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© 2014 Management Concepts, Inc. The material in this document is provided for informational purposes only.

Grants Management in the Era of Accountability: Performance Measures in the Uniform Guidance

Shane JerniganSenior Instructional Designer, Grants & Assistance Division Management Concepts

Executive SummarySuccessful management of Federal grants has always required skill, practice, patience, and even a little luck. As policymakers and the public have grown increasingly concerned about “wasteful government spending,” grants managers have had to adapt to new regulations and additional oversight. In this “Era of Accountability,” Federal awarding agencies and non-Federal recipient entities must remain vigilant in protecting Federal funds from waste, fraud, and abuse. The use and analysis of performance measures is one tool the grants community can use to more efficiently and effectively manage grant awards.

Background to the “Era of Accountability” The enactment of the Government Performance and Results Act (GPRA) in 1993 began a realignment of grants management. GPRA holds Federal agencies accountable for achieving programmatic goals and implementing result-oriented practices. In 2010, Congress passed the GPRA Modernization Act (GPRAMA) to strengthen and enhance the requirements in the original law. Under GPRAMA, Federal agencies must develop programmatic goals that align with governmentwide priorities.

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Both GPRA and GPRAMA directly affect grants administration. Federal agencies need to ensure grant-funded projects are meeting both agency and governmentwide goals. To meet this requirement, agencies have expanded the use of performance measures. The Office of Management and Budget (OMB) defines the term performance measure as “a target level of performance expressed as a tangible, measurable objective, against which actual achievement can be compared, including a goal expressed as a quantitative standard, value or rate.” 1

The Government Accountability Office (GAO) has extensively examined the use of performance measures among Federal awarding agencies. In a 2012 report on grant awards to state and local governments, the GAO found selected grant programs had a “lack of appropriate performance measures.” The GAO concluded that the use of ineffective or improper performance measures can “affect the ability of Federal agencies to ensure that grant funds are effectively spent” and limits agencies from “effectively [measuring] grant program performance.” 2

The Obama Administration has also promoted the increased use of performance measures for grant programs. OMB Memorandum M-13-17, “Next Steps in the Evidence and Innovation Agenda,” directs Federal agencies to utilize evidence-based decision making in developing and executing performance plans. To meet this directive, agencies are encouraged to “track important outcome measures for Federal grant programs.” Agencies are also encouraged to “expand or improve the use of grant program designs that focus Federal dollars on effective practices while also encouraging innovation in service delivery.” 3 Agency implementation of an effective performance measure system is critical for meeting the objectives in M-13-17.

The expectations and requirements for agencies to use adequate performance measures will only continue to increase. OMB used the principles found in M-13-17 as a foundation for the Uniform Guidance: Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The Uniform Guidance, sometimes referred to as the “Supercircular” or “Omni Circular,” consolidates eight existing grant circulars into a single guidance. Once implemented by Federal awarding agencies through the promulgation of agency regulations, the Uniform Guidance will create uniform requirements, with only minor exceptions, for all recipient entities. The Uniform Guidance is found at 2 CFR Part 200 and becomes effective for non-Federal entities on December 26, 2014.

Performance Measures in the Uniform Guidance OMB developed the Uniform Guidance to improve grants management by reducing administrative burden and to “more effective[ly] focus Federal resources on improving performance and outcomes.” 4 The Uniform Guidance emphasizes the increased use of and reliance on performance metrics in the awarding of grant funds and in agency decision making. Ultimately, OMB seeks to reform the administration of grant programs to focus on project performance instead of recipient compliance with regulations.

The Uniform Guidance references the use of performance measures at:

•§200.202 Notification of Grant Opportunity;

•§200.210 Award Information; and

•§200.301 Performance Measurements.

The Office of Management and Budget (OMB) defines the term performance measure as “a target level of performance expressed as a tangible, measurable objective, against which actual achievement can be compared, including a goal expressed as a quantitative standard, value or rate.”

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The Uniform Guidance requires Federal awarding agencies to identify specific performance goals, measurements, and intended outcomes for grant programs in the Catalog of Federal Domestic Assistance (CFDA). Section 200.202 states that program performance metrics should, when appropriate, align with the agency’s strategic goals and performance plans. Identifying performance measures in the CFDA will enable applicants to better design projects that will meet a program’s expected outcomes.

Section 200.210 outlines the required elements in the grant award agreement between the Federal awarding agency and the non-Federal recipient entity. The Uniform Guidance mandates that agencies identify the timing and scope of expected performance in the award agreement. Agencies may include “specific performance goals, indicators, milestones, or expected outcomes.” 5 Agency officials should carefully develop performance measures to ensure meaningful data can be obtained.

