Detailed Information on the
Rural Business Enterprise Grant Program Assessment

Create long term performance measures that will incorporate long term business or job stability.

Improve efficiencies within RD administration, decreasing the amount of time it takes to get NOFAs out and grants awarded

Increase the number of RBEG awards to communities that have high rates of poverty or unemployment.

Measure: Number of jobs created and/or saved through assistance provided to rural businesses.

Explanation:Provides a basic count of the impact of business assistance on jobs. Jobs create personal and household wealth. Creation/retention projections are provided by grantees at the beginning of a project to show how many jobs are expected to be created or retained (but for the grant would have been lost). After a grant is provided, job creation/retention figures are verified over time. Baseline/Target goals for years 2007 through 2011 were established by increasing the actual accomplishments in FY2006 by 2.5% each year, under the assumption that funding levels will remain constant. While the 2005 actual performance is higher than 2006, the five year historical average is under 20,000. RBE Grants promote economic development through an array of eligible activities that promote the development of small and emerging businesses in rural areas. Business development leads to jobs. At least one job is created for each new business established. As new businesses emerge and small businesses grow, jobs are added. In times of distress, jobs may be retained that otherwise would have been lost but for an economic development project. Jobs are used as an indicator of economic well being. Therefore, RD measures job creation and retention to indicate the impact of funding on rural economies.

Measure: Number of businesses assisted with program funds

Explanation:Number of businesses assisted with program funds" provides a basic count for distribution of dollars to projects. By measuring the number of businesses assisted we can understand the direct impact of the program on rural business development. Targets and baselines were established based on 2004 program performance. Targets were set assuming funding levels would remain constant in future years, a trend reflected in previous years. The targets were increased again by 2.5% in keeping with the pattern established in annual measure one. Annual targets have been set using the same goal of increasing activity by 2.5% each year. These targets are considered ambitious because they seek increased activity based on the expectation of level funding.

Measure: Cumulative number of direct jobs created and/or saved over a three year period

Explanation:Allows Rural Development to look at the long term effect of grants awarded during a given cohort year, at the end of a three year period. Baselines were established using measure 1 figures extended for a three year period. RBE Grants promote economic development through an array of eligible activities that promote the development of small and emerging businesses in rural areas. Business development leads to jobs. At least one job is created for each new business established. As new businesses emerge and small businesses grow, jobs are added. In times of distress, jobs may be retained that otherwise would have been lost but for an economic development project. Jobs are used as an indicator of economic well being. Therefore, RD measures job creation and retention to indicate the impact of funding on rural economies.

Measure: Cumulative number of businesses assisted over a three year period.

Explanation:This measure counts the number of businesses assisted with federal funding over the long term and is calculated using figures in measure 2 over a three year period, These targets are aggressive because they reflect increased long term activity within the expected constraints of level funding. In general, the measure looks to increased the impact of RBEG over time. After a grant is provided, the job creation and retention numbers are verified. The measure tracks each cohort year of funding for three years of activity to ensure that job creation and business assistance goals continue over time, ensuring strengthened business sectors and long term job growth.

Measure: Mean Average Days between obligation and ratification of the grant agreement

Explanation:In order to gauge the efficiency with which Rural Development (RD) staff delivers programmatic information and technical assistance regarding the grant application process under the Rural Business Enterprise Grant (RBEG) program, the time between obligation of a grant and ratification of the grant agreement will be measured. Funds are obligated to a grantee at the time of selection. However, funds cannot be disbursed until after a completed grant agreement is signed. Generally, conditions on a grant agreement cause a period of time to elapse between obligation and ratification. RD believes that a small number of conditions will require a small time span. Likewise, a long list of conditions will result in a lengthy time span. Measuring the time span should determine how well our field offices are preparing prospective grantees for the application process, and the quality of advance planning and up front training provided to customer organizations. During the past three years, the time has increased. The goal is to reduce the time to 95 days or less, which is equal to the 2005 level and more than 32% less than the 2006 level. As targets are reached, we will continue to adjust downward to work toward increase levels of efficiency.

Measure: Mean Average Days between approval and final disbursement of grants

Explanation:To gauge the efficiency with which RBEG dollars are distributed to grantees, Rural Development will measure the number of grants fully disbursed as a ratio of the number of grants approved (with ratified grant agreements). Determining the project completion rate measures how well staff is meeting the overarching goal of selecting grantees that can effectively manage and administer RBEG projects. A high ratio of grants approved to grants fully expended will demonstrate the success ratio and illustrate RD staff effectiveness in grantee selection. It will also measure staff capability for delivering funds in a timely manner. The aggressive goal of 100% of grants completed within the appropriate time frame sets a high expectation for delivery of services but takes into account unforeseen difficulties at the grantee level such as changes in key personnel or other issues that affect small organizations. Compared to 2006, the new measure almost doubles the efficiency expectation.

