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APPENDIX A

Methodology

In April 1971, the Commission activated a small group to conduct a limited review of Federal grant-type activities. In view of the nature, magnitude, and complexity of grant-type activities and the constraints of time and resources, the grants study was not intended to be comprehensive or extensive. It was to be of limited scope and undertaken at a lower level of effort than other Commission studies. The group that was established was designated a "Grants Task Force" rather than a "Study Group" to indicate its somewhat different scope and purpose.

The Grants Task Force was asked by the Commission to (1) develop data to put the "Federal Grant Program" in perspective, (2) examine the extent to which "grants" and "contracts" are used interchangeably by Federal agencies, and (3) analyze the extent to which "procurement rules and regulations" are and should be applied to "grant-type" transactions.

To put the "Federal Grant Program" in perspective the Grants Task Force:

• Defined the "Federal Grant Program" in terms of the best available composite data on Federal grant activities: the 1971 edition of the Catalog of Federal Domestic Assistance prepared by the Office of Management and Budget (OMB). This catalog is a comprehensive listing and description of Federal programs and activities which provide assistance or benefits in monetary and other forms to other governmental units, nongovernmental organizations, and individuals. It includes more than 1,000 programs administered by 60 different Federal departments, independent agencies, commissions, and councils. These data were examined, and about 500 of the programs, which are established by

law or administrative rule and practice as "grant" or "grant-in-aid" programs, were identified. Loan, subsidy, and insurance programs and forms of nonfinancial assistance were excluded from consideration.

• Developed or obtained from OMB data on each of the 500 programs in order to show:

Whether the program is a formula grant program, a project grant program, or a mix of the two

The funds obligated for each program for fiscal 1970 and the estimated amounts for fiscal years 1971 and 1972

Any matching or cost-sharing requirements

The functional purpose of the program, for example, systems development, demonstration, planning and administration, education and training, research, etc.

The eligible recipients of the program awards.

• Examined data derived from the Federal Budget, the National Income Accounts, and other sources to place Federal expenditures for grant-type transactions in the context of overall Federal expenditures for a tenyear period.

• Consulted with other Government activities that are concerned with Federal grants, such as the OMB Federal Assistance Review Program (FAR), the Advisory Commission on Intergovernmental Relations, and the Administrative Conference of the United States. • Consulted with members of congressional staffs, representatives of State and local governments, educational institutions, other re

cipients of Federal grant funds, and other persons knowledgeable in grant activities. • Examined data gathered by Study Group 11 (Research and Development) and drew on their experience resulting from interviews with nongovernmental recipients of Federal grant funds.

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To examine the interchangeable use of grants and contracts, the Grants Task Force visited 11 departments or agencies and reviewed 17 of their programs in order to develop sample data on the extent to which Federal agencies either (1) within their own operations, or (2) in comparison with each other, use grants in ways and for purposes for which contracts often are used. The major criterion initially used in selecting programs to review was the likelihood that the program might reveal the use of grants where in similar circumstances contracts are used, or the use of contracts where in similar circumstances grants are used. It became apparent, however, that using the criterion of the interchangeable use of grants and contracts for selecting programs would not produce a representative sample of the entire grant-type universe. Although grants and contracts are used interchangeably in some cases, the fact that the terms "grant" and "contract" have in practice varying meanings indicated that an examination solely on their "interchangeability" would not be very productive. Thus, after exploring the possibility, it was decided that a review of a representative sample of all grant-type transactions, including grant-in-aid or formula-type programs, whether or not there was interchangeability, might be more productive.

To determine whether processes and standards of the kind set forth in the Armed Services Procurement Regulation and the Federal Procurement Regulations are and should be applied to grant-type activities, the Grants Task Force:

• Undertook an analysis of the applicability and use in ten grant programs of 28 clauses normally used in contracting

• Analyzed a sample of statutes that authorize grant programs to determine, for example, the extent to which the statutes

1 See list of agencies visited and programs reviewed on the next page.

require the imposition of procurement-type requirements on grant transactions

• Examined certain data collected under the Federal Assistance Review Program (FAR) on requirements imposed by various agencies • Endeavored to understand the objectives or purposes of the 17 programs reviewed, why they are implemented in the fashion they are, the degree of Federal control deemed necessary by Congress or the agency, and the type of grant recipient. This review was conducted by consulting with responsible agency and some grant recipient officials, by by an examination of pertinent statutes, congressional hearings, agency and other pertinent literature, and by visits to each of the agencies.

