Grants Management: Agency Action Required to Ensure Grantees Identify Federal Contribution Amounts

Since 1989, an appropriations provision, colloquially known as the “Stevens Amendment,” has reflected Congress's longstanding effort to ensure transparency and accountability in federal grant spending. GAO was asked to review agency guidance and grantee compliance related to the Stevens Amendment. This report (1) describes the guidance DOL, HHS, and Education provide to grantees regarding the Stevens Amendment; (2) examines the extent to which DOL, HHS, and Education are managing grantees' compliance with the Stevens Amendment; and (3) describes what is known about how grantees calculate the dollar amounts and percentages of their federal and nongovernmental funding disclosures. GAO asked for agency guidance documents, reviewed monitoring reports, interviewed officials on agencies' Stevens Amendment oversight efforts, and asked agencies how grantees calculate funding amounts.

The Stevens Amendment is an appropriations provision that requires grantees of the Departments of Labor (DOL), Health and Human Services (HHS), and Education (Education) to disclose for a grant program the percent of the costs financed with federal funds, the federal dollar amount, and the percentage and dollar amount financed by nongovernmental funds. The provision requires that recipients of grants funded by DOL, HHS, and Education make certain funding disclosures when issuing statements, press releases, bid solicitations, and other documents describing their grant project or program. DOL, HHS, and Education generally provide written guidance to grantees with the exact text of the Stevens Amendment or a paraphrased equivalent. In addition, a number of operating divisions within HHS referenced the HHS Grants Policy Statement, which includes language equivalent to the Stevens Amendment, as a way to instruct grantees. One HHS operating division, the Health Resources and Services Administration, provided grantees with additional guidance in the form of a web page that contained examples of funding disclosure statements and frequently asked questions intended to clarify the Stevens Amendment's requirements.

One DOL subagency, the Employment and Training Administration (ETA), whose active grants represented more than 95 percent of DOL's total grant dollars, had processes for managing grantees' compliance that were able to identify instances of grantee noncompliance with Stevens Amendment requirements. ETA's operating plan for grant oversight targets 26 percent of its active grants for risk-based monitoring each fiscal year, representing approximately 2,100 grants in fiscal year 2019. The other DOL subagencies either stated that they did not monitor grantees for compliance with Stevens Amendment requirements or did not have processes in place for managing grantee compliance with the requirements of the Stevens Amendment. Most HHS operating divisions said they did not review grantees for Stevens Amendment compliance. Education also did not monitor for grantee compliance with the Stevens Amendment's requirements. Regulations governing federal agencies' management of grants require federal agencies to manage and administer the federal award in a manner that ensures that programs are implemented in full accordance with U.S. statutory and public policy requirements. Without processes for managing compliance, some DOL subagencies, HHS operating divisions, and Education are unable to ensure that grant programs are being implemented by grantees in full accordance with the statutory requirements of the Stevens Amendment.

Most of the subagencies and operating divisions monitoring compliance did not gather information from grantees about how the grantees calculate the dollar amounts and percentages in their Stevens Amendment funding disclosures. For example, DOL's ETA officials said that they do not know how the dollar amounts reported by grantees were calculated, and have not inquired about the level of detail factored into indirect costs involving the grantee organization's structure and the percentage of funds spent on salaries. Similarly, officials from HHS's National Institutes of Health operating division noted that calculations can be difficult given that a research program can have multiple funding streams that feed into a grant project and grantees' research portfolios are now more complex than they have been in the past.

GAO recommends that DOL subagencies (other than ETA), HHS operating divisions, and Education design and implement processes to manage grantees' compliance with the Stevens Amendment. In responding to the report, DOL, one DOL subagency, and HHS agreed with GAO's recommendation. Education disagreed with GAO's recommendation, citing limited monitoring resources and other reasons. GAO believes the recommendation should be fully implemented, as discussed in the report.

Federal agency grants management includes ensuring grantee  compliance with numerous rules and requirements. Grantees can receive  guidance on these requirements in the standard terms and conditions  contained in the award notices from federal agencies providing the  grants. The President’s Management Agenda, released in 2018,  established “results-oriented accountability for grants” as a cross-agency  priority goal to “maximize the value of grant funding by applying a risk- based, data-driven framework that balances compliance requirements  with demonstrating successful results for the American taxpayer.”

Requirements for some federal grantees receiving federal funds to  disclose the percentage of the total costs of the program or project which  will be financed with federal money, the dollar amount of federal funds for  the project or program, and the percentage and dollar amount of the total  costs of the project or program that will be financed by nongovernmental  sources have existed in some form since 1989. The 2018 appropriations  law establishing these disclosures requires that recipients of grants  funded by the Departments of Labor (DOL), Health and Human Services  (HHS), and Education (Education) disclose the total costs of programs or  projects paid for with federal funds “hen issuing statements, press  releases, requests for proposals, bid solicitations and other documents  describing projects or programs.” These requirements reflect  longstanding efforts to ensure transparency and accountability in federal  grant spending. The provision has been included in various  appropriations acts throughout the last 30 years and is still colloquially  referred to as the “Stevens Amendment” as it was first introduced by  then-senator Ted Stevens as an amendment to appropriations bills, and  was included in the final appropriations for those agencies.