Measure: The ability of organizations to complete their work within a three year period as evidenced by the amount of grants fully disbursed over a three year period.

Explanation:To gauge the efficiency with which RBEG grantees are able to complete funded work, Rural Development will measure the amount of grants fully disbursed within a three year period as a ratio of the amount of grants approved (with ratified grant agreements). The project fund disbursement rate measures staff ability to meet the overarching goal of selecting effective grantees, and measures grantee ability to complete work. Efficiency is illustrated by a high ratio of dollars approved (Cohort Year) to dollars fully expended in the reporting year. The aggressive goal of 95% of grants completed by the end of the three year period sets a high expectation for delivery of services but takes into account unforeseen difficulties at the grantee level such as changes in key personnel or other issues that affect small organizations. .

Is the program purpose clear?

Explanation: Rural Business Enterprise Grants are made to public bodies and private nonprofit corporations to finance and facilitate development of small and emerging private business enterprises and for the creation, expansion, and operation of rural distance learning networks or rural learning programs that provide educational instruction or job training related to potential employment or job advancement to adult students in rural areas. The purpose of the RBEG program is stated in statute and codified in regulation. RBEG Program Objectives are stated in the Catalog of Domestic Assistance at item 10.769. Excerpts are provided in evidence.

Evidence: The program is authorized in Section 310B(c ) of the Consolidated Farm and Rural Development Act, as amended (7 U.S.C. 1932 (c )). A goal or core mission of USDA is to increase economic opportunity in rural America. This is reflected in USDA's (FY 2007-2012) and Rural Development's (FY 2006-2011) strategic plans. The public can also access the USDA's website at www.usda.gov for program information.

Does the program address a specific and existing problem, interest, or need?

Explanation: RBEG addresses the need for rural revitalization and communication tools in isolated areas and regions suffering from economic distress. It provides assistance to improve employment conditions via retention, expansion and/or operation of rural distance learning networks or rural adult education programs for job training instruction; and assistance to improve public transportation services or facilities in rural areas where transit options are limited. Distance from metro centers is associated with lower earnings and fewer job opportunities for educated workers. Access to centers of information, communication, trade, and finance enable a smaller economy to connect to national and international marketplaces. RBEG funds also improve infrastructure; revitalize and/or expand existing rural businesses for job creation or retention; attract new businesses (avoiding funding for relocation of large employers from one community to another); and develop community economic decision making skills.

Evidence: Amber Waves; The Economics of Food, Farming, Natural Resources, and Rural America, volume 4, issue 5, page 8, November, 2006 Agency Guaranteed Lending System (GLS) and financial data. Economic Research Service Briefing Paper dated October 2003 discusses the following data from the 2000 decennial report of the Bureau of Census: Metro area per capita income ($32,077) exceeded per capita income in micro ($23,338) and non-core rural areas ($21,005) by 28% and 35%, respectively. Rural family income ($41,012) well below urban family income ($54,657).) And, USDA's Economic Research Service Rural America at a Glance, 2006 Edition Economic Information Bulletin Number 18, August 2006, page 3 shows the 2005 non-metro adjusted unemployment rate at 9.6 percent compared to 8.8 percent in metro areas.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The RBEG program is similar to the Community Facilities Grant program. It is duplicative of other programs found within Rural Development and Federal programs in the Commerce, Housing, Treasury, and Health departments. All of these programs can provide support for similar infrastructure and business activities in the same region of the country.

Evidence: Community Facility Grant Program: http://www.rurdev.usda.gov/rhs/cf/brief_cp_grant.htm Though not all of the programs listed on the following websites duplicate RBEG activities, many of them have similar goals and objectives. Department of Commerce programs: http://www.eda.gov/AboutEDA/Programs.xml Department of Housing and Urban Development programs: http://www.huduser.org/resources/hudprgs/ProgOfHUD06.pdf Department of Treasury's Community Development Financial Institutions Fund: http://www.cdfifund.gov/who_we_are/about_us.asp Department of Health and Human Services Grants and Funding Opportunities: http://grants.nih.gov/grants/index.cfm

