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Posted by on Feb 3, 2016

President Obama Signs the GONE Act

President Obama Signs the GONE Act

Legislation, Law, ActOn January 28, 2016, President Barack Obama signed the Grants Oversight and New Efficiency Act (GONE Act) into law. Congress designed the GONE Act to hold Federal awarding agencies accountable for timely closeout of grant awards. The purpose of the law is to reduce costs associated with maintaining bank accounts of expired grants that contain undisbursed funds or a zero balance.

The law requires Federal awarding agencies to submit a report to Congress and to the Department of Health and Human Services (HHS) that:

  • Identifies each Federal grant that has not been closed out two years after the end of the award’s period of performance
  • Describes the challenges leading to delays in grant closeout
  • Explains why awards have not been closed out

Within one year of the initial report, Federal awarding agencies are required to provide a follow-up report that specifies which of the identified grant awards have been closed out and those that remain open.

The law also requires:

  • The Inspector General (IG) for Federal awarding agencies with more than $500,000,000 in annual grant funding to conduct a risk assessment of the agency’s grant closeout process
  • The Director of the Office of Management and Budget (OMB) and the HHS Secretary recommend to Congress legislation to improve the accountability and oversight of grants management

Under the Uniform Guidance, Federal awarding agencies and pass-through entities should complete all closeout activities within one year. 2 CFR 200.343(g) states:

The Federal awarding agency or pass-through entity should complete all closeout actions for Federal awards no later than one year after receipt and acceptance of all required final reports.

It is important to note that the Uniform Guidance uses the word “should” and not “must” when detailing closeout requirements. Thus it is an expectation, and not a requirement, that closeout occurs within one year. The law does not require agencies to complete closeout activities within one year. However, agencies will be required to explain to Congress why closeout has not occurred within the one-year time frame.

The GONE Act is in response to a 2013 Washington Post article that found that the Federal government spent at least $890,000 on service fees to maintain empty bank accounts of expired grants. The Government Accountability Office (GAO) found that 13,712 such accounts existed in 2012.

“Our taxpayer dollars should be spent on programs and grant opportunities that actually support the American people, not on administering empty grant accounts that help nobody.”

– Senator Joe Manchin (D-WV), GONE Act Co-Sponsor

The following timeline identifies the key dates for the required actions under the law.

  • By July 18 2016, the OMB Director must instruct Federal awarding agencies to prepare a report on expired grant awards
  • By December 31, 2017, Federal awarding agencies must submit the initial report to HHS and Congress
  • By December 31, 2018:
    • Federal awarding agencies must submit the follow-up report to HHS
    • The IGs of select agencies must conduct a risk assessment of the agency’s closeout process
  • By March 31, 2019, the HHS Secretary must compile agency follow-up reports and submit a report to Congress
  • By September 30, 2019, the OMB Director and HHS Secretary must provide to Congress any recommendations to improve oversight of grants management

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