You asked us to review aspects of agency guidance and grantee  compliance related to the Stevens Amendment. This report (1) describes  what types of guidance, if any, DOL, HHS, and Education are providing to  grantees about the requirements of the Stevens Amendment; (2)  examines the extent to which DOL, HHS, and Education are managing  grantees’ compliance with the Stevens Amendment; and 3) describes  what is known about how grantees calculate the funding percentages and  dollar amounts required by the Stevens Amendment, including whether  indirect costs are factored into these calculations.

To address these objectives, we researched the legislative history of  these requirements to understand their evolution since the original  passage in 1989. We spoke to representatives from the National Grants  Management Association and the Council on Governmental Relations to  obtain their insights into grantees’ interpretation and implementation of  the Stevens Amendment, which helped inform our discussion topics for  later interviews with agency officials. In addition, we reviewed a study  published in April 2017 that reviewed 100 National Institutes of Health  (NIH) grant projects’ press releases for Stevens Amendment  compliance.

For the first objective, we asked DOL, all of DOL’s grant-making  subagencies, HHS, all of HHS’s grant-making operating divisions, and  Education for copies of relevant guidance documents showing the  agencies’ instructions to grantees to help them comply with the Stevens  Amendment’s disclosure requirements.

For the second objective, we asked some of DOL’s grant-making  subagencies, all 11 of HHS’s grant-making operating divisions, and  Education to provide us with responses to questions on guidance,  monitoring, and enforcement. We also conducted follow-up interviews  with officials from DOL’s Employment and Training Administration (ETA),  HHS operating divisions that initially stated they conducted monitoring, and Education to clarify their written responses and determine whether  the agencies had any supporting documentation. We also asked all three  agencies what their grants management efforts, including any monitoring,  showed with regard to the extent of grantee compliance with the  requirements of the Stevens Amendment.

We asked each of the subagencies and operating divisions that said or  indicated that they conducted monitoring for compliance with the Stevens  Amendment for six examples of grantee documents showing compliance  or noncompliance with the amendment. For any instances of  noncompliance, we asked whether the agency determined appropriate  corrective actions and whether the grantees implemented those  corrective actions. We also asked the agencies that provided examples  whether they tracked the number of instances of compliance or  noncompliance.

For the third objective we requested any available information regarding  how grantees calculated Stevens Amendment percentages and dollar  amounts and whether they factored indirect costs into their calculations.  We asked whether the subagencies and operating divisions that stated  they conducted monitoring of the Stevens Amendment were aware of the  methods grantees used to calculate percentages and dollar amounts of  federal funding, and whether grantees factored indirect costs into their  calculation of federal spending used in their Stevens Amendment  disclosures.

We conducted this performance audit from January 2018 to March 2019  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe the  evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

1993. For the version of this requirement that applied to DOL, HHS, and  Education, the Stevens Amendment has appeared in all but one of the full  appropriations acts passed in Congress since 1993. In proposing the  amendment in 1988, Senator Ted Stevens described the role of states,  local governments, and the federal government in forging a partnership to  share in the costs of many projects and said that the federal contribution  should be identified as a matter of taxpayer concern. Further, Senator  Stevens said that taxpayers “ought to be informed how much money  comes from Federal sources in any program, project, or grant activity.”  More recently, the Consolidated Appropriations Act of 2018 and the  appropriations for these agencies in 2019 renewed this requirement for  DOL, HHS, and Education (see sidebar). total costs of the project or program that  will be financed by non-governmental  sources.

Consolidated Appropriations Act of 2018, Pub. L. No. 115- 141, 132 Stat. 348, div. H, Title V, Sec. 505 (Mar. 23, 2018).

The combined amount of grant funding that went to state and local  governments from these three departments in federal fiscal year 2017  amounted to approximately $504 billion, or almost 75 percent of the $675  billion total distributed by all federal grant-making agencies to state and  local governments that year. HHS had the largest amount of grant outlays  to state and local governments with about $455 billion (67.4 percent of  the total), Education distributed about $42 billion (6.2 percent), while  Labor distributed about $7 billion (1.1 percent).

DOL, HHS, and Education Generally Provide Grantees with the Exact Text of the Stevens Amendment or a Paraphrased Equivalent

Generally, agencies or their subdivisions provided grantees with the exact  text of the Stevens Amendment, paraphrased its language, or in some  cases referred grantees to other guidance containing the Stevens  Amendment. Figure 1 summarizes what we found at each of the three  agencies we reviewed with regard to the Stevens Amendment guidance  they provide to grantees.

DOL Instructed Grantees to Follow Stevens Amendment Requirements by Providing a Template for Language in Subagencies’ Grant Terms and Conditions

According to ETA officials, grants from DOL’s ETA comprised more than  95 percent of DOL’s $22.1 billion in active grant awards as of October 1,  2018. ETA’s Office of Grants Management (OGM) developed standard  terms and conditions that serve as a template for written agreements for  grant awards. The terms and conditions template includes language  largely similar to the Stevens Amendment, with one instance of  paraphrasing, which is permissible under the relevant regulations.  ETA’s paraphrased language states that the Stevens Amendment  requirements apply to “all non-federal entities receiving federal funds,”  whereas the actual Stevens Amendment wording is that the requirements  apply to “all grantees receiving federal funds in this Act, including but not  limited to state and local governments and recipients of federal research  grants.” The Stevens Amendment has been in the agency’s terms and  conditions library for grant awards since fiscal year 2014. ETA officials  said they added the Stevens Amendment requirements to the terms and  conditions because they wanted to ensure that grantees knew about the  Stevens Amendment’s existence.

