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                                                      Calendar No. 303
114th Congress        {                       }                Report 
 1st Session          {         SENATE        }                 114-169
_______________________________________________________________________

                                     

                                                       

                GRANTS OVERSIGHT AND NEW EFFICIENCY ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 1115

               TO CLOSE OUT EXPIRED, EMPTY GRANT ACCOUNTS

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               November 30, 2015.--Ordered to be printed

                               _______
	       	                                
	       	     U.S. GOVERNMENT PUBLISHING OFFICE
	       	       
	       	           WASHINGTON : 2015
	                      
               COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                    Keith B. Ashdown, Staff Director
                  Christopher R. Hixon, Chief Counsel
       Patrick J. Bailey, Chief Counsel for Governmental Affairs
Gabrielle D'Adamo Singer, Deputy Chief Counsel for Governmental Affairs
                Drew C. Baney, Professional Staff Member
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
               Mary Beth Schultz, Minority Chief Counsel
       Peter P. Tyler, Minority Senior Professional Staff Member
                     Laura W. Kilbride, Chief Clerk
                                                       
                                                       
                                                       
                                                       
                                                       
                                                      Calendar No. 303
114th Congress         {                     }               Report 
 1st Session           {       SENATE        }                114-169
                                                      
======================================================================



 
                GRANTS OVERSIGHT AND NEW EFFICIENCY ACT

                                _______
                                

               November 30, 2015.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 1115]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 1115) to close out 
expired, empty grant accounts, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
 IV. Section-by-Section Analysis......................................4
  V. Evaluation of Regulatory Impact..................................4
 VI. Congressional Budget Office Cost Estimate........................4
VII. Changes in Existing Law Made by the Bill, as Reported............5

                         I. PURPOSE AND SUMMARY

    The purpose of S. 1115, the Grants Oversight and New 
Efficiency Act (or ``GONE Act''), is to identify certain 
expired grants. The bill as amended by a substitute amendment 
requires the Office of Management and Budget (OMB) to direct 
agencies, in coordination with the Secretary of Health and 
Human Services (HHS), to provide to Congress a list of certain 
expired grants held by federal agencies, and include a 
description of the reasons why the listed grants have not yet 
been closed. The expectation is that this identification will 
help lead to a reduction in the number of expired grants that 
have not been properly closed out from the financial payment 
systems. This will improve financial accountability over grant 
programs, and save taxpayer money on costs associated with 
maintaining the grants in an open status.