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: This program has no major design flaws. It is efficient and effective in providing assistance as evidenced by: The grant program is consistent with the program objectives to support business expansion and development and provide jobs to increase economic opportunities in Rural America. Applicants are ranked on their ability to support the program objectives. The Agency uses a check and balance system for servicing and collections if at any time a grantee is determined not eligible for all or part of the financial assistance received. Successful administrative design is evidenced by continued high participation and the number of applications/unmet need each year-end. Long term effectiveness is monitored via regularly scheduled field visits throughout the life of a project. In the case of projects involving real property, such field visits occur for as long as the grantee retains the property, which may be as long as 20 or more years. This ensures continued use of RBEG supported facilities for eligible purposes. RBEG quality controls include a check and balance system for servicing and collections, regular reporting requirements, site visits, and documented follow-up meetings throughout the life of the grant. Systems are in place to rectify inappropriate expenditures and recuperate unauthorized funding. Non-performing grantees are subject to revocation of funding. Effectiveness data is gathered by the mandatory Guaranteed Lending System (GLS) tracking system which monitors RBEG grant status (and other loan and grant programs) and collects performance data. Dollar output is leveraged with non-federal funds at a ratio of 1:1.22. With all of the checks and balances and program specifications there is no strong evidence that anotherapproach would be more efficient or effective.

Evidence: Per GLS and financial data, during FY 2003-2006, 92 grants (over $20.8 million) were made in Empowerment Zones/Enterprise Communities and 72 grants (over $8.8 million) were made to assist Native American communities. The following citations evidence grant servicing checks and balances 7 CFR Subpart 3015, §3015.80 - 3015.94; 7 CFR Subpart 3016, §3016.40 - 3016.51; 7 CFR Subpart 3019, §3019.50 - 3019.53 & 3019.60 - 3019.62, & 3019.70 - 3019.73; 7 CFR Subpart 1951-O; 7 CFR Subpart 1951-R, §1951.882 - 1951.896.(See Attachments 1J, 1K, 1L, and 1M) 1.4.4 GLS and financial data 1.4.5 See Attachment 1O) comparing the existing rule with highlights of the anticipated proposed rule.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: RBEG effectively targets rural residents, with high priority placed on communities who have less than 5,000 people, have high unemployment rates, or where the population lives below the poverty rate as defined in 7CFR 1942.305(b)(3). This is completed through regulation and administration. RBEG is administered through a nationwide network of 767 State, Area, and Local offices that generally operate close to the principal market. This network enables RD personnel to work directly with rural residents/small businesses/communities, and the organizations that provide information and access in rural areas. This contact makes it easy for RBS to ensure that the right beneficiaries are targeted and that no unintended subsidies occur. RD markets RBEG through multiple media, helping customers with the capacity to initiate an independent search web-based search: (web based Catalog of Federal Domestic Assistance, USDA website at www.USDA.gov/Rural Development/Business Programs/Programs/Rural Business Enterprise Grants, and S/O based websites. For those without electronic capabilities, assistance may be received directly from any RD office nationwide or the Business Programs office in Washington, or through local or private partner organizations. Marketing and delivery has resulted in full utilization of funds in each of the past five fiscal years. This has occurred via an established evaluation system that prioritizes rural clients to ensure delivery to the smallest and neediest communities. RBEG job creation and retention data for the past five years shows significant effect. Some RBEG funds are earmarked for high need zones such as Empowerment Zones/Enterprise Communities and Native American communities. RBEG awards points for matching funds to encourage local investment. RBEG does not subsidize projects without need, funding only those projects that would not occur in the private sector. After grantee selection, delivery of funds is dependent on adequate activity and financial performance as reported by grantees. Verification is conducted via annual site visits by field personnel. Open communications are maintained between field staff and grantees. The program ensures effectiveness via local oversight by RD staff available in rural communities near the grantees and have first hand knowledge of local needs and grantee accomplishments ensuring that resources reach the intended targets.

Evidence: 1.5.1 7CFR, §1942.302 1.5.2 7CFR §1942.305(b) Business Programs Activity Reports, 2002- 2006

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: Yes, specific long term performance measures have been established that focus on job creation/retention and business assistance outcomes that meaningfully reflect the purpose of the program, which is to facilitate jobs and assist business development. They are: "Cumulative number of direct jobs created and/or saved over a three year period" is "Cumulative number of businesses assisted over a three year period". Please see evidence and performance measures section for explanations of measures. The measures look to increased the impact of RBEG over time. After a grant is provided, the job creation and retention numbers are verified. The measures track each cohort year of funding for three years of activity to ensure that job creation and business assistance goals continue over time, ensuring strengthened business sectors and long term job growth.