ETA also disseminates its standard terms and conditions template to  grantees on behalf of five other DOL grant-making subagencies, including  the Veterans Employment and Training Service, the Chief Evaluation  Office, the Bureau of International Labor Affairs, the Women’s Bureau,  and the Office of Disability Employment Policy. According to ETA officials,  OGM administers the front-end application processing for grants awarded  by these subagencies, while the subagencies are responsible for any  post-award grantee oversight. OGM also administers the final grant  closeout for these subagencies. According to DOL officials, together with  ETA, these subagencies awarded more than 99.8 percent of DOL’s active  grant funds as of October 2018.

According to DOL officials, three other DOL grant-making subagencies,  the Mine Safety and Health Administration (MSHA), the Occupational  Safety and Health Administration (OSHA), and the Bureau of Labor  Statistics (BLS), administer their sub-agencies’ grant award processes  themselves. Officials said that two of these agencies, MSHA and OSHA,  disseminate their own separate grant award terms and conditions, and  have their own separate guidance for grantees regarding compliance with  the Stevens Amendment. For example, OSHA paraphrased the Stevens  Amendment language in its terms and conditions. OSHA officials told us  that instead of stating the amendment’s requirements in three parts,  OSHA broke them out into four requirements that reflect the full content of  the Stevens Amendment’s original language. MSHA also had its own  terms and conditions that contain the exact language of the Stevens  Amendment’s requirements, according to officials. The third agency, BLS,  told us that its grantees only produce narrowly focused press releases  and that these documents do not fall within the Stevens Amendment  description of documents “describing projects or programs funded in  whole or in part with Federal money.” BLS officials said that since none of  the other qualifying public statements mentioned in the Stevens  Amendment are part of BLS grantee operations, BLS cooperative  agreements do not produce public statements that qualify for Stevens  Amendment compliance.

Most HHS Grant Guidance Restated, Paraphrased, or Referenced the Stevens Amendment

At the department level, HHS publishes a Grants Policy Statement that  contains language equivalent to the Stevens Amendment, but it does not  quote the amendment verbatim. Consistent with the Stevens  Amendment, the Grants Policy Statement provision directs grantees to  disclose information on the percentage and dollar amount of federal  contributions to grantees’ programs or projects in addition to the same  information for nongovernmental sources, but collapses the three Stevens  Amendment requirements into two requirements with slight wording  changes. Officials told us that HHS expects its operating divisions to  follow the Grants Policy Statement together with the relevant HHS  regulations, but does not instruct operating divisions on what to include in  their grant award terms and conditions.

A number of HHS operating divisions provide grantees with grant award  terms and conditions that contain the exact language of the Stevens  Amendment. Examples include:

Centers for Disease Control and Prevention (CDC) - Provides  grantees with general terms and conditions for both research and  non-research grants and cooperative agreements that include a  requirement for an “Acknowledgement of Federal Support” that is an  exact re-statement of the Stevens Amendment.

Health Resources and Services Administration (HRSA) - Provides  grantees with the Standard Form 424 Application Guide (grants  application guide), which includes a section that quotes the exact  language of the Stevens Amendment.

Office of the National Coordinator for Health Information Technology  (ONC) - Added a section in 2018 to the terms and conditions section  for every Funding Opportunity Announcement that specifically  references the Stevens Amendment verbatim.

One operating division, the Centers for Medicare and Medicaid Services  (CMS) provides grantees with a section of its terms and conditions titled  “Public Reporting” that shows the language of the Stevens Amendment,  but with the addition of tribal governments to the list of applicable grant  recipients. Another operating division, the National Institutes of Health  (NIH), publishes its own grants policy statement separate from the one  published by HHS. The NIH grants policy statement contains the standard  terms and conditions for all NIH grant awards. It uses the same Stevens  Amendment guidance language HHS uses, with the same paraphrasing  of the language that collapses the three Stevens Amendment  requirements into two requirements.

Four relevant HHS operating divisions told us that they relied solely on a  reference to the HHS Grants Policy Statement to instruct grantees with  regard to the Stevens Amendment requirements. This reference made no  specific mention of the Stevens Amendment and did not include either the  exact or paraphrased Stevens Amendment language in the agencies’  grant agreement terms and conditions or funding opportunity  announcement.

HHS’s HRSA Provided Additional Guidance to Help Grantees Comply with the Stevens Amendment

HRSA’s “Acknowledgement of Federal Funding” provision in its grants  application guide contains the exact language of the Stevens Amendment  and its requirements. Further, HRSA’s application guide provides  grantees with what HRSA officials stated was a sample  acknowledgement and disclaimer paragraph written in “plain language”  that the operating division developed to assist HRSA grantees in  complying with the Stevens Amendment. HRSA officials said that they  consulted with HHS’s Office of General Counsel to simplify the language,  while ensuring that it met the requirements of the Stevens Amendment.  HRSA’s sample acknowledgement and disclaimer paragraph reads,  “This   supported by  the Health Resources and Services Administration (HRSA) of the  U.S. Department of Health and Human Services (HHS) as part of  an award totaling $XX with xx percentage financed with  nongovernmental sources. The contents are those of the author(s)  and do not necessarily represent the official views of, nor an  endorsement, by HRSA, HHS or the U.S. Government.”

