EPA often does not document its reasons for choosing a
grant instead of a contract in its award decision
memorandums and it is unclear whether this shortcoming
obscured inappropriate decisions to use grants instead of
contracts, the General Accounting Office has said.
It said that under the Federal Grant and Cooperative
Agreement Act of 1977 the decision to issue a grant or
contract hinges on the purpose of the award.
In 64 percent — 43 of 67 — of the memoranda GAO reviewed,
EPA did not fully justify its reasons for choosing a grant
instead of a contract, even though EPA procedures define
staff roles and responsibilities, provide examples of when
to use a grant or a contract, and require justification in
the award decision memorandum.
However, GAO found about 8 percent of EPA’s discretionary
grantees identified EPA as the primary and direct
beneficiary, suggesting the principal purpose of the grant
award was acquiring property or services for EPA’s direct
benefit, which would call for a contract rather than a grant.
EPA needs to improve the documentation of its justification
for using a grant instead of a contract, both of which
constitute over two-thirds of EPA’s budget — in fiscal year
2003, EPA awarded $3.6 billion in grants directed by
Congress, $656 million in grants awarded at its own
discretion, and $934 million in contracts, said GAO.