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bearing on assistance techniques. Development of a system of guidance for assistance programs requires more than development of a collection of assistance methods, processes, procedures, and clauses based on an analysis of types of involvement and program functions. It also requires consideration of related matters which must be explored to enable the system to provide the kind of complete guidance required by the agencies. Some of these related matters, cast in the form of needs, are:

• An analysis of all Federal assistance statutes to (1) obtain an overall picture of statutory requirements for assistance programs and (2) determine if any legislative changes are desirable. • A comparison in selected programs of requirements established by statute against requirements established by the agencies. • Development of factors that should be considered by the agencies in distinguishing assistance from procurement, that is, guidelines for deciding whether a specific transaction is assistance or procurement. • Development of factors that should be considered by the agencies in deciding on the use of the various kinds of assistance instruments: grants, grants-in-aid, and cooperative agreements. • Recommendations on the applicability of clauses now used in procurement to assistance transactions. • Recommendations on mandatory and optional requirements or standards which should be applied Government-wide to assistance transactions. • Development of standards for use in procurement transactions which occur under assistance relationships. • Recommendations as to when there should be agency involvement in procurement transactions which occur under assistance relationships. • Recommendations as to what kinds of requirements should be specified by statute and what kinds should be developed administratively by the agencies, OMB, or GAO. • An examination of the significance for

assistance relationships of the nature of the recipient, whether it is a unit of State or local government, a nonprofit organization, or a profitmaking organization. • An analysis of considerations such as the role of technical competition, price, and cost factors; the use of lump-sum types of arrangements; and the use of fees or surcharges in assistance transactions. • A review of management problems that have hampered assistance programs. • An examination of the needs for agency and Government-wide data and reporting on assistance programs. • An examination of the role of assistance recipients in the process of developing requirements for new programs and developing or modifying requirements for ongoing programs.

These factors, or needs, will overlap many of the considerations which will arise from an analysis of the matrix data. That is desirable in that separate consideration of these factors should point up omissions and emphasize interrelationships. The resulting network of interrelated considerations is especially important for the development of a system of guidance for assistance programs, as it would become an integral part of such a system.

The system of guidance that is needed can be regarded tentatively as an analogue of a system of procurement regulations. It is a reasonable expectation that it might take similar form. Thus, it should be possible to take the generalized techniques, methods, procedures, processes, and relationships that are yielded by use of matrixes, consider them in the context of the results of the related considerations listed above, and develop the elements that will make up the system. The character of those elements will influence the kind of system which is developed, but the structure of procurement regulations suggests a framework that should be considered: Introduction (scope, applicability, arrange

ment, deviations) Definitions of terms General policies (for example, nature of

assistance relationships)

18

Public participation in policy and procedure

formulation Public information on assistance programs Application for awards Solicitation of proposals Evaluation of proposals and selection of re

cipients Financial and technical capabilities of pros

pective recipients Negotiation Types of instruments (when to use) Clauses for grants ) Clauses for grants-inaid

optional and manClauses for coopera-}. datory clauses and

tive agreements standards Clauses for other

agreements Special clauses for various functional pro

grams (construction, planning, etc.) Price and cost policies and techniques Methods of payment Third-party arrangements Project management Relationship to procurement regulations

(when and how to use procurement re

quirements) Audit Patents, data, and copyrights Property Non-project-related technical assistance Use of GSA sources Cost principles Program evaluation Standard and suggested forms and formats.

The system that results should present a catalog of alternative kinds of relationships spelled out in sufficient detail to enable Congress, the executive agencies, and recipients to better judge the full import of a transaction or class of transactions. For example, if responsible decentralization is a desirable goal, judgments as to how it can be accomplished (as well as its desirability) are best made on the basis of as much operational detail as possible on what a specific relationship would entail in terms of roles and responsibilities.

An important by-product of an effort to spell out the operational detail and operational considerations pertinent to a system of guidance for assistance relationships is likely to be the emergence of better ways of defining the nature of Federal assistance. For this reason, the development of a system is not just a Federal function. Defining a Federal role defines a recipient role. An analysis of Federal assistance techniques, which considers the relationships between Federal agencies and recipients, requires the involvement of recipients and their representatives, as well as representatives of the Federal agencies. Today, assistance recipients' major complaint is that they do not play the role they feel they should play in the establishment of requirements that are placed upon them. They are not providing supplies or services for Federal use. They are endeavoring to accomplish congressionally established objectives with the assistance of the Federal agencies. Assistance recipients are affected and involved differently from Government contractors, hence, their different roles in program formulation and in rulemaking should be explicitly determined with their cooperation.

Pending the enactment of legislation to reduce the existing statutory barriers to consistency, a study of the kind suggested above should be undertaken to determine the feasibility of developing a system of guidance. This may be done in conjunction with or apart from the activities being conducted by the OMB Federal Assistance Review. It should be done so that a determination can be made at an early date of the utility of a system of guidance. A systematic examination of the questions that must be dealt with in developing such a system should provide evidence of the need for executive branch guidance to the agencies and should also identify specific changes requiring legislative action by Congress. The continuing increase in the number, size, and complexity of Federal assistance programs and the increasing billions of dollars appropriated for assistance underline the urgency of this task.

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 recipients 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.

To examine the interchangeable use of grants and contracts, the Grants Task Force visited 11 departments or agencies 1 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

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 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

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

page.

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