Later in the section, HRSA further defines the Stevens Amendment’s  “other documents describing projects or programs” as including, among  other things, HRSA-supported documents such as manuals, toolkits,  resource guides, case studies, and issues briefs.

In addition to HRSA’s efforts to interpret the Stevens Amendment, HRSA  posted a web page in October 2018 that provided grantees with additional  written guidance and a list of “frequently asked questions” about  communicating and acknowledging federal funding. The HRSA web  page provided examples of HRSA disclosure statements to show  grantees how disclosure language should be drafted to comply with the  Stevens Amendment. The web page also featured frequently asked  questions, one of which clarified that the disclosure should reflect the  overall amount of the grant rather than the cost of developing the  publication where the acknowledgement appears. The other frequently  asked question directed grantees to consult with HRSA officials if they  intend to use language that differs from the examples provided to ensure  that their alternative wording complies with the Stevens Amendment  requirements.

HRSA officials also instructed their grantees on compliance with grant  award terms and conditions, including the Stevens Amendment, through  informal discussions during workshops and conference calls. HRSA  officials provided examples of Stevens Amendment discussions such as a  May 2018 Healthy Grants Workshop presentation to grantees, as well as  a July 2018 question and answer period during an HRSA conference call  with grantees. The grantee conference call featured several HRSA  presenters, including one representing the Division of Grants Policy.  Officials said that during these technical assistance calls, HRSA wanted  to ensure that grantees were made aware of legislative mandates, but the  calls were not tailored to focus on a specific mandate.

Education’s Grant Awards Terms and Conditions Contain Paraphrased Stevens Amendment Language

Education grantees that receive discretionary and formula grants are  provided with information on the Stevens Amendment through a Grant  Award Notification attachment. The attachment is included with the terms  and conditions of the grant award and has the exact language of the  Stevens Amendment’s requirements, but paraphrases with regard to the  types of entities to which the Stevens Amendment applies. Instead of  applying the requirements to “all grantees receiving federal funds  included in this act including but not limited to state and local  governments and recipients of federal research grants” as noted in the  Stevens Amendment, Education’s phrasing applies the requirements  specifically to “U.S. Department of Education grantees.” According to  Education officials, the grant notification process involves providing guidance to grantees and ensuring that they are made aware of various  statutory requirements, including the Stevens Amendment. Education  officials told us that another way that their agency communicates  information about the Stevens Amendment to grantees is through  Education’s required post-award conference call, during which the  program offices reinforce grant recipients’ need to be aware of the  requirements.

DOL’s ETA Managed Compliance with the Stevens Amendment through Its Grantee Monitoring Processes, Though Most HHS Operating Divisions and Education Did Not

The regulations that govern DOL, HHS, and Education’s management of  grant awards state that “the Federal awarding agency must manage and  administer the federal award in a manner so as to ensure that Federal  funding is expended and associated programs are implemented in full  accordance with U.S. statutory and public policy requirements.” The  Stevens Amendment is a statutory requirement that these federal  agencies must ensure is implemented by their grantees. Agencies’  management of the grant award so as to ensure implementation of the  Stevens Amendment can be accomplished by various means, including  the monitoring of grantees, through processes such as reviews of grantee  reports and correspondence, desk audits, and grantee site visits. In our  review of Stevens Amendment grants management practices at DOL,  HHS, and Education, we found that DOL’s ETA had processes in place  that were able to identify instances of grantee noncompliance with the  Stevens Amendment and demonstrate that noncompliance was being  remedied. ETA’s grants management processes took the form of  grantee monitoring. Figure 2 below summarizes the Stevens Amendment  monitoring practices of DOL, HHS, and Education.

ETA Had Processes for Managing Grantee Compliance with the Stevens Amendment

ETA officials told us that their subagency’s active grants represented  more than 95 percent of DOL’s total active grant dollars, or approximately  $21.1 billion. According to ETA officials, their operating plan for grant  oversight targets 26 percent of the active ETA grants universe for  monitoring each fiscal year, representing approximately 2,100 grants in  fiscal year 2019. The regional office staff in each of ETA’s six regional  offices conduct a risk analysis of the grants within their regions and  assign a risk rating to each grant indicating its risk level. The grant’s risk  level, which includes factors such as the dollar amount of the grant award  and whether the grantee is on track to meet the grant’s performance  goals, determines which grants ETA selects for monitoring and inclusion  in its regional monitoring plans for that fiscal year.

Each annual regional monitoring plan consists of a list of grants and  schedule of ETA staff monitoring reviews. According to ETA, monitoring  reviews are used to measure grantee progress toward achieving project  goals, identify areas of grantee compliance, offer opportunities for  technical assistance to help resolve compliance issues, and ensure that  federal funds are used responsibly. ETA conducts these reviews either  through an on-site monitoring visit or an “Enhanced Desk Monitoring  Review” that is conducted remotely. ETA officials stated the regional  monitoring plans are designed to be flexible management tools, and are  updated throughout each fiscal year to ensure that ETA meets its  operating plan’s goal to monitor 26 percent of its grants annually.

