval stages. One particular extensive effort— the development of a Web portal called Grants.gov that represents a common face to grantees—has enabled grantees to identify relevant grant opportunities and, to a limited extent, apply electronically for grants. For the later phases of the grant life cycle, a new initiative is under way, the Grants Management Line of Business, that will encompass all phases of the grant life cycle and specifically address simplifying the administration and management of grants. P.L. 106-107 requires that under OMB leadership, agencies develop common applications, systems, and administrative rules to improve the effectiveness of federal grants. To implement this requirement, a cross- agency committee established cross-agency work groups. The work groups then identified needed changes and developed a common plan for implementing P.L. 106-107. Twenty-six federal grant-making agencies agreed to use this common plan to meet the law’s requirements, since meeting its objectives required them to work together to a large extent. The plan, submitted to Congress and OMB in May 2001, was developed under the oversight of the initial interagency governance structure established to implement P.L. 106-107. A series of five public consultation meetings was held with representatives from states, local governments, Native American tribes and tribal organizations, universities and nonprofit organizations that conduct research, and other nonprofit organizations. Comments from these meetings were considered in developing the plan. The common plan contained goals and objectives intended to meet the requirements of P.L. 106-107. It included progress, accomplishments, and planned activities for streamlining and simplifying the award and administration of federal grants. The plan addressed the life cycle of the grant process, supporting processes, systems and standards, as well as other issues. Some specific objectives included (1) streamlining, simplifying, and improving announcements of funding opportunities and related business processes, application requirements and procedures, and award documents; (2) streamlining and simplifying standard and unique report forms, allowing for electronic submission of reports, achieving greater uniformity in federal business processes for reporting, and improving reporting by recipients; (3) simplifying and standardizing, to the extent appropriate, general administrative requirements and agency treatment of them in the terms and conditions of award; and (4) fully developing and implementing a portal for identifying and applying for grants, and ensuring that any revised electronic data standards are interoperable and present a common face to grant-making agencies, applicants, and recipients. The common plan also included some process improvements that began before passage of P.L. 106-107 and were completed prior to adoption of the plan or are still continuing today. For example, since 1998 the federal government has required grant-making agencies to transition from various payment systems to one of three designated systems. The common plan included objectives and milestones directly related to such past activities that have been incorporated into the plan. The plan is also built on successful models resulting from earlier initiatives of individual agencies or interagency groups. For example, one objective of the common plan was to ensure that federal agencies’ grant financial systems comply with requirements established by the Joint Financial Management Improvement Program. Annual governmentwide progress reports describe the collaborative efforts of 26 federal agencies. Each agency also reports annually on its progress implementing the plan, although not all agencies have regularly submitted these reports. The annual governmentwide progress report describes the collaborative efforts to streamline and simplify the award and administration of federal grants. The report includes the federal government’s steps toward simplification of the grant policy framework. For instance, the establishment of a central location for OMB guidance to federal agencies and agency regulations implementing that guidance will make it easier for the applicants and recipients to find and follow administrative requirements. It also includes completed initiatives, such as the development and use of a standard format for agencies’ funding announcements, which aims to make it easier for potential applicants to quickly find specific information in the announcements. P.L. 106-107 requires each federal grant-making agency to provide an annual progress report that evaluates its performance in meeting the common plan’s goals and objectives. However, only 22 of the 26 agencies have submitted their 2004 annual report to Congress. (See app. I for information on agencies submitting reports for 2002 to 2004.) Agencies have reported progress in implementing some streamlining activities. For example, HHS has worked toward the internal consolidation from nine to two grant management systems, one primarily supporting research grants and the other primarily supporting nonresearch, or service grants. Another agency, the National Science Foundation, reported it is conducting a comprehensive business analysis that will highlight areas where grant processes can be streamlined and simplified. Also, the National Endowment for the Humanities reported it has streamlined the internal agency clearance process, which is the mechanism by which all grant applications’ guidelines and forms are reviewed and updated every year.