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Grants Management in the Federal Government: The Role for Business Intelligence

Originally published June 20, 2013

For all the money the federal government spends buying goods and services, it actually doles out a larger amount of dollars through the award of grants, approximately $600 billion in 2010. This is a considerable amount of money; and, for a number of reasons, the field of federal grants management is in the midst of considerable pressures for reform.

As all things “government,” we need to understand what we are talking about. A federal grant is defined by statute (The Federal Grant and Cooperative Agreements Act of 1977) as a:

"...legal instrument reflecting the relationship between the United States Government and a State, a local government, or other entity when 1) the principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and 2) substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement."
All this basically means that when the government gives out money to anyone in order to carry out a public purpose, it does so through a grant as opposed to the fact that it must use a contract to acquire anything for its own direct benefit or use. As a result, these grants are referred to as federal assistance; and recipients, except for other governments, are referred to as charities.

Federal grants are very diverse in scope, amounts, purpose, etc. They can cover the very large grants given for scientific, medical or agricultural research by the National Science Foundation, the National Institutes of Health, or the National Institute of Food and Agriculture, the important educational Pell Grants given to eligible students, as well as the smaller amounts provided for travel or living expenses to AmeriCorps volunteers.

In fact, grants awarded by the federal government fall into three categories:
  1. Categorical Grants

  2. Block Grants

  3. Earmarks
Categorical Grants are intended to address a defined purpose, such as a medical or scientific project (Project Grants) or to dispense dollars, destined for a specific purpose, but according to some algorithm generally proportional to population, unemployment level, housing conditions or the like (Formula Grants).

Block Grants are the primary means to accomplish what used to be called “revenue sharing” or the mechanism by which the federal government distributes back to the states the dollars it collects through taxes and other means. In effect, these block grants go not just to state governments but also to cities, counties or regional governments. They also follow a framework of rules and are usually grouped under broad domains such as health care, housing, transportation or homeland security.

Earmarks were the principal mechanism for legislators to reach into the so called “pork barrel,” and they have now become increasingly rare as the ban on earmarks has been enacted by the last few Congresses. It was the traditional way for members of Congress to reward their constituents and “bring home the bacon” by directing funds to their home districts.

Over the years, the federal grants domain has grown substantially not only in terms of number of grants and corresponding dollars, but also in the complexity of their management. The dollars have grown by 300% from $200 billion in 1994.

The Catalog of Federal Domestic Assistance (CFDA) is the compendium listing all federal programs through which grants dollars can be obtained by “state and local governments (including the District of Columbia); federally recognized Indian tribal governments; territories (and possessions) of the United States; domestic public, quasi- public, and private profit and nonprofit organizations and institutions; specialized groups; and individuals.” The current CFDA provides descriptions for 2,236 federal assistance programs at latest count.

Given the tightening of federal budgets on all fronts, the grants community has also come under scrutiny and is in the midst of undergoing an important period of transformation. The principal entity directing the effort is the Council on Financial Assistance Reform (COFAR) which was established in 2011 “as a governance body to provide policy level leadership for the Federal grants community.” (cfo.gov/cofar). This entity is co-chaired by the OMB Controller – until last month, Danny Werfel, now Acting Head of the IRS with the mission of handling the conservative group targeting incident. The members of COFAR come primarily from the largest grant-making agencies, listed here in alphabetical order: the Departments of Agriculture, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Labor and Transportation.

The principal reason for the COFAR’s existence is to address the non-trivial issues currently facing the federal grants community. Norman Dong, the OMB co-chair of COFAR, listed a number of challenges that organization was dealing with in a presentation to the ACT-IAC Federal Government Grants Management Working Group. ACT-IAC is the American Council for Technology – Industry Advisory Council, a public-private partnership dedicated to helping government use technology to serve the public.) The principal issues appear below:
  • Eight overlapping complex sets of guidance for federal grants

  • Over 700 distinct grant-related forms approved in the OMB database

  • Scientists working on federally funded grants report spending approximately 40% of their time on administrative tasks

  • Three percent (3%) of total audited programs (over 4,000) failed to receive clean opinions in 2011

  • Major programs report repeat audit findings causing material noncompliance but no easy way to track repeat findings

  • No existing guidance holds agencies and recipients accountable for effectively correcting financial integrity weaknesses
All this has resulted in a significant administrative burden, large balances left on expired grants, late grant closeouts, little spending transparency and hence problems with the auditors. The situation has drawn enough attention from politicians, federal executives and legislators, and now there is a strong push to reform in ways that the business intelligence (BI) practitioners will clearly appreciate since it offers ample opportunity for BI to assist in the process. COFAR is pushing to “foster more efficient and effective Federal financial management” through “… a standardized business process, data standards, metrics, and information technology.”

Bottom line, the grants world is changing, we believe for the better. Business intelligence will play an increasingly important role. Please stay tuned; there is much more to come.

  • Dr. Ramon BarquinDr. Ramon Barquin

    Dr. Barquin is the President of Barquin International, a consulting firm, since 1994. He specializes in developing information systems strategies, particularly data warehousing, customer relationship management, business intelligence and knowledge management, for public and private sector enterprises. He has consulted for the U.S. Military, many government agencies and international governments and corporations.

    He had a long career in IBM with over 20 years covering both technical assignments and corporate management, including overseas postings and responsibilities. Afterwards he served as president of the Washington Consulting Group, where he had direct oversight for major U.S. Federal Government contracts.

    Dr. Barquin was elected a National Academy of Public Administration (NAPA) Fellow in 2012. He serves on the Cybersecurity Subcommittee of the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee; is a Board Member of the Center for Internet Security and a member of the Steering Committee for the American Council for Technology-Industry Advisory Council’s (ACT-IAC) Quadrennial Government Technology Review Committee. He was also the co-founder and first president of The Data Warehousing Institute, and president of the Computer Ethics Institute. His PhD is from MIT. 

    Dr. Barquin can be reached at rbarquin@barquin.com.

    Editor's note: More articles from Dr. Barquin are available in the BeyeNETWORK's Government Channel


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