According to ETA’s Grantee Handbook, upon completion of the  monitoring review, ETA drafts a monitoring report to each of the grantees  reviewed. The monitoring report includes, among other things,  compliance findings and the required grantee corrective action for any  noncompliance with the findings, along with the due date for the  corrective action. In response to our request for examples of grantee  noncompliance with the Stevens Amendment requirements, ETA officials  from each of the agency’s six regional offices conducted a manual search  of monitoring reports from fiscal years 2016 and 2017.

ETA officials in four of the six ETA regional offices located monitoring  reports with a finding stating that grantees’ public materials did not  include the Stevens Amendment’s required language or information to  properly identify the project’s federal funding dollar amount and the  project’s percentage of federal and nongovernmental funding. Three of  the four monitoring reports provided the grantee with the exact language  of the Stevens Amendment and instructed the grantee to ensure that  statements, such as brochures, promotional materials, and other public  announcements, contain a statement that identifies the project’s funding  sources in accordance with the three requirements of the Stevens  Amendment.

In the fourth monitoring report, while finding that the grantee did not  include the required funding source statement in its documents, ETA’s  comments in the monitoring report did not provide the grantee with the full  language of the Stevens Amendment and had omitted the requirement to  provide the percentage and dollar amount of costs financed by  nongovernmental sources. For each of these examples, ETA officials  showed that the grantees subsequently corrected their documents to  bring them into compliance with the Stevens Amendment requirements.  In the fourth example, the grantee’s subsequent inclusion of the required  funding source statement in its documents showed that the program was  100 percent funded by federal dollars.

In August 2018, ETA also created a “Core Monitoring Guide” that  references the Stevens Amendment requirements as an element to be  monitored by ETA officials when speaking with grantees. ETA intended  this guide to be used as a tool in the on-site review of a grantee’s  activities, and it provides officials with a series of checklists as well as the  steps to take when conducting monitoring. For Stevens Amendment  compliance, the guide includes a “Question for Review and Discussion”  that uses the exact language of the Stevens Amendment. However, the  Stevens Amendment is only one issue among many addressed in the  guide, and ETA officials said they do not have the resources to audit all of  the elements included in the guide. ETA officials said that their grant  reviewers select from one to four sections of the guide to use when  conducting monitoring, depending on the nature of the grant, and that the  choice of which items to monitor is based on a risk analysis of the grantee  and the grant projects’ quarterly financial reports. ETA officials  acknowledged that the scope of their monitoring overall is limited to 26  percent of their grant universe for a given fiscal year, therefore the extent  of noncompliance among ETA grantees cannot be determined.

Of the eight DOL subagencies we spoke to other than ETA, two, OSHA  and BLS, stated that they did not monitor grantees for compliance with  Stevens Amendment requirements. These subagencies’ officials said  they did not monitor for Stevens Amendment compliance because  monitoring is not explicitly required under the statute and, in the case of  BLS, because it believes that the type of press releases generated by  their grantees do not fall within the scope of the Stevens Amendment. Six  of the eight DOL subagencies told us that they conducted grantee  compliance monitoring. However, based on the information and  documents provided by officials from these six subagencies, they have  not demonstrated that they have processes to manage grantees’  compliance with the Stevens Amendment. For example, the Chief  Evaluation Office, the Bureau of International Labor Affairs (ILAB), and  the Veterans’ Employment and Training Service stated that they do not  track the extent of grantee compliance; and the Mine Safety and Health  Administration said that it does not maintain records of grantee  compliance with the Stevens Amendment. In addition, both ILAB and the  Women’s Bureau, while stating that they conducted monitoring of grantee  compliance with the Stevens Amendment, provided examples of grantee  disclosures that did not meet all of its requirements. Further, the Office of  Disability and Employment Policy (ODEP) said that all of its grantees  were fully compliant with the Stevens Amendment, but produced no  examples of grantee disclosures.

The Uniform Administrative Requirements that govern certain federal  agencies, including DOL, state with regard to the management of grants  that “the Federal awarding agency must manage and administer the  Federal award in a manner so as to ensure that Federal funding is  expended and associated programs are implemented in full accordance  with U.S. statutory and public policy requirements.” Other than ETA,  DOL’s subagencies have not developed the processes needed to  manage and administer grantees’ compliance with the Stevens  Amendment. Without these processes, these DOL subagencies are not  able to ensure that grant programs are being implemented by grantees in  full accordance with the statutory requirements of the Stevens  Amendment.

Most HHS Operating Divisions Said They Did Not Review Grantees for Compliance with Stevens Amendment Requirements

At the department level, HHS officials said that they have no knowledge  about whether their operating divisions conduct monitoring and  enforcement of the Stevens Amendment, and they did not collect  information from their operating divisions on grantee compliance with the  Stevens Amendment’s requirements. According to HHS officials, any  efforts to manage grant awards for adherence to Stevens Amendment  requirements would be carried out by staff at the agency’s 10 relevant  operating divisions. HHS officials said that operating divisions have an  obligation to monitor their grantees for compliance with all of the agency’s  standard grant award terms and conditions, which includes the Stevens  Amendment.