Evidence: Data is collected via the Guaranteed Lending System (GLS)--the standard program data reporting system for all programs administered under Rural Development's (RD) Rural Business and Cooperative Service. The first long term measure is "Cumulative number of direct jobs created and/or saved over a three year period" This allows Rural Development to examine the long term effect of RBEG funding on employment levels for any given cohort year and the long term trends over time. Baseline targets were established in accordance with annual job creation/retention baselines. The second long term measure is "Cumulative number of businesses assisted over a three year period". This measure allows RD to count the number of businesses assisted with RBEG funding over the long term and relates directly to annual business assistance data. Performance measures are established based 7CFR §1942.302 which states that the program will be used to support the development of small and emerging private business enterprises and, on 7CFR§1942.305(b)(3)(ii) which sets economic conditions, specifically unemployment rates, as a priority scoring criteria in the grantee selection process.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: Yes, the RBEG program has ambitious targests and timeframes for its long term measures. Long term measures have been established and track cohort year activities over ongoing three year time frames for job creation/retention and business assistance performance measures. Targets have been developed under the assumption that funding remains constant and are based on historic data and aggressive expectations. Long term measures are also reflected in the established annual measures. Targets steadily increase over time to ensure that funding reaches increasing numbers of recipients and beneficiaries. Targets also ensure that activity will result in long-term outcomes in terms of rural job creation and retention. A reduction in any cohort year activity over time could result in targets being unmet. Meeting the established targets will require higher levels of performance than in the past. Targets seek an annual increase of 2.5% over the previous three year period for each measure.

Evidence: Data is collected via the GLS. The long term targets and time frames require that three years worth of activity be added together each year for a full measure of long term outcome. This allows tracking of activity by cohort year for three years out. Data can be verified on an on-going basis so that trends can be tracked every three years or incrementally during the longer term to allow for comparison of cohort years over time.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: Annual performance measures have been established and are used as the basis for development of long term measures as discussed in question 2.1. The first measure is "Number of jobs created and/or saved through assistance provided to rural businesses". This measure quantifies the effect of funding on employment. Jobs created are those that are new to a community as a result of funding. Jobs saved (retained) are those that, but for grant funding, would have been lost. The second measure is "The number of businesses assisted with program funds." This measure allows RD to quantify the direct effect of funding on rural business development in terms of the number of businesses "touched." It also provides a measure against which other analyses can be made when compared with job creation measures. The annual measures tie directly into the long term goals. With increased work efficiencies and more targeted grant solicitations, more jobs and buisnesses will be created and sustained.

Evidence: Established annual performance measures are tracked using the GLS. Data is verified at the field level. Established measures were developed with long term goals in mind. Data collected annually can be used independently or utilized directly in concert with long term expectations. Established measures are available in the Performance Measures section of the PART. Performance measures are established based 7CFR §1942.302 which states that the program will be used to support the development of small and emerging private business enterprises and, on 7CFR§1942.305(b)(3)(ii) which sets economic conditions, specifically unemployment rates, as a priority scoring criteria in the grantee selection process.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Baselines have been established for the RBEG annual measures using 2004 data. Ambitious targets have been established using historical data and, as with long term measures, aggressive expectations. Annual targets have been established assuming level funding for the coming years and with the intent to establish a pattern of improvement over time. The measures are explained and evidenced in PART-web. Annual performance measures and targets for job creation/retention and business assistance and provide aggressive expectations against which performance can be measured annually. Data for Fiscal years 2004 through 2006 are provided to illustrate performance to date and to support the measures as evidenced. Agency data is continually updated via the GLS system based on actual activity. Established targets seek an annual increase of 2.5% in the number of businesses assisted and jobs created or retained over each previous year.

Evidence: Historical data source, Business Programs Activity Reports Unnumbered Letter dated March 7, 2006, titled Accuracy, Completeness, and Timing of Program Data Entered Into Guaranteed Loan System

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: All partners commit to and work toward the goals of the program throughout the application, selection, and post-award/oversight process. Applicants exhibit their commitment to program goals in their Scope of Work and/or Workplans. These documents estimate the expected number of businesses assisted and jobs created/retained in accordance with 7CFR, §1942.313 and §1942.314. They also provide estimated completion dates which may be used to anticipate efficiency expectations. The application process requires documentation to the extent that only committed and capable applicants will score well enough to be selected. Without such advance commitment, application approval is unlikely. Selected grantees submit regular performance reports to collect data and continually measure activity, accomplishments, and project progress. Grantees also sign a project management agreement that further commits to program goals. Field offices review and process payment requests based on activity, providing grantee monitoring. Local commitment to the project is also monitored in terms of matching fund activity. Regular site visits ensure close communication between the grantee, its partners, and the Agency as all parties work together to reach the original goal. GLS data is updated as appropriate. After disbursement, especially in cases involving real estate, site visits ensure compliance. Grant closeout occurs when completion of work is evidenced and funds have been expended.Annual program performance goals are tied to employee performance ratings. Performance targets are included in the critical elements for management employees.

