Grants Blog

Archive for the ‘Accountability/Oversight’ Category

Senator Mark Warner (D-VA) introduced a new version of the DATA Act (S.3600) after the previous version passed the House but died in the Senate.   This version differs in several ways from the previously introduced version, including a new design for the accountability board.

This new version eliminates the creation of an independent board which would have had control over all federal spending, including management of USAspending.gov, subpoena power, and other oversight tasks (see our post from June 15, 2011).  The newly introduced DATA Act stifles some of the power created in the House bill.  The Senate version’s Federal Accountability Spending and Transparency Board (FAST Board) would be smaller and not independent and is also intended to replace the President’s Government Accountability and Transparency Board created under Executive Order 13576.  According to the legislation, the board would consist of five members appointed by the President and would include at least one senior official from the Office of Management and Budget (OMB).

Other pieces to note:

• USAspending.gov would be expanded to include money spent by federal agencies on salaries, facilities, and other expenses beyond grants, loans, and contracts.
• Both versions of the bill include a requirement for the online posting of federal funds that were actually expended, not just what was promised to contractors or grant recipients.
• The new Senate version contains similar language to the old bill creating common data elements, “such as codes, unique award identifiers, and fields, for financial payment information required to be reported by Federal agencies.”
• The bill would streamline recipient financial reports by requiring OMB to review reporting requirements required by the agencies in an effort to reduce duplicative financial reporting and then submit a report to Congress on any legislative action required to streamline these reporting requirements.

The full text of the legislation can be found here.

We will keep you posted on any movement through the Senate.

The Government Accountability Office (GAO) released a report on September 25, 2012 entitled “Grants to State and Local Governments: An Overview of Federal Funding Levels and Selected Challenges.” The report provided a synopsis of federal assistance programs, the grant awards process, and funding levels of federal grants over the last thirty years. The GAO did not examine any new issues regarding federal grant programs, and instead summarized previous audit reports focusing on the challenges in implementing and managing federal assistance programs.

While the report did not provide any new recommendations for policy initiatives or insight into grants management, it can serve as an excellent reference for individuals seeking to learn more about federal grant programs. The report provided a concise summation of GAO concerns regarding the lack of appropriate performance measures for many grant programs, overlap and duplication of program scopes and objectives, and the need for more effective oversight and monitoring of grant awards. The report can be found at http://www.gao.gov/assets/650/648792.pdf.

Management Concepts offers two courses designed to address the some challenges in grants management outlined by the GAO. The Monitoring Grants and Cooperative Agreements for Federal Personnel course provides training to federal grant and program officials to develop working familiarity with essential monitoring techniques and gain insight into potential problem areas in grants administration. The Accountability for Federal Grants course is designed for anyone in the grants community, awarding and recipient personnel alike, who is interested in applying performance-based principles to grant projects. Additional information about these courses can be found in our course catalog.

The Government Accountability Office (GAO) recently sustained protests by several housing agencies who asserted that the Department of Housing and Urban Development’s (HUD) use of a notice of funding availability (NOFA) was improper in seeking to obtain contract administration services.   Instead, the protesters contend, HUD should have used a procurement instrument for these services. (GAO B-406738)

In March of this year, HUD issued a NOFA providing for cooperative agreements to be issued to public housing agencies (PHA) for the administration of Project-Based Section 8 Housing Assistance Payment (HAP) contracts.  The NOFA stated that the awards would be a contract between the PHA and HUD to administer Section 8 contracts as a Performance-Based Contracts Administrator.  The PHAs would receive an administrative fee to pay for operating expenses while administering the contracts under HUD regulations.

The protesters argue that HUD improperly used a NOFA for contract administration services that should be solicited through a procurement instrument.  The GAO noted that its jurisdiction does not extend to disputes over cooperative agreements, so it must first determine whether the instrument was correctly used.  Contending that cooperative agreements were the appropriate instrument, HUD maintained that the principal purpose of the contracts between the agency and the PHAs was to assist states and local governments by having the PHAs administer the contracts.  The agency further argued that the NOFA transfers a thing of value to the PHAs by providing the administrative fees.

The GAO rejected HUD’s arguments and found that the PHAs act only as a conduit for the funds and that they have “no right to retain or use for the purposes any of the funds it receives for payment to the property owners.”  The GAO agreed that the administrative fee could be considered a “thing of value”, but did not agree that the principal purpose of the fee was to assist the PHAs in the performance of their mission.  The GAO concluded that the “principal purpose of the NOFA and [contracts] to be awarded under the NOFA is for HUD’s direct benefit and use.”