Of the 10 relevant HHS operating divisions we spoke with in our review,  officials from eight of them—the Administration for Children and Families  (ACF), the Agency for Healthcare Research and Quality (AHRQ), the  Centers for Disease Control and Prevention (CDC), the Food and Drug  Administration, the Health Resources and Services Administration  (HRSA), the National Institutes of Health (NIH), the Office of the Assistant  Secretary for Health (OASH), and the Substance Abuse and Mental  Health Services Administration—told us that they did not monitor  grantees’ compliance with Stevens Amendment requirements. Two of  these operating divisions, ACF and AHRQ, further stated that the Stevens  Amendment did not require them to monitor for grantee compliance.  These operating divisions maintained the position that they are not  required to monitor for grantee compliance despite HHS policy regarding  operating division monitoring of grants that states “…to fulfill their role in  regard to the stewardship of Federal funds, OPDIVs monitor their grants  to identify potential problems and areas where technical assistance might  be necessary. This active monitoring is accomplished through review of  reports and correspondence from the recipient, audit reports, site visits,  and other information available to the OPDIV.” As mentioned earlier in  this report, agencies are required to manage grant awards and have a  number of possible means available to do so—including grant monitoring.  However, grant monitoring is not explicitly required by the Stevens  Amendment.

NIH officials stated that they do not specifically monitor for Stevens  Amendment compliance and that NIH officials have not received any  reports of noncompliance with the Stevens Amendment. They said they  would address any non-compliance issues if they were raised. Similar to  NIH, HRSA officials told us that they conduct grantee monitoring, but do  not specifically review grantee documents for compliance with Stevens  Amendment requirements unless there is a cause for concern regarding  noncompliance. Similarly, CDC officials said that their grantee monitoring  practices do not specifically target Stevens Amendment compliance. CDC  officials further explained that while grant program officers may find  instances of noncompliance during a grant review, it would be tangential  to other issues more central to the focus of the grant review, such as  grantee financial performance and goal accomplishment.

Officials from OASH stated that while they do not specifically review  grantees’ written statements for Stevens Amendment compliance, they  provide grantees with guidance regarding how to comply with its  requirements. For example, a grantee asked whether a Stevens  Amendment acknowledgement statement had to be included on  billboards the recipient rented to promote their program’s services. OASH  determined that the grantee did not need to include the statement on the  billboards.

ONC officials told us that all of their grantees were in compliance with the  Stevens Amendment. ONC officials stated that while they do not  specifically look for Stevens Amendment compliance, it was their belief  that ONC monitoring practices would identify instances of noncompliance  for their small number of grantees. ONC officials told us their belief is  based on interactions with a wide range of grantees’ employees during  monitoring visits that seek to ensure that all compliance issues among  their grantees are addressed.

The remaining HHS operating division in our review, CMS, told us that its  monitoring processes include reviews for Stevens Amendment  requirements and that CMS had a process for reviewing grantee  documents. According to HHS policy, the results and accomplishments of  the activities CMS funds should be made public and CMS requires  grantees to make the results and accomplishments of their activities  available to the research community and to the public at large. The  grantee must submit any materials to CMS in advance of publication,  including brochures, recruitment materials, informational materials,  advertisements, website copy, website pages, videos, and op-ed articles  that report results from or describe information obtained through the grant  award. CMS officials told us they reviewed for Stevens Amendment  compliance, and provided us with examples of materials they said were  from grantees that were in compliance. However, in our analysis of the  sample grantee materials from CMS, we found that the grantees were not  in compliance with the cost requirements of the Stevens Amendment.

Despite the claims and efforts of some HHS operating divisions with  regard to monitoring for Stevens Amendment compliance, none of HHS’s  operating divisions could demonstrate that they had a process to manage  and administer grantees’ compliance with the Stevens Amendment  requirements. In addition to the previously-mentioned Uniform  Administrative Requirements applicable to all grant awards, HHS  regulations that govern the agency’s grant making state that, “The  Federal awarding agency must manage and administer the Federal  award in a manner so as to ensure that Federal funding is expended and  associated programs are implemented in full accordance with U.S.  statutory and public policy requirements.” Further, these regulations  also state, “The Federal awarding agency must communicate to the non- Federal entity all relevant public policy requirements, including those in  general appropriations provisions, and incorporate them either directly or  by reference in the terms and conditions of the Federal award.”

Neither HHS, nor its operating divisions, had developed processes to  manage and administer grantees’ Stevens Amendment compliance.

Without having processes to manage and administer their grantees’  compliance with the Stevens Amendment, which is included in HHS’s  appropriations provisions, there is no way for HHS or its operating  divisions to ensure that grantees are in full accordance with the statutory  requirements of the Stevens Amendment appropriations provision and the  agency-communicated conditions of the federal award. Further, without  monitoring grants in accordance with their Grants Policy Statement, HHS  and its operating divisions are not able to identify potential problems  related to grantees’ Stevens Amendment compliance.

Education Does Not Monitor for Grantee Compliance with the Stevens Amendment

Education officials stated that its program offices do not explicitly track  individual grantees for Stevens Amendment compliance. Education  officials told us that their grant review process does not collect Stevens  Amendment documentation nor do they gather information regarding the  extent of grantee compliance with the appropriations provision. As a  consequence, Education cannot determine the extent of their grantees’  compliance with the requirements of the Stevens Amendment.