Agency representatives interviewed were generally cooperative and candid and appeared capable and conscientious. Many of their comments do not represent the official positions of their agencies. The facts reported and especially the observations made in the Grants Task Force report are inferential to some extent and might not be agreed to by those interviewed. However, the members of the Grants Task Force and the participating members of the Commission staff have reviewed and agreed on the accuracy of the facts or observations reported.

In examining data on Federal grant-type programs, it became clear that Federal granttype activities are a vast and complex collection of programs, functioning with little central guidance in a variety of ways that are often inconsistent even in the case of similar programs or projects. Because these initial findings coincided with the opinions of most knowledgeable observers of Federal programs, the Grants Task Force decided that it would be more productive to explore what might be done to improve the present situation rather than to develop detailed documentation of facts which are already generally agreed upon.

The significant causes of the disarray besetting grant-type assistance activities were perceived to be:

• Confusion of grant-type assistance relationships and transactions with procurement relationships and transactions

• Failure to recognize that there is more

than one kind of grant-type relationship or transaction

Lack of Government-wide guidance for Federal grant-type relationships and transactions.

Consideration of these causes led to questions such as:

• What is the nature of the grant-type assistance relationships that exist between the Federal Government and the non-Federal sector?

• Can and should grant-type transactions be distinguished from procurement transactions?

Is it possible to reduce the confusion which seems to beset grant-type programs by giving relationship-based definitions for Government-wide use to terms such as contract, grant, and grant-in-aid?

Hypotheses were developed to deal with the foregoing questions and the findings that had generated them. These hypotheses are expressed in the Commission's recommendations.

The Commission also gathered useful poststudy data on grant-type programs. When the Grants Task Force presented its recommendations to the Commissioners in February 1972, the Commissioners asked that examples be gathered on cooperative-agreement types of relationships. To provide the data sought, the Commission sent to the departments and agencies a questionnaire which was designed to obtain, by functional class or category of awards to State and local units of Government and all other nonprofit organizations, the following kinds of information: (1) when they use a particular type of instrument: grant, grant-inaid, contract, or other, (2) why they use the particular type of instrument for a given class of transaction, (3) the nature of the agency participation or involvement that occurs during performance, and (4) whether the department or agency regards that involvement as "minimal" or "substantial.”

The data gathered were helpful in developing examples of cooperative-agreement types of relationships. The data gathered in response to item 3 above also support the utility of the Commission's recommendations. The data indicate that, although each agency's programs may be different from other agencies' pro

grams in purposes and objectives, there are a limited number of kinds of involvement (methods, techniques, or "kinds of grants") that fall into the degrees-of-involvement (minimal or substantial) categories that are outlined in the report.

AGENCIES VISITED AND PROGRAMS REVIEWED

Department of Agriculture

Contracts and grants for scientific
research

Department of Commerce

Economic Development Administration
Economic development grants and
loans for public works facilities
Department of Health, Education,
and Welfare

Health Services and Mental Health Administration

Health services research and development Social and Rehabilitation Service Medicaid

Office of Education

Manpower development and training National Institutes of Health

Heart and lung research

Department of Housing and Urban
Development

Operation Breakthrough
Model Cities

Department of the Interior
Office of Saline Water

Saline water research and development
Department of Justice

Law Enforcement Assistance Administration
Department of Labor
Manpower Administration
Job Corps

Department of Transportation
Urban Mass Transit Administration

Research, development, and demonstration Environmental Protection Agency

Water pollution control research and
development

National Science Foundation

Basic research

Course content improvement Science information activities Office of Economic Opportunity

Research, evaluation, and program development

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