The GAO’s recommended that HUD cancel the NOGA and instead use a procurement instrument  that will result in the award of contracts.

On September 5, 2012, the Second Circuit Court of Appeals upheld a lower court’s judgment finding that Cornell University’s Weill Medical College and Dr. Wilfred van Gorp, a former faculty member, submitted false claims on grant renewal applications and progress reports from 1999 through 2001. The case is U.S. ex rel. Daniel Feldman v. Wilfred van Gorp and Cornell University Medical College.

The National Institutes of Health (NIH) awarded the grant to Cornell and Dr. van Gorp to provide training to post-doctoral fellows researching neuropsychology and HIV/AIDS. In 2003, Daniel Feldman, a fellow hired under the grant, filed a qui tam case under the False Claims Act.  (The False Claims Act imposes liability on persons and companies who defraud governmental programs.  These cases are often referred to as qui tam actions, which are suits brought by an individual, known as a relator, in an effort to prosecute government procurement and program fraud.  Additionally, to help alleviate the potential negative aspects of being a “whistleblower,” the federal government allows the relator to keep up to 30% of the amount the government recovers.)  Dr. Feldman alleged the program misused grant funds and that material changes had been made from the original grant application. After a four-year investigation, the government declined to intervene; however, Dr. Feldman pursued the claim using private counsel.

The Court of Appeals upheld damages in the amount of $855,714 – three times the amount the government paid in grant funds to Cornell after it submitted its first fraudulent progress report.  The lower court also awarded $32,000 in statutory penalties and more than $625,000 in attorneys’ fees to Dr. Feldman.

The Court of Appeals rejected all of the defendants’ arguments and provided a detailed discussion on awarding damages.  The Court found that when no tangible benefit has been received on the part of the government, then the “benefit of the bargain” method would be inappropriate.  The government, the Court said, received no benefit at all and therefore should be made whole again.

We’ll be taking a closer look at this case in our Federal Grants Update 2012 course.

The entire the decision can be found here.

The following was just posted on the OMB blog. Since it is rather succinct and complete, I thought it best to just copy and paste it. So here is what OMB is doing…

How can we continue to streamline, simplify, and improve rules and regulations? Which rules should be eliminated, streamlined, or made more effective? How can we reduce reporting and paperwork burdens? What are the best ways to cut regulatory costs? We’re looking for your ideas.

In January 2011, the President directed all executive agencies to undertake an unprecedented government-wide review of regulations on the books, in order to figure out what is working and what is not, and where appropriate, to streamline or eliminate ineffective, overly burdensome, and outdated rules. Over two dozen agencies responded with regulatory reform plans, listing more than 800 initiatives. We are already seeing big results. Just a small fraction of those initiatives, already finalized or formally proposed to the public, will save more than $10 billion over the next five years. Far more savings are expected as the plans are implemented and improved.

This May, the President made regulatory reform a continuing responsibility of all executive agencies and departments. All agencies must engage with the public to obtain suggestions about which regulations should be reassessed, modified, improved, streamlined, or eliminated. All agencies must give priority to reforms that would produce significant quantifiable savings or big reductions in paperwork and reporting burdens. And all agencies must report regularly to the public on their progress.

The next reports are due fairly soon – this fall. To improve our review, and to make it as ambitious as possible, we are announcing, today, an opportunity for members of the public to offer their ideas. Which rules are outdated? Which ones are imposing unjustified costs? Which ones can be improved or made more effective? Submit your ideas at WhiteHouse.gov/Advise. They will be given careful consideration.
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Earlier this year there was a flurry of activity and far-ranging discussion surrounding a new DATA Act, legislation that would impose strict new reporting requirements on federal agencies and grant recipients.

But what happened to that proposed measure?

Apparently, it has died in the Senate.

During a Sunday morning talk show, Rep. Darrell Issa, the bill’s primary sponsor in the House, was discussing the Republican agenda when he said “we want to be jobs and the economy,” Issa said. “The Data Act passed unanimously out of the House, and it’s died in the Senate. That would bring greater transparency and accountability and save money. We have those issues we’re working on.”

If the measure does see any action in the Senate, we’ll let you know.

Looking for some advice on how to design a collaborative network? The IBM Center for The Business of Government just published a new report that highlights the successes and challenges of users who have implemented cross-agency collaborative networks.

