Approximately $994 Million in Undisbursed Balances Remained in Expired Grant Accounts in the Payment Management System

		Undisbursed Balances Increased While the Number of Expired Grant Accounts Decreased Since 2011

As of September 30, 2015, $993.5 million in undisbursed balances  remained in 8,832 expired grant accounts in PMS (see figure 4). More than half of the accounts  exceeded their expiration date by 1 to 3 years. About $651 Million of Undisbursed Balances in Expired HHS Grant Accounts Comprised More than Half of Those in PMS

As of September 30, 2015, $651.3 million in undisbursed balances in  expired HHS grant accounts made up 66 percent of the total $993.5  million in undisbursed balances in PMS (see figure 6). Similar to all PMS expired grant accounts and undisbursed  balances, about half of expired HHS grant accounts and undisbursed  balances exceeded their expiration dates by 1 to 3 years. In 2015, 3,922  expired HHS grant accounts made up 66 percent of the 5,906 grants  PMS flagged for closeout, down from 79 percent (more than 21,000) in  2011. Agency officials told us that grant  closeout delays can occur for a number of reasons that may be placed  into several larger categories, and sometimes these reasons can be  attributed to more than one category: grantee failure to submit final  reporting in a timely manner; agency failure to review, process, and  reconcile final reporting in a timely manner; and external processes or  factors. A quarterly analysis is  completed to measure the number of expired grant awards that have  completed the closeout process and the total grant funding that has been  deobligated. Officials from Commerce and Justice also told us their respective  agencies have developed training guides for grantees or awarding  agency grant managers. However, according to OMB staff and officials at the  affected agencies we interviewed, OMB had not issued any instructions  on reporting these balances since 2011, and OMB staff did not think that  restating additional guidance was necessary given the language in the  selected agencies’ appropriations acts. Our review included four of the affected agencies under this  appropriations act—Commerce, Justice, NASA, and NSF. As a result of OMB not recognizing the language in the  appropriations acts as a requirement to instruct agencies to report these  balances and NASA and Commerce not recognizing the language in the  appropriations acts to report, the undisbursed balances in expired grant  accounts for NASA and Commerce have not been reported since fiscal  years 2011 and 2012, respectively. The Secretary for the Department of Commerce resume reporting on  the undisbursed balances in expired grant accounts in the agency’s  annual performance reporting. The Secretary of HHS, to improve the enforcement of existing HHS  Grant Policy Manual grant closeout guidance and reduce undisbursed  balances in expired grant accounts, require all HHS grant-making  operating divisions to take the following two actions:  identify grants expired for more than 1 year past their period of  performance end date and to either close the expired grant in the  Payment Management System or to determine why these grants  are not closed; and identify expired grant accounts designated for immediate closure  by the Payment Management System and require these operating  divisions to close the expired grant accounts in PMS or explain  why these grants are not closed. Appendix I: Objectives, Scope, and Methodology

This report examines (1) the extent to which there are undisbursed  balances remaining in expired grant accounts in the federal government’s  largest civilian payment management system—the Payment Management  System (PMS) administered by the Department of Health and Human  Services (HHS); (2) the reasons selected agencies give for their grant  accounts remaining open past their end dates; and (3) the extent to which  the Office of Management and Budget (OMB) monitors agency progress  with regard to tracking and reporting on undisbursed balances in expired  grant accounts. PSC provided us with the PMS quarterly closeout report for the end of  fiscal year 2015 (September 30, 2015). We interviewed OMB staff on providing government-wide guidance for  grants management and grant closeout and officials at the four agencies  that reported undisbursed balances in expired grant accounts in 2010 and  2011 annual performance reports—the United States Department of  Commerce, the United States Department of Justice, the National  Aeronautics and Space Administration, and the National Science  Foundation—to discuss their implementation of OMB’s instructions.
Why GAO Did This Study

In 2008 and 2012, GAO reported on hundreds of millions of dollars in undisbursed balances in expired grant accounts in the largest civilian payment system for grants, PMS. GAO was asked to update this work. GAO examined: (1) the extent to which there are undisbursed balances remaining in expired grant accounts in PMS; (2) the reasons selected agencies give for their grant accounts remaining open past their end dates; and (3) the extent to which OMB monitors agency progress with regard to tracking and reporting undisbursed balances in expired grant accounts. To do this, GAO analyzed PMS data as of September 30, 2015; reviewed audit reports issued by GAO and federal inspectors general, agency performance reports, and OMB guidance; and interviewed agency officials from OMB, HHS, Commerce, Justice, NASA and NSF.

What GAO Found

GAO found approximately $994 million in funding remained in expired grant accounts in the Payment Management System (PMS), operated by the Department of Health and Human Services (HHS), at the end of fiscal year 2015. PMS identifies expired grant accounts for users as those accounts more than 3 months past their grant end date that have not had payment activity for 9 months. PMS makes payments for 12 federal entities and about 77 percent of all federal civilian grant payments. GAO’s analysis of the September 30, 2015, PMS data indicated the following:
The total undisbursed balance increased by approximately $200 million from what GAO reported for the end of fiscal year 2011. However, the number of expired grant accounts with undisbursed balances decreased to 8,832 in 2015 compared to 10,548 in 2011.
More than half the accounts exceeded their expiration date by 1 to 3 years.
A relatively small number of expired grant accounts represented more than half of the total undisbursed balance—151 grants represented $514.7 million in undisbursed balances.
HHS grant accounts in PMS comprised approximately $651 million (66 percent) of the identified undisbursed balances in expired grant accounts.
The number of expired grant accounts with no undisbursed balance that PMS flagged for closeout dropped to 5,906 from the more than 28,000 accounts GAO reported for the end of fiscal year 2011. HHS accounts made up 66 percent of the 5,906 expired accounts flagged for closeout, which is inconsistent with HHS policy.
Agency officials told GAO that closeout delays can occur for a number of reasons, including grantee failure to submit final financial and performance reports and agency failure to review, process, and reconcile grantees’ final reporting in a timely manner.These agency officials included staff from HHS, the largest PMS user, and the Departments of Commerce (Commerce) and Justice (Justice), the National Aeronautical and Space Administration (NASA), and the National Science Foundation (NSF), which previously reported undisbursed balances for expired grants. These agencies have implemented various internal policies to elevate the issue of timely grant closeout internally, including developing internal working groups that set grant closeout goals and analyzing the number of expired grants not yet closed out.
Since 2010, Congress has required the Office of Management and Budget (OMB) to specifically instruct Commerce, Justice, NASA, and NSF to track and provide information onbalances in expired grant accounts. OMB has not issued this guidance since 2011, and NASA and Commerce have not reported on these balances since 2011 and 2012, respectively. OMB staff did not think that it was necessary to restate the requirements given the language in these agencies’ appropriations acts. OMB updated its guidance on grant closeout in December 2013. However, OMB did not specify procedures for tracking and reporting undisbursed balances in expired grant accounts.

What GAO Recommends

GAO recommends that OMB resume instructing agencies to report undisbursed balances for expired grant accounts as required under their respective appropriations acts and that NASA and Commerce resume reporting on these balances. GAO also recommends that HHS require its grant-making operating divisions to identify grants expired more than 1 year past their period of performance end date and close those grants or determine why they are not closed, consistent with agency policy. OMB and the agencies agreed with the recommendations.