Evidence: 2.5.1 7 CFR, Part 1942G, §1942.313 and §1942.314. The Scope of Work will be used to measure the performance of the grantee. Attachment 1 of RD Instructions 1942-G, Guide 1 2.5.4 7CFR Part 1951-E §1951.215

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Independent evaluations of RBEG are not conducted at a level needed to support a yes response. Independent evaluations are conduced but not on a regular basis and generally in response to a specific concern. For example, In September, 2004, OIG published its report entitled, Rural Business Cooperative Service Television Demonstration Grant Program (Audit 34099-01-Hy). The Television Demonstration Grant Program is a sub-set of the RBEG program. And, in July, 2000, OIG published its report entitled, Rural Business Enterprise Grant Vivero Caimito Project (OIG Audit Report 34004-04-HY) as the result of an audit initiated due to two hotline complaints expressing concerns regarding the grantee. Internally, the RD Financial Management Division (FMD) periodically reviews RBEG. Pursuant to 7CFR §2030.106, FMD is RD's designated GAO liaison office. FMD also acts in an oversight capacity, coordinating Management Control Reviews (MCRs) to evaluate National Office program management practices and State Internal Reviews to evaluate regulatory compliance and program effectiveness at the State Office level. RBEG was the subject of an MCR during FY2001 and also during FY2006 (evidence 2.6.4). The Rural Business and Cooperative Service Oversight and Coordination Staff (OCS) maintains a contract with the Farm Service Agency to administer Business Program Assessment Reviews (BPARs). While not independent, these reviews are designed to identify program management weaknesses at the state level. The RBEG program is included in the items that are examined during the BPAR process.

Evidence: OIG Audit Report 34099-01-Hy OIG Audit Report 34004-04-Hy Management Control Review of the Rural Business Enterprise Grant Program (FY2001) Management Control Review of the Rural Business Enterprise Grant Program (FY2006)

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Due to Rural Development's structure, administrative costs are not incorporated into the program's budget request. Though RBEG performance measures will be reported, the full costs associated with running the program are not incorporated. Rural Development's administrative expenses are provided in one lump sum, without program specification. Funding provided in a budget request goes directly to the recipient.

Evidence: See President's Budget for FY 2005, 2006, 2007, and 2008.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The most recent update of the RBEG regulation occurred in the early 1990's. To keep abreast of developments in the program, it had been the practice to issue Administrative Notices. Upon expiration, those notices would be re-issued if they continued to be valid. To address this deficiency, a Proposed Rule is currently in clearance that will update and improve the program. A timeline for the remainder of the clearance process, through publication of the final, estimates a late June or early July publication date. Also since 2004, improvements in data collection have occurred and the importance of the efficacy of data and the use of the GLS data collection and management system is continually highlighted via several ongoing sources. Data quality is at the forefront of continuing efforts. The need for consistent and correct use of the GLS data management system is highlighted.

Evidence: Publication date for Proposed Rule, April 20, 2007; Data collection and management system discussions occur regularly via on going sources such as (bi-monthly teleconference calls, at staff meetings, training sessions) The GLS Users Guide provides instruction for appropriate input. A user liaison team was established during late 2006 to ensure clear communication with the field regarding data requirements.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The program regularly collects performance data via the GLS system as previously mentioned in the responses to questions 1.4. and 2.5 This data includes projected job creation and retention data, business assistance data, verified job creation and retention data, internal processing time data, and project completion data. Agency data collection begins at application, occurs regularly, and does not cease until the grant is fully disbursed and closed. The GLS tracks loan and grant information including specific performance outcomes. Data is verified via regular reporting in accordance with OMB guidelines and Agency servicing regulations and site visits. Throughout the performance period, submitted reports and verifying site visits measure progress to ensure credibility, appropriate use of funds, and appropriate levels of key partner involvement. Funds are disbursed in accordance with submitted reports. A final Project Performance Activity Report must be completed by the grantee. Data is again verified. Audits are required when appropriate to the level of Federal Funds advanced. State offices are advised to complete a site visit at least once a year to both the grantee and ultimate recipients and, when personal property is purchased with grant funds, a site visit be completed every two years until the property is disposed of. Results are reported annually. Based on performance results, the Agency is able to make informed decisions regarding budget allocations, and consider other appropriate steps in managing the RBEG program. Performance is integrated into the budget. The National Office publishes data in annual activity reports. In addition, field personnel work closely with the National Office to ensure that partner and field staff concerns are considered and addressed. This allows significant opportunity for stakeholders to be involved in the evolutionary process of program improvements. Baseline data have been developed so that meaningful and ambitious targets can be set, and met.

