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GAO's Report on the Cost of Custom Grant Systems (Part 2)

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The U.S. Government Accountability Office (GAO) recently published a report on information technology modernization. In part 1 of this series, we talked about how legacy systems come with hidden costs and can defeat their own purpose if all updates are not done in a timely manner. This second part will delve further into this by looking at how customized systems affect the quality of grant management.

Data Quality Issues

Let's go back to the Corporation for National and Community Service (CNCS), a federal organization whose internally designed grant management system became increasingly problematic.  Even before they were evaluated by the GAO, their own IT Modernization Plan in February of 2013 found that:

Data and information are not standardized and are entered into the grant management and monitoring systems with limited checks and validation, which results in data quality issues. In addition, according to the plan, technical limitations of [the custom-built solution] make it difficult and time-consuming to integrate data from multiple sources and filter out inaccuracies. For example, agency officials stated that initiatives such as reporting on state-level grants require significant intervention by technical staff to obtain, integrate, and analyze data due to the disparate nature of the way the data are stored.

In other words, if you are hurting your data quality and stepping outside the system to achieve your goals, you are increasing your staff costs in maintaining this custom-built-system. 

Ineffective Grant Monitoring

In addition, the CNCS Office of Inspector General (OIG) reported that the customized grant management software "was inefficient and ineffective at supporting monitoring officers’ efforts to predict and detect improper use of funds awarded by CNCS grants. The OIG noted that, although the agency had collected data from its grantees to monitor their use of funds, its outdated systems did not provide the kind of data analytics capabilities needed to monitor early detection of fraud and mismanagement of grant funds.” These failures to use technology to monitor grant activity mean greater loss of risk management practices and reliance on inefficient processes for finding fraud, misappropriation or mismanagement of funds. 

The Breaking Point

In 2014, the CNCS reached a breaking point and decided to modernize their IT infrastructure, including the grant monitoring process, by engaging with a contractor. The contractor conducted an independent evaluation to find limited system collaboration and communication capabilities, data inconsistencies, system availability issues, and data transparency and reporting issues needing improvement. With this many deficiencies, the users “found a way” to maintain mission-critical programmatic demands as “program staff had developed workaround solutions to manage critical information accessed from multiple disparate sources, such as spreadsheets, e-mail, local and shared files, and local databases.”

Kitchen Sink Requirements Cause Delays

As of the time of this writing, after three years and $30 million paid to the CNCS contractor, they still don’t even have a working first version of software and estimate that it will take $43.6 million to complete—$39.3 million in labor and $4.3 million in software and services. The obvious cause of such a project overrun like this is delays, but where do these delays come from?


What seems to drive an agency to choose a custom solution is that too many stakeholders bring the “kitchen sink” of requirements to the table in their RFIs and RFPs, and no single vendor can pass all those requirements with an existing software as a service (SaaS) vendor. When agencies decide to award and custom-build a software solution, instead of using a SaaS solution, they have to put themselves in the business of managing a vendor, project management, requirements gathering, software development, testing schedules and more. This is where the cause of most development project delays come from. The quality of grant management is affected because they and the contractors they work with rely on taking existing inefficient practices and moving them into a custom software solution thinking that will somehow save them. But it won’t. 

All About Good Stewardship

The principle recommendation of the GAO to CNCS executive management is that the “The Chief Executive Officer should direct the Chief Information Officer to take steps needed to ensure that system requirements are defined to align with the business needs of CNCS’s future risk-based grants monitoring process.” To me, this rather plainly says: Don’t transition your existing process or the way you do things today into a new customized online system.  Instead, invest in standardizing and improving your processes in an attempt to make it more future-proof for growth. Everyone working in or with government needs to be good stewards of federal funds. Reports like the GAO's remind us that customization, while an understandable move, can hurt good stewardship.

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