The agency has developed a strategy for eliminating the backlog of nonconstruction grants and preventing a future backlog. To avert a future grant backlog, the agency developed a strategy that includes identifying the required closeout documents for individual grants before the grants are awarded, requiring each grants management office to develop a closeout strategy, and streamlining closeout procedures to improve the effectiveness of the closeout process. Closeout Procedures and Plans for Nonconstruction Grants Were Not Consistently Followed or Implemented

EPA did not always follow its procedures when closing out nonconstruction grants. The strategy to avert a future backlog was also not consistently implemented. The plan stated that 497 of the 5,860 original remaining construction grants would not be closed out by the end of fiscal year 1997 and that a concerted effort would be required to close out these grants to prevent additional delays after fiscal year 1997. EPA Has Taken Efforts to Reduce the Number of Inactive Contracts Needing Closeout

EPA took several actions to reduce the number of contracts that require closeout after we and the Office of Inspector General reported on the number of contracts that required closeout. As of October 1998, EPA did not know if this goal had been attained. Inactive Grants and Contracts and Expected Closeout Time Frames

EPA has made significant reductions in the number of inactive grants and contracts. For nonconstruction grants, the backlog was reduced from approximately 18,000 in 1996 to approximately 4,100 as of June 30, 1998, and the number of inactive construction grants was about 500 as of March 1998—reduced from about 5,900 at the end of fiscal year 1990. The backlog of inactive nonconstruction grants will likely be eliminated by 2000, but it is uncertain when the backlogs of construction grants and contracts will be eliminated. Current Status of Nonconstruction Grants Requiring Closeout

EPA has made significant progress in reducing the backlog of nonconstruction grants, and, as of June 30, 1998, had reduced the initial backlog of nearly 18,000 identified in 1996 to approximately 4,100. It is unlikely, however, that this goal will be met either. Estimates from EPA’s regional offices that are responsible for closing out grants indicate that not all projects will be closed out by that date. In 1990, we testified that EPA had almost 2,400 inactive contracts that needed to be closed, and in 1994, the Office of Inspector General reported that almost 2,000 needed to be closed. By August 1998, EPA had reduced that number to 1,028. All contracting locations were required to estimate an inventory level and a date by which they would attain this level. Unliquidated Obligation Amounts

Significant amounts of unliquidated moneys remain available for grants and contracts that are awaiting closeout. Using EPA’s data systems and information from the agency’s regional offices, we identified inactive grants and contracts with unliquidated obligations of approximately $612.1 million that may no longer be needed for the intended purposes. For wastewater treatment construction grants, we requested that EPA obtain information on the number of inactive grants as of March 1998.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Environmental Protection Agency's (EPA) progress in closing completed grants and contracts, focusing on: (1) EPA's efforts to close out inactive grants and contracts; (2) the progress that EPA has made in reducing the number of inactive grants and contracts, the number of remaining inactive grants and contracts, and the dates by which they are expected to be closed out; and (3) the amount of unliquidated obligations for inactive grants and contracts.

What GAO Found

GAO noted that: (1) over the last 8 years, EPA has taken several initiatives to reduce the backlogs of inactive grants and contracts needing closeout; (2) in 1992, EPA developed a policy specifying procedures for closing out nonconstruction grants, and in 1998, the agency developed a strategy for eliminating the existing backlog of inactive nonconstruction grants and preventing a future backlog; (3) however, closeout procedures and strategies for nonconstruction grants were not consistently followed, and strategies at the regional level frequently did not include specific actions for implementation; (4) EPA also developed automated systems to improve the monitoring of the nonconstruction grant closeout process; (5) in 1990 and 1997, EPA developed strategies to reduce the backlog of wastewater treatment construction grants; (6) in fiscal year (FY) 1994, EPA established goals for closing out a specific number of inactive contracts; (7) EPA has made significant progress in closing out inactive grants and contracts, but a considerable number remain to be closed; (8) in 1996, the agency had a backlog of nearly 18,000 nonconstruction grants, but by June 1998, the backlog was reduced to approximately 4,100; (9) EPA estimated in 1996 that the backlog of nonconstruction grants would be eliminated by July 2000; (10) with closeouts progressing at the current rate, it is likely that this goal will be attained; (11) the number of inactive wastewater treatment construction grants needing closeout was about 500 as of March 1998--reduced from about 5,900 at the end of FY 1990; (12) while the construction grant backlog was initially projected to be eliminated by the end of FY 1997, this goal was not attained, and in December 1996, EPA revised its projection to eliminate the backlog by 2002; (13) recent estimates from EPA's offices implementing the closeout strategy for construction grants indicate that this goal is unlikely to be attained; (14) in March 1993, EPA had approximately 2,000 inactive contracts needing closeout, and by August 1998, that number had been reduced to 1,028; (15) significant amounts of unliquidated obligations remain for inactive grants and contracts and could potentially be allocated for other EPA projects and programs; (16) the unliquidated obligations for construction and nonconstruction grants totalled about $612.1 million, and for about $423.8 million of this total amount, there are no statutory time restrictions on the use of funds; and (17) therefore, a large portion of these funds is potentially available for recovery and could be used for other approved projects.