Evidence: Annual Business Programs Activity Reports

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Managers responsible for achieving key program results are identified. At the field office level, these are the State Directors and the Program Directors. At the National office level, these are the Administrator, Rural Business and Cooperative Service, the Deputy Administrator, Business Programs, the Director, Specialty Lenders Division, and the Chief, Processing Branch of the Specialty Lenders Division. Managers and employees of the State offices are held accountable for their performance. Their authority to act on programmatic issues can be revoked if they do not administer the program accordingly. For example, in July, 2000, an OIG investigation concluded that a grant awarded in Puerto Rico had been inappropriately awarded to an organization not in a rural area. As a result, the Puerto Rico State Office lost its authority to approve grants at the state level. Additional personell actions were taken. National Office staff individual performance ratings are tied to program performance measures. The quality of grant applications submitted to the National Office for final evaluation, and the quality of the National Office review process have a direct impact on the ability of the Agency to meet the goals of the program. State Directors, National Office Directors and higher ranking officials sign attestations as to the accuracy and completeness of the data that reports program results. Grantees are held accountable for meeting the scope of work of each project, signing an agreement in advance of any disbursement of funds. Failure to successfully reach project goals and expectations can result in non-payment of submitted invoices (until appropriate corrections are made or until the grant is terminated) and reduced opportunity for future funding. Failure to follow through with responsibilities can result in a demand for repayment of funds. Other circumstances such as an erroneous eligibility determination may also result in collection of a grant. Collection actions are conducted in accordance with OMB Circulars and Grant Servicing Regulations.

Evidence: 7 C.F.R. 2006-I discusses the accountability and accuracy of data. Grant Agreement/Letter of Conditions See response to question 1.4

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: Funds are obligated to projects that meet the eligibility requirements and priorities of the program regulation. The National Office provides written guidance through the use of RD Instruction 1940-L, Exhibit A, Attachment 1, to assure funds are appropriately obligated and otherwise committed. Field offices use OMB's Cost Principles Circulars when reimbursing grantees for approved expenses. All monitoring of funds is done through the Guaranteed Loan System. Though RD receives a yes for this answer, they currently have a considerable time lag between when the recipients are announced and when they receive their award. In 2004 it only took the agency 54 days to fill out the proper paperwork; in 2006, RD took 140 days. To manage this problem RD created an efficiency measure that will promote administrative performance.

Evidence: The Agency prepares RD Instruction 1940-L Exhibit A, Attachment 1, annually. This provides the field with the allocations for the fiscal year, procedures for accessing National Office reserve funds, and pooling of unobligated funds. 7 C.F.R. Part 1942-G discusses eligibility and priority and OMB Circulars A-21, A-122, A-87 and FARS 31.2 covers the allowable expenses for projects.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: To decrease overhead costs and improve efficiencies, RBS is focusing considerable levels of time and energy into adopting new IT streamlining technologies. The agency continues its involvement with the E-Gov initiative continually moving closer to a paperless, centralized, government grants application system. In addition, the agency relies on electronic media to transfer application and award information and to manage performance data. This reduces the use and cost of paper, speeds and reduces the cost of response time, and allows for the free flow of data for better information management. Additionally, the Agency is working on the E-authenication initiative to have borrowers/grantees authenticate their signatures in person one-time at a field office location. Once this completed, the borrower/grantee can submit requests for reimbursements or advances or any information basically using an e-signature via the world wide web. The Agency also calculates the burden to the public and estimated cost of administering the program via Agency personnel with in the paperwork burden package of 7 C.F.R. Part 1942, subpart G. Efficiency measures have been established to allow better analysis of program execution issues. Future efficiency improvement plans are expected to be developed based on efficiency data gathered over time under the new measures.

Evidence: Agency participation on the individual initiatives. Paperwork burden package of 7 C.F.R. Part 1942, Subpart G.

Does the program collaborate and coordinate effectively with related programs?

Explanation: The RBEG Program has joint goals with other Agency programs to target rural communities and customers with the greatest need. This allows the RBEG grant recipients to best utilize funding as needed in their communities and in conjunction with other programs to produce a synergized end product- one in which the results of the whole can be greater than the sum of its parts because the level of federal funding received is better able to leverage financial and community participation. RBEG's flexibility allows it to be used where other programs may not have authority, permitting the best use of limited funds to help the neediest rural areas. To further illustrate collaboration in the administration of the RBEG program, funding instruction 1940-L delineates how funds will be managed each year. The Agency administers RBEG funding through agreements with several organizations including the Delta Regional Authority, the Appalachian Regional Commission and the Economic Development Administration. These regionally based, federally authorized organizations are assisted by Rural Development in the administration of programs offered by those agencies through the Rural Business Enterprise Grant Program. This adds to efficiency across government. Because the other agencies rely on USDA's expertise in delivery, economies of scale can be achieved, and needless development of new processes (and the incumbent salary and expense costs) can be avoided. All grants approved from the other agencies must meet the requirements of 7 C.F.R. Part 1942, subpart G. Field offices administer the grants at their level. This results in consistency within the Federal Government and eases access for beneficiaries.