The most significant discussion of performance measures in the Uniform Guidance is found at Section 200.301. This section explains the responsibilities of Federal awarding agencies and non-Federal recipient entities in collecting, reporting, and analyzing performance data. Recipients are required to relate project performance to financial management. The Uniform Guidance suggests recipients use unit cost data to meet this requirement. Federal agencies are expected to analyze recipient performance data to “improve program outcomes, share lessons learned, and spread the adoption of promising practices.” 6 Identifying best practices and disseminating this information to all program award recipients should improve the management of the grant program and lead to a more effective use of Federal funds. Agencies are also expected to use data analysis in making programmatic decisions, which may include future award decisions and funding priorities.

Federal awarding agencies may also use data analysis to develop innovative grant programs that align with the objectives of M-13-17. Section 200.201 enables agencies, and pass-through entities to a limited extent, to make fixed amount awards. This type of award is designed to reduce administrative burden, increase accountability, and encourage improved project outcomes by linking payment to performance. In some circumstances, recipients would only receive additional funding after meeting established milestones. Recipients that fail to meet established milestones could be denied additional funding or may be required to reimburse the government.

One long-range goal of the Uniform Guidance is for agencies to use collected performance measure data in decision making. There are three provisions in the Uniform Guidance in which data analysis of performance metrics may eventually become an important component of agency decision making:

•§200.204 Federal Awarding Agency Review of Merit Proposals;

•§200.205 Federal Awarding Agency Review of Risk Posed by Applicants; and

•§200.207 Specific Conditions.

The Uniform Guidance requires agencies to develop and implement a merit review process for all discretionary grant awards. Agencies must also identify the merit selection criteria in the Notification of Funding Opportunity. To increase the use of performance measures, agencies could include in the review process an evaluation of an applicant’s ability to collect performance data. Additional selection criteria could also include the extent to which an applicant incorporates best practices into the project design and the applicant’s capacity to provide meaningful analysis of performance data.

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Under Section 200.205, Federal awarding agencies must develop and implement a risk-assessment framework before making an award. The Uniform Guidance suggests agencies consider reviewing “the applicant’s record in managing Federal awards” by reviewing government databases such as the Federal Awardee Performance and Integrity Information System (FAPIIS).7 The Duncan Hunter National Defense Authorization Act of 2009 required OMB to develop a database containing the performance history of grant recipients and contractors. Due to funding constraints, OMB has only populated FAPIIS with information regarding contractors. Regardless of the future of FAPIIS, Federal awarding agencies may incorporate a review of an applicant’s previous ability to meet performance goals as part of the pre-award risk-assessment.

Section 200.208 allows agencies to impose sanctions on recipients for non-compliance with the award agreement. Recipients that fail “to meet expected performance goals as described in §200.210 Information Contained in a Federal Award” could face sanctions.8 Sanctions can include enhanced monitoring, increased reporting requirements, additional prior approval requirements, or termination of the award. Recipients should be prepared for increased agency oversight of performance reports and heightened scrutiny of performance metrics.

The Department of Education: The Future of Grants Management?The Uniform Guidance does not become effective for non-Federal entities until December 26, 2014. As with any reform initiative, there are likely to be implementation difficulties that affect both Federal awarding agencies and non-Federal entities. Agencies are likely to expend time and effort addressing basic administrative issues instead of working towards achieving some of the more ambitious goals, such as executing a more robust performance measurement system.

Eventually, the ideals of the Uniform Guidance will come to fruition. Recipients will be held accountable for meeting performance metrics and agencies will use data analysis in decision-making. Currently, many questions remain on how agencies should increase the use of performance measures in daily operations. The U.S. Department of Education has already begun to expand the use of performance measures and may serve as a model for other agencies.

In 2013, the Department of Education published a final rule amending the Education Department General Administrative Regulations (EDGAR). The new regulations are designed to improve the Department’s ability to “promote projects supported by evidence; evaluate the performance of discretionary grant programs and grantee projects, [and] review grant applications using selection factors that promote reform objectives.”9

The Department initiated the reform after determining that the existing performance measure system failed to provide meaningful data. The regulatory changes include four provisions designed to increase the Department’s use and analysis of performance data. The changes allow the Department to:

•establish performance measure requirements in an application notice of competition;

•assess the likelihood the proposed project can be brought to scale;

•provide special consideration to projects that cite and build upon evidence of effectiveness; and

•authorize a data collection period.

The U.S. Department of Education has already begun to expand the use of performance measures and may serve as a model for other agencies.