Representatives from Education’s Office of General Counsel stated that  Education has an “obligation to correct” instances of Stevens Amendment  noncompliance, but does not have an “obligation to monitor” its grantees  to determine whether they are in compliance. Education officials told us  that due to limited resources, they use risk assessment results to identify  and prioritize which items among their standard terms and conditions they  will monitor during the course of a grant review. Officials told us they had  not received any complaints related to the Stevens Amendment.

The uniform regulations that govern federal agencies, including  Education’s management of grants, state that “the Federal awarding  agency must manage and administer the federal award in a manner so as  to ensure that Federal funding is expended and associated programs are  implemented in full accordance with U.S. statutory and public policy  requirements.” Education has not developed the processes it needs to manage and administer grantees’ compliance with the Stevens  Amendment which is included in Education’s appropriations provisions.  Without these processes, Education is not able to ensure that grant  programs are being implemented by grantees in full accordance with the  statutory requirements of the Stevens Amendment appropriations  provision and the agency-communicated conditions of the federal award.

Most Subagencies and Operating Divisions Monitoring Stevens Amendment Compliance Did Not Gather Information about Grantees’ Cost Calculations

With two exceptions, the subagencies and operating divisions we  reviewed that stated they conducted monitoring had no information on the  methods used by grantees to calculate the federal funding dollar amounts  or funding percentage figures required by the Stevens Amendment. As an  example, DOL’s ETA officials told us that they do not know how the dollar  amounts reported by grantees were calculated, and they have not  inquired about the level of detail factored into indirect costs involving the  grantee organization’s structure and the percentage of funds spent on  salaries. In addition, officials at DOL’s ILAB said that it is not always clear  how grantees calculate these costs, and the Stevens Amendment does  not provide specific guidance on how costs should be determined.  Officials also noted that some grantees expressed confusion regarding  the requirements and how to calculate the total federal funds, including in  cases where there may be collaboration across federally-funded  programs. Similarly, officials from HHS’s NIH operating division noted that  calculations can be difficult given that research programs can have  multiple funding streams that feed into a grant project and grantees’  research portfolios are now more complex than they have been in the  past.

Officials at one DOL subagency, ODEP, said that grantees calculate the  total funds received in the grant awarding document and that these funds  include negotiated indirect cost rates. The remainder of the DOL  subagencies and HHS operating divisions that produced examples of  either compliance or noncompliance with the amendment did not have  information on how grantees made their disclosure calculations. In  addition, officials at one HHS operating division, HRSA, said the HRSA  Notice of Award lists the total federal and non-federal amounts for the  grant project or program. Grantees can use this information to calculate  the percentage of federal funding and nongovernmental funding.  However, in the Stevens Amendment compliance examples that HRSA  provided to us, this calculation was not necessary because these projects  were 100 percent funded by the HRSA grant award. In addition, HRSA  officials told us that they are not aware of any other methods that  grantees would need to use to arrive at the percentage. With regard to  indirect costs, HRSA officials said that these costs are already included in  the federal award amount and, therefore, any calculation of funding  percentage should already account for the inclusion of both direct and  indirect costs.

Congress has repeatedly taken action to include the Stevens Amendment  requirements with agencies’ appropriations. Ensuring grantee compliance  with accountability requirements is achieved through investment of  federal agency resources that reflect decisions regarding how best to  ensure efficient and effective use of grant funds while reinforcing statutory  requirements.

DOL’s largest grant making subagency, ETA, showed that its grantee  review processes were, to some extent, actively monitoring for Stevens  Amendment compliance and that when ETA found compliance issues, it  was able to provide grantees with the technical assistance needed to  correct them. While a couple of HHS operating divisions showed some  evidence that they were enhancing their guidance to grantees with regard  to the Stevens Amendment, none of the operating divisions could  demonstrate that they had a process to manage and administer grantees’  compliance with the Stevens Amendment requirements. Education  officials stated that while their agency does not have an “obligation to  monitor” its grantees to determine whether they are in compliance with  the Stevens Amendment, they do have an “obligation to correct”  instances of noncompliance if brought to their attention. While none of the  agencies in this review can determine the extent of their grantees’  compliance with the Stevens Amendment, DOL’s ETA has monitored  grantee compliance with the provision, and when noncompliance is found,  has taken steps to bring their grantees into compliance. However, with no  such processes in place, the remaining DOL subagencies, HHS’s  operating divisions, and Education are not able to manage or administer  grantee compliance with the Stevens Amendment appropriation provision  so as to ensure that grant funds are being expended in full accordance  with these statutory and regulatory requirements.

We are making a total of three recommendations, one to each of the  three agencies in our review, to take steps to manage grantees’  compliance with the Stevens Amendment. Specifically:  The Secretary of Labor should direct its subagencies, other than ETA, to  design and implement a process to manage and administer grantees’  compliance with the Stevens Amendment, including determining to what  extent to provide guidance to grantees on calculations. (Recommendation  1)

The Secretary of Health and Human Services should direct its operating  divisions to design and implement processes to manage and administer  grantees’ compliance with the Stevens Amendment, including  determining to what extent to provide guidance to grantees on  calculations. (Recommendation 2)

The Secretary of Education should design and implement a process to  manage and administer grantees’ compliance with the Stevens  Amendment, including determining to what extent to provide guidance to  grantees on calculations. (Recommendation 3)

We provided a draft of this report to DOL, HHS, and Education for review  and comment. We received written concurrence from DOL, and written  comment letters from DOL’s OSHA, HHS, and Education. The comment  letters are reprinted in appendixes I, II, and III, respectively and are  summarized below.

