Grant funds to get better control under executive order

President Barack Obama’s recent executive order to form a governmentwide oversight board for federal spending will be used to strengthen monitoring of more than $500 billion a year in federal grants, according to a senior White House official.

The order, issued June 13, directed the creation of the Government Accountability and Transparency Board (GATB) as a single entity to coordinate efforts to reduce waste and fraud, modeled after the Recovery Accountability and Transparency Board overseeing economic stimulus law funding.

Additional measures to monitor federal grants under the order are likely to include deployment of anti-fraud software and more centralized coordination in display of federal grant data, Danny Werfel, controller for the Office of Federal Financial Management in the Office of Management and Budget, told a House subcommittee on June 23.

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“The creation of the GATB provides an opportunity to help drive a new and more robust governance structure for the grants community,” Werfel said to the the House Oversight and Government Reform Committee's Technology, Information Policy, Intergovernmental Relations and Procurement Reform Subcommitee.

“There are currently numerous boards, councils, and committees with current responsibilities for providing strategic direction to the grants community,” Werfel said. “With the GATB in place, there is an opportunity to coordinate these activities and pursue a more singular vision toward effective accountability of federal grant awards. In the near term, we hope to achieve a new and unified grants governance framework, aligned and coordinated with the GATB.”

In 2010, the federal government awarded a total of $572 billion in grants, including stimulus law grants, an increase of 85 percent from the $309 billion awarded in 2000.

More than 2,000 federal grant programs, both competitive and by formula, are administered by more than 30 federal agencies, Werfel said. State and local governments, including tribes, received 83 percent of the awards in 201, while 17 percent went to other grantees, primarily colleges, universities, non-profit and profit corporations.

A number of federal solutions and programs are in place to oversee and manage the grant programs, including the Single Audit Act of 1984, Grants.gov, the Recovery Accountability and Transparency Board, the Improper Payment Elimination and Recovery Act, and the Obama administration’s Accountable Government Initiative.

Jeanette Franzel, manager director of the financial management assurance team for the Government Accountability Office, testified on the GAO’s evaluations of federal grant oversight in past reports.

“Overall, our work on grant management has found weaknesses in the control systems of federal awarding agencies. We found vulnerabilities at different points in the grant life cycle: in the preaward, award, implementation, and closeout stages,” Franzel said.

In 2008, GAO reported that in 2006 about $1 billion remained in undisbursed funding in expired grant accounts in the largest civilian grant payment system, she added.

In addition, agencies reported an estimated $125 billion in improper payments for fiscal year 2010. These were generated by more than 20 agencies.