              II. BACKGROUND AND THE NEED FOR LEGISLATION

    Delays by federal agencies in closing expired grants were 
highlighted in an April 2012 report by the Government 
Accountability Office (GAO).\1\ The GAO identified more than 
eleven thousand grants that had remained active within two 
major multiagency payments systems, even though the grants were 
clearly inactive or past the end date of the grant period. In 
fact, the report noted that 115 of these grants were ten years 
past the end of the grant period. Further, the 2012 report 
identified nearly $800 million in funding remaining in expired 
grant accounts upon review of just two payment systems.\2\
---------------------------------------------------------------------------
    \1\U.S. Government Accountability Office, GAO-12-360, Grants 
Management: Action Needed to Improve the Timeliness of Grant Closeouts 
by Federal Agencies 19 (2012), available at http://gao.gov/assets/600/
590926.pdf.
    \2\Id. at 11.
---------------------------------------------------------------------------
    There is a financial cost associated with maintaining a 
grant in an open status, as opposed to closing the grant in a 
timely manner. GAO reported that for one multiagency grant 
payment system, the government was ``. . . charged a total of 
roughly $173,000 per month to maintain the more than 28,000 
expired grant accounts with zero dollar balances listed on the 
year end closeout report.''\3\ GAO estimated that `` . . . 
[o]verall, the total charges for all expired grants with a zero 
dollar balance would represent roughly $2 million in fees if 
agencies were billed for these accounts for the entire 
year.''\4\ Furthermore, in another large payment system, GAO 
``found that more than $126 million in undisbursed balances 
remained in dormant grant accounts--accounts for which there 
had been no activity for 2 years or more.'' The GAO report also 
describes that delay in closing out grants means a higher risk 
in conducting important financial control steps, decreasing the 
ability to ensure accountability.\5\
---------------------------------------------------------------------------
    \3\Id at 19.
    \4\Id.
    \5\Id. at 11.
---------------------------------------------------------------------------
    On July 24, 2012, OMB issued a Controller Alert to federal 
chief financial officers, which cited GAO's findings and 
indicated ``. . . [a]gencies should take appropriate action to 
closeout grants in a timely manner.''\6\ The alert was issued a 
day before a Committee on Homeland Security and Governmental 
Affairs Subcommittee on Federal Financial Management, 
Government Information, Federal Services, and International 
Security hearing that took place the next day on grants 
management and the GAO's report.\7\ During that hearing, then-
OMB Controller Danny Werfel testified that he agreed with GAO's 
position on the importance of improving the timeliness of grant 
award closeouts and ensuring that there are proper internal 
controls to oversee the grants.\8\
---------------------------------------------------------------------------
    \6\Office of Executive Councils, Chief Financial Officers Council, 
Controller Alert, (June 10, 2015), available at https://cfo.gov/wp-
content/uploads/2015/06/GRANTS-MANAGEMENT-Action-Needed-to-Improve-the-
Timeliness-of-Grant-Closeouts-by-Federal-Agencies.pdf.
    \7\Assessing Grants Management Practices at Federal Agencies: 
Hearing Before the Subcomm. on Federal Financial Management, Government 
Information, Federal. Services, and International Security of the 
Senate Committee on Homeland Security and Governmental Affairs, 114th 
Cong. (July 25, 2012).
    \8\Id. (statement of Danny Werfel, OMB Controller).
---------------------------------------------------------------------------
    On December 26, 2013, OMB significantly revised its 
guidance on the grants management process, which included a new 
section on closeout.\9\ OMB indicated the need for updated 
guidance to ``increase the efficiency and effectiveness of 
Federal awards to ensure best use of the more than $500 billion 
expended annually.''\10\ The OMB guidance reminded Federal 
agencies that they should be closing out grants within 90 
calendar days following the end date of the period of 
performance.\11\
---------------------------------------------------------------------------
    \9\2 C.F.R. Sec. 200.454 (2015), available at http://www.gpo.gov/
fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf.
    \10\Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards, 78 Fed. Reg. 78,590, 78,590 (Dec. 26, 
2013).
    \11\Cong. Research Serv., R43726, Delayed Federal Grant Closeout: 
Issues and Impact (Sept. 12, 2014) (on file with Committee Staff).
---------------------------------------------------------------------------
    There is little information available about the 
implementation of this OMB guidance. Moreover, delays in grants 
closeouts may, for many agencies, cost taxpayers unnecessary 
fees for maintaining expired accounts, and, for all agencies, 
can prevent the undisbursed funding from being returned to the 
Treasury.\12\
---------------------------------------------------------------------------
    \12\Gov't Accountability Office, GAO-12-360, Grants Management: 
Action Needed to Improve the Timeliness of Grant Closeouts by Federal 
Agencies 18 (2012), available at http://gao.gov/assets/600/590926.pdf.
---------------------------------------------------------------------------
    This bill, as amended by a substitute amendment, would 
address the need for improved information from federal agencies 
by requiring all federal agencies within 180 days of enactment 
to submit a report identifying certain grants that have not 
been closed.