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The first provision, found at 34 CFR 75.110, mirrors the requirement in the Uniform Guidance for agencies to include performance measures in the CFDA. Under the Department’s regulation, the notice of funding opportunity should include specific performance measures, baseline data, performance targets, and performance data. The Department may also consider a recipient’s past performance when awarding continuation grants. The Department expects that the greater use of performance measures will assist with GPRA reporting requirements. Other agencies may benefit from examining the Education Department’s award announcements for an example on how to incorporate performance measures into the application process.10

Another provision, found at 34 CFR 75.210, is designed to increase the performance outcomes of the Department’s programs. For selected programs, the Department will consider the applicant’s capacity to bring the proposed project to scale. The term “strategy to scale” refers to the ability to replicate a project on a state, regional, or national level. Bringing a successful project to scale has the benefit of providing effective services to a greater population. To meet the goal of the Uniform Guidance of promoting the effective use of Federal funds, other agencies may eventually make award decisions based on an applicant’s ability to bring a project to scale.

The regulations also allow the Department to consider the extent to which a proposed project has incorporated best practices for service delivery. The regulations encourage applicants to use reference materials from the What Works Clearinghouse (WWC) when designing projects. The Department established the WWC in 2002 to develop “informed education decision making” by identifying best practices for improving student outcomes from a review of research literature.11 This provision, found at 34 CFR 75.210, will ensure the Department funds well-designed projects that can contribute to the body of knowledge. M-13-17 encourages agencies to promote the use of clearinghouses that “help translate strong research into practice,” and the WWC could serve as a model to assist other agencies in developing resource depositories.

Finally, the Department amended 34 CFR 75.250 to allow for a data collection period after the period of performance. This provision enables the Department to fund recipients up to 72 months to collect, analyze, and report performance measures. This data collection period will provide recipients ample time to validate and synthesize performance data, and, as a result, provide the Department with a more accurate evaluation of a project’s success. A funded data collection period could one day become a standard practice for all agencies.

It has been less than a year since the Department’s new regulations became effective and it is still too early to derive any conclusions. If the regulations prove successful in meeting the Department’s stated goals, then other agencies have a model to follow when implementing the performance measure requirements in the Uniform Guidance.

ConclusionsThe Uniform Guidance is the culmination of years of collaboration between Federal agencies, recipients, and other stakeholders in the grants community. The Uniform Guidance is the next phase in the “Era of Accountability.” New provisions are designed to increase the effectiveness of Federal funds and improve program outcomes. As a result, Federal awarding agencies and non-Federal recipient entities should prepare to devote additional resources to collecting and analyzing performance data.

The Department established the WWC in 2002 to develop “informed education decision making” by identifying best practices for improving student outcomes from a review of research literature.

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References1 2 CFR §200.76

2 Czerwinski, Stanley; Davis, Beryl. GRANTS TO STATE AND LOCAL GOVERNMENTS: An Overview of Federal Funding Levels and Selected Challenges. GAO-12-1016. Sept. 25, 2012, http://www.gao.gov/products/GAO-12-1016

3 Burwell, Sylvia; Muñoz, Cecilia; Holdren, John; Krueger, Alan. Next Steps in the Evidence and Innovation Agenda. OMB Memorandum 13-17. July 26, 2013. http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-17.pdf

4 Management and Budget Office, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, The Federal Register. Dec. 26, 2013. Document Citation: 78 FR 78589. Document Number: 2013-30465. https://federalregister.gov/a/2013-30465

5 2 CFR §200.210(d)

6 2 CFR §200.301

7 2 CFR §200.205(c)(3)

8 2 CFR §200.207

9 The U.S. Department of Education. Direct Grant Programs and Definitions That Apply to Department Regulations. Federal Register. Aug. 13, 2013. Document Citation: 78 FR 49337. Document Number: 2013-19390. https://federalregister.gov/a/2013-19390

10 An example can be found in the Education Department’s notice of funding opportunity for the Teacher Quality Partnership Grant Program. https://federalregister.gov/a/2014-12346

11 http://ies.ed.gov/ncee/wwc/aboutus.aspx. Accessed May 28, 2014.

About the AuthorShane Jernigan is a Senior Instructional Designer in the Grants and Assistance Training Division at Management Concepts and is responsible for developing grants training curriculum. Prior to joining Management Concepts, he served as a Grants Director to multiple members of Congress and he continues to provide consulting services to Congressional offices in developing constituent grant programs. He also has prior experience in law enforcement and education. Shane holds a BA from the George Washington University and a M.Ed. from Marymount University.

About Management ConceptsManagement Concepts is the nation’s premier provider of training and professional development solutions serving the public and private sectors. Founded in 1973, Management Concepts has collaborated with every major agency in the federal government, thousands of state and local government offices, numerous non-profit organizations and universities, and hundreds of corporations — helping more than one million professionals unleash their potential.

At Management Concepts, we are committed to empowering professionals to advance their career and enabling organizations to achieve their mission with our high-impact training courses, professional development solutions, customized consulting services, and award-winning publications. For more information visit www.ManagementConcepts.com.

Era of accountability management concepts

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