GAO backs more accountability in grant programs
Agencies should work with grantees to find useful performance metrics, study finds.
Federal program managers should use both carrots and sticks to boost accountability in management of grant programs, according to a new report from the Government Accountability Office.
By working collaboratively with grantees and lawmakers, and sharing best practices among themselves, managers can enhance the effectiveness of grant programs and stretch resources, the report (GAO-06-1046) stated.
The use of performance accountability measures has increased significantly in program management over the past several years, in part due to the 1993 Government Performance and Results Act and the development of the Bush administration's Program Assessment Rating Tool, GAO reviewers said. But they found that the use of performance metrics and goals has not grown to the same extent among federal grant programs.
The study examined four places that do use performance metrics -- the Health and Human Services Department's office handling child support payments; an Education Department office that administers grants for career and technical education; a Massachusetts Division of Medical Assistance program to manage mental health and substance abuse programs; and an Ontario, Canada-based realty management contract.
GAO reviewers found that methods of establishing accountability can be financial or nonfinancial, and based on rewards or penalties. For example, a financial mechanism could entail rewarding good performance with a one-time bonus or increased funding. A nonfinancial method might involve rewarding programs with greater operational flexibility or by altering a program's oversight or reporting burden. The report even suggested that public recognition alone could be a productive incentive.
Reviewers found five strategies that contribute to effective implementation of performance accountability. They said incentives must be meaningful enough to influence behavior; metrics must be well-chosen to reflect factors that are under the grantee's control and do not induce perverse incentives; both the grantor and grantee must have the technical capacity to implement and act on the measures; incentives must be periodically reassessed and renegotiated, if necessary; and accountability mechanisms should be phased in over time with opportunities to test and revise the performance metrics.
The study cautioned against taking a "one size fits all" view of accountability mechanisms, though, warning that grants vary along a spectrum that balances accountability with control. "Because design features that encourage performance accountability can limit state and local grantee flexibility, achieving these twin goals can be a delicate balancing act," the report stated.
GAO urged agencies to introduce accountability mechanisms in slow steps, working with grantees to ensure that metrics are effective before implementing rewards or penalties based on them. The study recommended that the Office of Management and Budget promote their use by encouraging knowledge transfer from agencies employing accountability measures and by promoting best practices.
The study was requested by Rep. Todd Platts, R-Pa., chairman of the House Government Reform Subcommittee on Government Management, Finance and Accountability. Tabetha Mueller, a spokeswoman for the subcommittee, said the GAO's recommendation that agencies work collaboratively with grantees could address some of the problems that members of Congress have had with the PART process.
Some members of Congress have said PART scores fail to reflect the real value of programs by using the wrong performance measures. Others have rejected use of the scores for budget decisions because they say the grades do not take into account legislators' goals in creating the programs.
Mueller said agencies should look at congressional intent when working with grantees to set metrics. "The PART has been very OMB-driven, so an agency feels like they're being asked to do two different things," she said. GAO's strategies could improve the PART process by ensuring that agencies and grantees are on the same page about what success means. The integration of grant performance and funding could be a next logical step, Mueller said, but only after the parties could agree that the performance assessment system was fair and accurate.
Grants to state and local governments alone represented nearly 20 percent of federal spending in fiscal 2005, GAO noted, so finding ways to improve performance is important.