A Proposal for Better Management of Federal Grants

The Office of Management and Budget today published a significant set of proposed reforms to improve the way we administer the more than $600 billion awarded annually for grants and other types of Federal financial assistance. This grant reform proposal entitled “Proposed Uniform Guidance: Cost Principles, Audit, and Administrative Requirements for Federal Awards,” combines the multiple Federal regulations that currently govern the way we administer grants into a single, comprehensive and streamlined uniform policy guide.  It is intended to both increase the efficiency and effectiveness of grant programs by eliminating unnecessary and duplicative requirements and strengthen the oversight of grant dollars by focusing on areas such as eligibility, monitoring of sub-recipients, adequate reporting, and other areas that are potential indices of waste, fraud or abuse.

The reforms in this proposal make further progress on implementing President Obama’s November 2009 Executive Order 13520 on reducing improper payments and eliminating waste in Federal programs, and the February 2011 Presidential Memorandum on promoting administrative flexibility. Following OMB’s February 2012 publication of potential grant reform ideas in the Federal Register, we received hundreds of comments and suggestions, which we carefully considered as we worked with the Council on Financial Assistance Reform to develop this proposal. We also worked collaboratively with stakeholder groups in the grants community to identify policies in need of clarification and simplification – with the goal of improving grant management, accountability, oversight, and overall performance. 

 Specific measures in the proposal include:

•  Harmonizing and streamlining all OMB guidance on grants from eight documents into one, while clarifying key differences for different entities;
• Simplifying the reporting requirements that grantees must adhere to in justifying salaries and wages charged to grants;
• Ensuring that Federal agencies better review financial risk posed by applicants and merits of an application before providing a grant;
• Providing guidance to ensure robust oversight of sub-recipients;
• Focusing more audit resources on preventing waste, fraud, and abuse; and
• Holding agencies accountable for getting results and addressing weaknesses among grant recipients.

The Administration believes these reforms will make a significant contribution to improving Federal grant-making and outcomes for the American people. And we welcome ideas to make them even better and encourage the public and stakeholders to go to Regulations.gov (docket OMB-2013-0001) to review and comment on our proposal.

Danny Werfel is Controller of the Office of Management and Budget