                        III. LEGISLATIVE HISTORY

    The GONE Act was introduced in the 113th Congress by 
Senator Deb Fischer. In the 114th Congress, Senator Deb Fischer 
and original cosponsor Senator Joe Manchin III introduced S. 
1115 on April 28, 2015. Senator Ron Johnson joined as a 
cosponsor on June 11, 2015. The bill was referred to the 
Committee on Homeland Security and Governmental Affairs. The 
Committee considered S. 1115 at a business meeting on June 24, 
2015.
    During the business meeting, Senator Ron Johnson offered a 
substitute amendment, as modified, that required HHS, rather 
than the Council of the Inspectors General on Integrity and 
Efficiency, to submit a report on grant closeouts. The 
substitute amendment modified the reporting requirement so that 
it required the identification of grants expired more than two 
years, as well as making other technical changes. The modified 
substitute amendment was adopted by voice vote with Senators 
Johnson, McCain, Lankford, Ayotte, Ernst, Sasse, Carper, 
Tester, Baldwin, and Heitkamp present.
    Senator Johnson's second amendment modified the long title 
of the bill, and was adopted by voice vote with Senators 
Johnson, McCain, Lankford, Ayotte, Ernst, Sasse, Carper, 
Tester, Baldwin, and Heitkamp present.
    The Committee ordered the bill, as amended, reported 
favorably by voice vote on June 24, 2015. Senators present for 
the vote on the bill were Senators Johnson, McCain, Lankford, 
Ayotte, Ernst, Sasse, Carper, Tester, Baldwin, and Heitkamp.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section provides the bill's short title, the ``Grants 
Oversight and New Efficiency Act'' or the ``GONE Act.''

Section 2. Identifying and Closing Out Expired Grants

    Subsection (a) requires the Director of OMB to direct 
agencies to coordinate with the Secretary of HHS to submit to 
Congress, within 180 days, a report on each agency's remaining 
expired grant accounts. The agency's report must contain a list 
of each covered grant held by the United States Government, 
which is defined as a grant that is part of a government agency 
payment system and has not yet been closed out, recommend which 
covered grants should be closed, and explain why each covered 
grant has not been closed out. Agencies can use any existing 
multiagency data systems to complete the report. If an agency 
is unable to provide the required information in the report, 
there must be an explanation as to why, including any 
shortcomings with existing grant data systems.
    Subsection (b) requires the head of each agency to notify 
the Secretary of HHS specifying if the agency has closed out 
grant awards associated with all of the covered grants. The 
head of the agency must notify the Secretary of HHS within a 
year of submitting the report outlined in subsection (a), and 
notify Congress within 90 days of notifying the Secretary of 
HHS.
    Subsection (c) defines the terms, ``agency,'' ``close 
out,'' ``covered grants,'' and ``Secretary.''

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 31, 2015.
Hon. Ron Johnson, Chairman,
Committee on Homeland Security and Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1115, the GONE Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford, who can be reached at 226-2860.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 1115--GONE Act

    S. 1115 would direct federal agencies to prepare reports on 
their efforts to close out financial accounts for expired 
federal grants. Information on the USASpending website 
maintained by the Treasury Department indicates that the 
government has awarded almost $600 billion annually in grants 
over the past five years. In 2012, the Government 
Accountability Office reported that about 80 percent of all 
grants are provided through the Department of Health and Human 
Services (HHS) and Treasury payment systems and that 
undisbursed grants totaled about $720 million in about 10,000 
expired accounts. In 2012, the Office of Management and Budget 
(OMB) advised that agencies should take appropriate action to 
close out such accounts in a timely manner.
    Under current law, agencies are required to track expired 
grant accounts. CBO anticipates that under S. 1115, some 
agencies' workloads would increase slightly. Based on 
information from OMB and HHS, CBO estimates that implementing 
S. 1115 would cost $8 million over the 2016-2020 period, 
primarily for increased administrative costs related to the new 
reports; such spending would be subject to the availability of 
appropriated funds.
    Enacting S. 1115 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 1115 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Because this legislation would not repeal or amend any 
provision of current law, it would make no changes in existing 
law within the meaning of clauses (a) and (b) of paragraph 12 
of rule XXVI of the Standing Rules of the Senate.

                                  [all]