	Observations on Grants Management Challenges

		Streamlined Grants Management is Critical to Effective Use of Federal Funds

Our work has shown that when grants management requirements are  duplicative, unnecessarily burdensome, and conflicting, agencies must  direct resources toward meeting them—which can make the agency’s  programs and services less cost effective and increase burden for grant  recipients. We have also reported on a number of initiatives intended to address the  challenges grantees encounter throughout the grants lifecycle. In addition, the Digital Accountability  and Transparency Act of 2014 (DATA Act) required the Office of  Management and Budget (OMB) to establish a pilot program to develop  recommendations for reducing reporting burden for recipients of federal  awards. Transparency of Grant Spending Can Inform Decision Making

To provide increased transparency to agencies, Congress, and the public,  the DATA Act required OMB, the Department of the Treasury (Treasury),  and other federal agencies to increase the types of information available  on the more than $3.7 trillion in annual federal spending, including federal  spending on grants. However, in a 2017 report, we found  inconsistencies in key award data elements and issues with the  completeness and quality of the information reported. Given the complexity of  managing intergovernmental grants, collaboration among the grant  participants, particularly with regard to information sharing, is an  important factor in effective grants management. Our work on interagency grants management reform initiatives also found  that inadequate ongoing communication with grantees sometimes  resulted in poor implementation and prioritization of initiatives. Addressing these challenges may achieve cost  savings and result in greater efficiencies in grant programs. Our work has identified weaknesses in  grants oversight and accountability issues that span the government  including undisbursed grant award balances, single audit submissions  that are late, and significant levels of improper payments in grant  programs. Key grants management challenges related to internal controls  and oversight that we have identified include:
Timeliness of grant closeouts. Federal grant-making agencies must  close out grants when the grantee’s period of performance has ended  in order to ensure that grantees have met all financial requirements  and provide final reports as required. Opportunities to Effectively Advance Current Grants Management Initiatives

Recent and proposed legislative- and executive-sponsored initiatives  aimed at grants management reform, present opportunities to improve the  efficiency, effectiveness, and transparency of federal grants. Our work on  the design and implementation of merit-based grant award selection and  initiatives to manage for results across the federal government has  highlighted a number of key features necessary to effectively implement  such crosscutting initiatives. Those features include:
Establishing implementation goals and tracking progress. Identifying and agreeing on leadership roles and responsibilities. Developing an effective communication strategy. In addition, given the number and diversity of grantor agencies and  grantmaking programs, we believe it is important that any grant reform  initiative integrate with other government-wide reform efforts on related  issues. Evidence-based policy. These efforts should complement each other. A lack of integration could  result in duplication of effort or run the risk of working at cross-purposes. For example, the integration of the Results-Oriented Accountability for  Grants CAP goal with ongoing DATA Act implementation and efforts to  advance evidence-based approaches to federal grant funding and  administration presents a complex governance challenge. In conclusion, designing and implementing grants management policies  that strike an appropriate balance between ensuring accountability for the  proper use of federal funds without increasing the complexity and cost of  grants administration for agencies and grantees is a longstanding  governance challenge. Federal Research Grants: Opportunities Remain for Agencies to  Streamline Administrative Requirements. Managing for Results: OMB Improved Implementation of Cross-Agency  Priority Goals, But Could Be More Transparent about Measuring  Progress. Grants to State and Local Governments: An Overview of Federal Funding  Levels and Selected Challenges.
Why GAO Did This Study

Federal outlays for grants to state and local governments totaled more than $674 billion in fiscal year 2017, equivalent to 3.5 percent of the gross domestic product in that year. GAO's previous work has found that growth in both the number of grant programs and level of funding has increased the diversity of federal grants to state and local governments.
GAO's work has also found that designing and implementing grants management policies that strike an appropriate balance between ensuring accountability for the proper use of federal funds without increasing the complexity and cost of grants administration for agencies and grantees presents a governance challenge. At the same time, several government-wide initiatives hold promise for advancing the transparency, efficiency, and effectiveness of federal grants.
This statement is based on GAO's prior reports on federal grants management and crosscutting issues related to managing for results across the federal government issued between 2005 and 2018. It addresses: (1) GAO's observations on long-standing challenges for federal grants management, and (2) opportunities to effectively advance current grant modernization initiatives.

What GAO Found

GAO has identified challenges to federal grants management in its work spanning several decades. These challenges include:
Streamlining: Grants management requirements that are duplicative, unnecessarily burdensome, and conflicting require agencies to direct resources toward meeting them and can burden recipients of federal grants. GAO has reported on initiatives to streamline these requirements and address challenges grantees encounter throughout the grants lifecycle.
Transparency: The Digital Accountability and Transparency Act of 2014 (DATA Act) required the Office of Management and Budget, the Department of the Treasury, and other federal agencies to increase the types of information available on federal spending, including grants. GAO has reported on progress in standardizing and expanding reported data, but has found inconsistencies with the completeness and quality of the reported information.
Collaboration and consultation: Collaboration, particularly information sharing, is an important factor in effective grants management. GAO's work on interagency grants management reform initiatives found that inadequate ongoing communication with grantees sometimes resulted in poor implementation and prioritization of initiatives.
Duplication, overlap, and fragmentation : Agencies' grants management practices, such as requirements to avoid duplication and overlap among grants before awarding them, can help agencies achieve cost savings and result in greater efficiencies in grant programs.
Internal controls and oversight : GAO's work has identified weaknesses in grants oversight and accountability. For example, GAO has identified opportunities for agencies to more consistently close out grants when the grantee's period of performance has ended to ensure that grantees have met all requirements and identified opportunities to redirect or return unused funds.
Recent and proposed initiatives aimed at grants management reform present opportunities to improve the efficiency, effectiveness, and transparency of federal grants. GAO's work on federal grants management and managing for results has highlighted a number of key features for effectively implementing such crosscutting initiatives, which include: (1) establishing implementation goals and tracking progress, (2) identifying and agreeing on leadership roles and responsibilities, and (3) developing an effective communication strategy.
Further, given the number and diversity of grantor agencies and grant programs, it is important that any grant reform initiative integrate with other government-wide reform efforts on related issues across government, such as the grants-related Cross-Agency Priority goal, implementation of the DATA Act, and initiatives related to evidence-based policy. These efforts can be effective if they complement each other rather than run the risk of operating independently and potentially duplicating effort or working at cross-purposes.