Evidence: 3.5.2 7 C.F.R. Part 1942, subpart G Memorandum of Agreement between Delta Regional Authority and Rural Development Memorandum of Understanding between the Appalachia Regional Commission and Rural Development Memorandum of Understanding between Economic Development Administration and Rural Development

Does the program use strong financial management practices?

Explanation: The Agency utilizes standard checks and balances in the management of federal funding. Funds are initially allocated for use by State Offices in making local grant determinations based on local competition. Funds are transferred to organizations only after appropriate evidence of grant activity and performance has been provided. Field offices obligate grants, provide performance oversight, and approve disbursements to grantees for allowable expenses. Funds are deposited directly into grantee accounts after payment requests have been appropriately examined. Reports generated by the GLS are used to track obligations and monitor use of funds. Each grantee must have a financial management system in place in accordance with 7 C.F.R. Part 3015 to receive grant funds. 7 C.F.R. Part 1942, Subpart G, was re-written to include a provision for the Agency to terminate grants that have any outstanding balances after 3 years, especially in the case of a revolving loan fund projects. This will give the Agency a chance to re-allocate those funds before the Treasury symbols expire and funds are lost. According to the most recent available USDA Performance and Accountability Report, Audit follow-up ensures that prompt and responsive action is taken once management decisions are reached on recommendations contained in final audit reports. USDA agencies are required to prepare combined time-phased implementation plans and interim progress reports for all audits that remain open one or more years beyond the management decision date. Time-phased implementation plans are submitted at the end of each quarter. They are updated to include newly reported audits that meet the one-year past management decision criterion. These plans contain corrective action milestones for each recommendation and corresponding estimated completion dates. There are no outstanding audit requirements for RBEG at this writing.

Evidence: GLS Table of Contents 7CFR part 3015 USDA Performance and Accountability Report for FY2003, Systems, Controls and Legal Compliance available at www.ocfo.usda.gov/usdarpt/par2003/pdf/par05.pdf copy of proposed rule for RBEG re-write

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The Agency consistently uses its internal processes to identify and correct program management issues to stop problems before they become deficiencies. These internal processes include the BPAR and MCR. BPARs evaluate program management on a State by State basis and are used to internally identify program weaknesses. Each report provides recommendations for correction of deficiencies and States are responsible for developing plans of action to correct identified concerns. The Agency typically reviews 10 States annually. MCRs look at program management at the national office level on a program by program basis to identify weaknesses and recommend corrective action. As a result of concerns reported via BPAR and MCR activities, GLS has been updated to include mandatory input fields on performance outputs. Clarifications are issued via internal issuances. Further, as discussed in the response to question 1.4, a proposed rule is currently in clearance that will strengthen the RBEG program.

Evidence: Business Program Assessment Reviews Handbook draft Management Control Review of the Rural Business Enterprise Grant Program (FY 2001, and FY2005)

Are grants awarded based on a clear competitive process that includes a qualified assessment of merit?

Explanation: Competition and priority scoring are administered in accordance with 7 C.F.R. Part 1942, subpart G, section 1942.305(b)(3). The majority of funds appropriated for the program are distributed to State Offices via controlled allocations. Generally, 10% to 15% of the appropriated funds are held in the National Office for national competitive funding. All funding deadlines are discussed in RD Instruction 1940-L, Attachment 1, Exhibit A, issued annually. Federal Register notices are completed where appropriate for earmarked funds. States spend their allocations by selecting the highest-ranking applications received. States that deplete their allocations may submit grantee applications for competition for National Office reserve funds. Starting with the highest-ranking application received nationwide, the highest-ranking application per State is selected until the National Office reserve is exhausted. This ensures that the Agency is distributing funds to competitively qualified organizations on a geographical basis. If two or more organizations share an equally competitive score, and are qualified for funding, selection decisions are based on the viability of the projects in accordance with the funds available.

Evidence: 7 C.F.R. Part 1942, subpart G, section 1942.305(b)(3) RD Instruction 1940-L, Attachment 1, Exhibit A Federal Register Notice Volume 71, No.223, November 20, 2006, page 67095

