EPA has had persistent problems in managing its grants. In 2002, the Inspector General and the Office  of Management and Budget recommended that EPA, once again, designate  grants management as a material weakness. EPA Continues to Face Problems in Managing Its Grants in Four Key Areas

EPA faces four major, persistent problems in managing its grants. It must  resolve these problems in order to improve its grants management. EPA Has Not Always Awarded Grants Competitively and Ensured Widespread Solicitations

Until September 2002, EPA did not have a policy for competing the  discretionary grants that might be eligible for competition—about $719  million of its total $4.2 billion in grant funding in fiscal year 2002. Instead, EPA’s management of the program focused on the  procedures and processes of awarding grants. In fact, for almost half of the  42 grants reviewed, EPA did not even attempt to measure the projects’  outcomes. EPA Has Not Effectively Managed Its Grant Resources

Both EPA’s internal management reviews and its Inspector General  reports have noted several problems in how effectively and efficiently EPA  manages its grants staff and other resources. EPA’s Past Actions Have Targeted Some of the Key Problems but Have Not Been Consistently Successful

In recent years, EPA has taken a series of actions to address two of its key  problem areas: grantee oversight and resource management. It has issued  several oversight policies, conducted training, and developed a new data  system for grants management. However, EPA’s corrective actions have  not been consistently successful because of weaknesses in their  implementation and insufficient management emphasis. EPA Has Taken Actions to Improve Oversight of Grantees and Resource Management

Between 1998 and 2002, EPA issued three policies to improve its oversight  of its grant recipients. EPA Has Recently Issued New Policies and Developed a Plan to Address Its Grants Management Problems

EPA has recently issued new policies to address two of the key problems  we have identified—competition and oversight—and developed a 5-year  plan to address its long-standing grants management problems. In  September 2002, EPA issued a policy to promote competition in awarding  grants by requiring that certain grants be competed. In April 2003, EPA issued a 5-year Grants Management Plan. Specifically, EPA’s plan:    Recognizes the need for greater involvement of senior officials in ensuring  effective grants management throughout the agency. Although these actions appear promising, EPA has a long history of  undertaking initiatives to improve grants management that have not solved  its problems. If the future is to be different from the past, EPA must work  aggressively to implement its new policies and its ambitious plan through  a sustained, coordinated effort. It will be particularly important for all  agency officials involved in managing grants to be committed to and held  accountable for achieving the plan’s goals and objectives.
Why GAO Did This Study

Over the years, EPA has had persistent problems in managing its grants. Grants constituted one-half of the agency's annual budget, or about $4.2 billion in fiscal year 2002. EPA uses grants to implement its programs to protect human health and the environment and awards them to over 3,300 recipients, including state and local governments, tribes, universities, and nonprofit organizations. EPA's ability to efficiently and effectively accomplish its mission largely depends on how well it manages its grant resources and builds in accountability. Since 1996, GAO and EPA's Office of Inspector General have repeatedly reported on EPA's problems in managing its grants. Because these problems have persisted, in January 2003, GAO cited grants management as a major management challenge for EPA. GAO is currently reviewing EPA's efforts to improve grants management at the request of the Chairman of the House Committee on Transportation and Infrastructure and Representative Anne Northup. For this testimony GAO is reporting on results of its previously issued reports and on the grants problems EPA faces, past actions to address these problems, and recently issued EPA policies and a 5-year grants management plan to address its long-standing grants management problems.

What GAO Found

EPA faces four key problems in managing its grants: (1) selecting the most qualified grant recipients from a large applicant pool, (2) effectively overseeing grantees throughout the life of the grant, (3) measuring the results of the grantees' work, and (4) effectively managing its grants staff and resources. EPA must resolve these problems in order to improve its management of grants. In recent years, EPA has taken a series of actions to address two of its key problem areas: grantee oversight and resource management. EPA actions include issuing several oversight policies, conducting training, and developing a new data system for grants management. However, these past actions were not consistently successful in resolving grants management problems because of weaknesses in implementation and insufficient management emphasis. For example, between 1998 and 2002, EPA issued three policies designed to improve oversight of grantees, but EPA staff did not consistently carry them out. Late in 2002, EPA launched new efforts to address some of its grants management problems. In September 2002, EPA, for the first time, issued a policy to promote competition in awarding grants. In December 2002, it issued a new policy designed to better ensure effective grant oversight. Finally, in April 2003, EPA issued a 5-year grants management plan to address its long-standing grants management problems. GAO is still reviewing these new efforts. Although EPA's recent actions seem promising, the agency has a long history of undertaking initiatives to improve grants management that have not solved its problems. If the future is to be different from the past, EPA must work to aggressively implement its new policies and its ambitious 5-year plan through a sustained, coordinated effort. It will be particularly important for all agency officials involved in managing grants to be committed to and held accountable for achieving the plan's goals and objectives.