In the introduction to the report, the authors say: Government agencies face increasing internal and external pressure to share information and to communicate across agency boundaries. Multiple-organization collaborative initiatives are far more complex and difficult than technology-based projects developed for use by a single agency. Collaboration requires a shared technology infrastructure that knits together legacy information systems of each partnering organization. Even more challenging is the need to design new approaches to organizing, funding, governing, sharing data, security, and operations.

The recommendations in the report are fairly straightforward. For example, they recommend involving all stakeholders. But they also go on to give pointers about how to do that.

You can access the report here.

Nearly $800 million in undisbursed federal funds remained in expired grant accounts at the end of fiscal year 2011, according to a new report from the Government Accountability Office. And while some agencies have taken steps to reduce that amount and speed the grant closeout process, more work needs to be done.

In a May 2012 follow-up to a 2008 report, GAO repeated its basic recommendation: OMB needs to establish governmentwide guidance for grant closeout.

In the 2012 report, GAO noted that while the total amount of undisbursed funds in FY 11 essentially equaled the amount reported in its previous study, the percentage of total grant funding that those funds represented was lower – meaning that agencies were doing a better job of getting rid of those unobligated monies and closing accounts.

For example, in February 2011, HHS established an interagency workgroup—the Accelerated Closeout Team—led by the Office of Grants and Acquisition Policy and Accountability to coordinate a departmentwide response in strengthening financial controls and accelerating the number of grant and contract closeouts.

“Our analysis shows that there has been an improvement in closing out expired grant accounts with undisbursed balances in PMS since our 2008 report,” GAO said in the report. Nevertheless, GAO continues “The presence of tens of thousands of expired grant accounts in PMS with no undisbursed funds remaining raises concerns that these accounts are not receiving sufficient attention. Reducing the number of accounts with zero balances remaining would help ensure that administrative and financial closeout—the final point of accountability for these grants—is being completed. It would also minimize the amount agencies pay in potential fees for maintaining these accounts, which can accumulate over time.”

If you are interested in learning about effective grant closeout, Management Concepts’ two-day Closeout of Grants for Federal Personnel will be helpful. This course provides students with a framework and actionable process for overseeing and conducting grant closeouts. Visit www.managementconcepts.com/grants for more information.

With the buzzwords “accountability” and “transparency” cited over and over, the House yesterday approved the DATA Act, a measure that would impose strict new reporting requirements on federal agencies and grant recipients.

Recipients would have to report at least quarterly on receipt and use of federal funds. Similarly, federal agencies would have to report at least quarterly on all obligations and expenditures of federal funds. The Treasury Department would also report federal agency obligations and expenditures, and all of this information would be identified by program, budget category, or other Treasury account number so that it could all be easily compared.

An interesting provision in this legislation is that it would not waive the reporting requirements for entities that receive small awards; only certain individuals would be exempt.

The House also attempted to put some teeth behind the measure by allowing federal agencies to impose penalties of up to $250,000 on recipients who fail to meet the reporting requirements. To enforce agency reporting, OMB would be directed to issue guidance requiring compliance with the new act.

The Data Accountability and Transparency Act (HR 2146) would also create a new oversight panel, the Federal Accountability and Spending Transparency Commission. This commission would have extensive power. For example, it would establish reporting deadlines, specify the data elements and the format of reports, and issue guidance to federal agencies and recipients on compliance with the new law.

Also, rather than repealing the Federal Funding Accountability and Transparency Act, as was originally proposed in the House bill, the measure that members approved yesterday would amend that legislation by aligning it with the new reporting and transferring control over FFATA reporting and USAspending.gov from OMB to the new council.

A companion measure was introduced in the Senate earlier this year, but is still awaiting action in the Committee on Homeland Security and Governmental Affairs.

Federal awarding officials now have a new tool to help them confirm individual and entity eligibility before making any grant, loan, contract, or benefit payment. Launched today, the new Do Not Pay List web site is a single point of entry for accessing relevant data.

The portal allows federal agencies to to access data sources including the Death Master File, the Excluded Parties List System, Treasury’s Debt Check Database, and the List of Excluded Individuals and Entities. The site also offers data analysis of information from other sources that are not currently available through the portal, such as prison information and several privately available sources.

OMB Memo 12-11 directs federal agencies to submit to OMB a draft of the agency’s plan for using this new tool by June 30, 2012. OMB will review those plans and agencies will finalize them no later than Aug. 31,2012.