DOL stated that it concurs with our recommendation. OSHA provided  written comments and stated that it generally agreed with GAO’s  recommendation. OSHA said it will take steps to establish processes to  monitor grantee compliance with Stevens Amendment requirements, to  include reviewing what assistance the agency can provide to grantees on  how to calculate funding percentages. OSHA further stated that it has  begun updating its grant and cooperative agreement instructions to  include the Stevens Amendment language verbatim, rather than  paraphrasing the language, and is adding guidance to grant monitoring  guidelines to assist OSHA’s Regional Offices in reviewing compliance  with the Stevens Amendment.

DOL subagencies ILAB, BLS, ETA, and ODEP also provided technical  comments, which we incorporated into the report where appropriate.

In its written comments, HHS stated that it concurs with our  recommendation and would implement the recommendation to the fullest  extent feasible. HHS officials said they would direct all operating divisions  to design a process for implementing and monitoring the Stevens  Amendment and would update HHS grants policy to reflect this new  process.

HHS also provided technical comments, which we incorporated into the  report where appropriate.

Education provided written comments stating that it did not concur with  our recommendation, but would consider enhancing its existing approach  to compliance with the Stevens Amendment. We reiterate our  recommendation that Education should design and implement a process  to manage and administer grantees’ compliance with the Stevens  Amendment, including determining to what extent to provide guidance to  grantees on calculations.

Education had three concerns regarding the recommendation. First,  Education said that our recommendation is not based on any evidence of  noncompliance with the Stevens Amendment by Education grantees. As  noted in our report, we found that Education lacks information regarding  whether its grantees are, or are not, complying with the requirements of  the Stevens Amendment. As indicated in this report, Education officials  told us that they do not collect documentation from grantees to monitor  their compliance with the Stevens Amendment, nor do they analyze  information regarding the extent of grantee compliance with the Stevens  Amendment.  As a consequence, Education does not know the extent to  which its grantees are or are not complying with the statutory  requirements of the Stevens Amendment. Without this knowledge,  Education does not have assurance that its grant awards are managed  and administered in accordance with federal regulations.

Second, Education referred to its tiered risk-based approach to grantee  monitoring that balances compliance requirements with limited monitoring  resources in alignment with the President’s Management Agenda.  According to Education, implementation of the recommendation would  require them to devote limited resources to managing and administering  grantee compliance with the Stevens Amendment when there is no  evidence of grantee noncompliance. We acknowledge that the cross- agency priority goal in the President’s Management Agenda refers to  maximizing the value of grant funding by applying a risk-based, data- driven framework that balances compliance requirements with  demonstrating successful results. However, because Education does not  collect information or documentation on this aspect of grantee  compliance, it lacks the data needed to make an informed risk-based  assessment with regard to monitoring for Stevens Amendment  compliance. The recommendation could be implemented within the  context of Education’s risk-based approach to grantee monitoring as long  as Education gathers the grantee compliance information needed to apply  their risk-based, data-driven framework.

Third, Education said that it has already taken numerous steps to make  its process for awarding and overseeing grant funds transparent to the  public. However, these steps do not eliminate the legal requirements that  grantees must comply with the Stevens Amendment, and that federal  agencies, including Education, must manage and administer the federal  award in a manner that is fully in accordance with statutory requirements.  Education did state that it would consider enhancing its existing approach  to Stevens Amendment compliance with actions that further explain the  requirements to grant recipients. While such efforts could enhance  grantees’ understanding of the Stevens Amendment, they would not give  Education the grantee compliance information it needs to apply to a risk- based, data-driven framework or to manage and administer its grant  awards in accordance with federal regulations. For all of these reasons  we continue to believe that our recommendation to Education is valid and  that Education should fully implement it.

We are sending copies of this report to the Secretaries of Labor, Health  and Human Services, and Education, as well as interested congressional  committees and other interested parties. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-6806 or sagerm@gao.gov. Contact points for our offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix IV.

Appendix I: Comments from the Department of Labor’s Occupational Safety and Health Administration

Appendix II: Comments from the Department of Health & Human Services

Appendix III: Comments from the Department of Education

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Tom James (Assistant Director),  Anthony Bova (Analyst-in-Charge), Jacqueline Chapin, Jehan Chase,  Robert Robinson, Wesley Sholtes, and Walter Vance made key  contributions to this report.

Former Senator Ted Stevens once said that taxpayers "ought to be informed how much money comes from federal sources in any program, project, or grant activity." To that end, people who receive grants from the Departments of Labor, Health and Human Services, and Education are required to publicly disclose the amount of their federal grant program funding.

We found that most Department offices didn't manage grantee compliance with the disclosure requirement—except for Labor's Employment and Training Administration (whose grants comprise over 95% of Labor's total grant dollars).

We recommended that HHS, Education, and the rest of Labor do so.