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: Oversight is built into RBEG administration and management at several levels. At the State Office level, oversight begins with the application process as prospective grantees certify to the veracity of statements made in their applications. Once selected, grantees must submit quarterly financial and activity reports in order to obtain fund disbursements. Verification of purpose, use of funds, and performance results is completed by the field offices. Reports are analyzed by RD field staff and supported via site visits and regular contact with grantees. The Agency uses the GLS system to track and report fund use, performance, and oversight activity. Reports are required, and follow-up visits made, to ensure that general compliance requirements such as civil rights and environmental responsibilities are met. Controls are built into the program to ensure that any funds inappropriately expended are acted upon for recovery and funds inappropriately obligated are deobligated. The BPAR system is used for internal oversight to help ensure that State Offices function at appropriate levels and administer grants as required. Offices for which oversight weaknesses are identified must respond to and correct the weaknesses within given timeframes. The MCR system also provides internal oversight functions, working to ensure appropriate program administration at the National Office level. To ensure that field staff remain informed of ongoing and updated requirements, RD employs a system of written and electronic communications that issues Administrative Notices and Un-Numbered letters to keep staff abreast of regulatory, policy, and procedural requirements. In addition to printed materials, copies of current regulations, Federal Register publications, and other pertinent documentation are available through an internal web-site.

Evidence: GLS system screens and/or reports and 7 C.F.R. Part 1942, Subpart G. USDA RD Website (See URL www.teamrd/usda.gov).

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: Grantees provide project performance in terms of number of businesses assisted and number of jobs created and/or saved in their applications. As described in the response to previous questions, the Agency tracks these performance measures in GLS and verifies outputs and outcomes via site visits and final reports when the project is completed. Output and outcome results data are collected regularly and reported on an annual basis. Verification occurs as effects are realized and may take up to 3 years after obligation to be completed. For instance, in the case of a grant to capitalize a revolving loan fund, it may take up to 3 years for the grantee to lend the entire RBEG funded portion of its RLF. This requires verification of expected outcome over a longer term. Performance results are reported in the year the project was obligated in the annually published Business Programs Activity Report. The Agency posts the annual activity reports, making them fully available to the public, on the Departmental website. Reports remain on the website for up to 5 years providing historical transparency. The reports are also available in hard copy upon request.

Evidence: Business Programs Annual Reports FY 1998 - FY 2006 (information pulled from the Guaranteed Loan System) and the Agency website.www.rurdev.usda.gov/rbs/pub.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The RBEG program has actuals for only one year of its long term performance measures. They met their targets for the year, but since they only have one year of data, they will receive a small extent.

Evidence: See performance measures 3 and 4.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The RBEG program achieved its annual goals for one of its four annual and efficiency measures. Achieving its annual goals in 2005 and 2006 for the number of jobs created or saved enabled it to receive a small extent rating. To make the PART an important tool in program management and governance, the agency chose ambitious targets that they can use as motivators to improve staff performance and increase the number of businesses they assist, assuming a constant funding stream. Though these objectives make it challenging for RD to meet the targets, they meet the essential goals of the PART.

Evidence: See performance measures 1, 2, 5, and 6.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Since the first year of data collected, 2004, the amount of time that it took RD to obligate and ratify grant agreements has nearly tripled. In 2006, it took an average of 140 days to obligate and disperse funds. Because of this huge increase, ambitious targets were set to increase efficiencies in the RD offices, starting for 2007. When the 95 day target is obtained, RD will lower their target number of processing days to 54 or lower, continuing to improve on their efficiencies.

Evidence: See Measures in PARTweb. National Office communication to the Rural Development State Offices, GLS reports, USDA Quarterly Performance Report, RD Budget and Performance Reports.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The Economic Development Administration and Appalachian Regional Commission have similar measures of jobs created and/or retained along with their goal of increasing economic development. In comparing performance information available in FY 2006 for EDA and ARC, EDA exceeded its job creation/retention measure by 3 percent and ARC was 44 percent over its job created or retained target. RBEG was 1 percent above its target of number of jobs created or assisted in 2006, but 8 percent shy of its 2006 businesses assisted target. There are no easily accessible comparative studies that evaluate the relative outcomes of community and economic development programs. GAO Study 00-220 provides programmatic comparisons, but does not compare results.

Evidence: ARC Output and Outcome Results for FY 2006 Area Development Projects Economic Development Administration Targets and Performance Summary (FY 2006) GAO Study 00-220

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: The RBEG program does not have regular independent reviews, but they are subject to independent evaluations through USDA's Office of the Inspector General and the US General Accounting Office. The Office of the Inspector General examines program operations to ensure compliance with program requirements and oversight. These examinations result in reports that address deficiencies, inconsistencies, and appropriate use of funds. They also make recommendations for corrective actions when needed. Two examples of such reports were highlighted in the response to question 2.6, Audit 34099-01-Hy and Audit 34004-04-HY. The US General Accounting Office (GAO) has also examined the RBEG program, however not as a separate examination, but as a part of a larger study of government wide economic development programs. The Rural Development Financial Management Division (FMD) examines the RBEG program on a regular basis.

Evidence: Audit 34099-01-Hy Audit 34004-04-HY.