Drug Control: Certain DOD and DHS Joint Task Forces Should Enhance Their Performance Measures to Better Assess Counterdrug Activities

The U.S. government has identified illicit drugs, as well as the criminal organizations that traffic them, as significant threats to the United States. In 2017, over 70,000 people died from drug overdoses, according to the Centers for Disease Control and Prevention. DOD and DHS created joint task forces to help facilitate and strengthen interagency efforts in combating the flow of illicit drugs, particularly in the maritime domain.

GAO was asked to review the structure of these task forces and their ability to coordinate and conduct missions effectively. Among other objectives, this report (1) assesses the extent to which the task forces coordinate effectively to minimize duplication, and (2) examines how the task forces measure the effectiveness of their missions and activities. GAO reviewed and assessed documentation on the task forces' missions, coordination efforts, and performance assessments and compared them to best practices from prior work, departmental guidance, and federal internal control standards. GAO also met with task force officials to discuss and observe planning and coordination activities.

Many federal agencies are involved in efforts to reduce the availability of illicit drugs by countering the flow of such drugs into the United States. Among them are the Department of Defense (DOD), which has lead responsibility for detecting and monitoring illicit drug trafficking into the country, and the Department of Homeland Security (DHS), which is responsible for securing U.S. borders to prevent illegal activity. DOD and DHS lead and operate task forces—Joint Interagency Task Force (JIATF)-South, JIATF-West, and three DHS Joint Task Forces (JTF)—to coordinate and conduct counterdrug missions and activities. Task force officials reported that the task forces coordinated effectively with each other when they had shared purposes and overlapping or shared geographical boundaries (see map). The task forces also used coordination mechanisms that align with best practices, such as working groups and liaison officers, to minimize duplication of their missions and activities.

Note: DHS also has JTF-Investigations, which is a functional task force with no geographic area of responsibility.

Each of the five task forces GAO reviewed has performance measures, but only JIATF-South uses output (e.g., number of detected smuggling events) and outcome-based measures to assess the effectiveness of its activities. Specifically, JIATF-South developed an outcome-based measure of its overall effectiveness: the percentage of smuggling events it detected and provided to law enforcement that resulted in disrupted or seized illicit drugs. JIATF-West evaluates its numerous initiatives and activities, for instance, by determining if they were executed as planned, but has not established a vital few performance measures that consistently convey the overall effectiveness of its activities. Lastly, the DHS JTFs' performance measures are not outcome-based and do not fully assess the effectiveness of the task forces' activities. Enhancing their measures would better position JIATF-West and the JTFs to demonstrate contributions and convey trends in the overall effectiveness of their activities.

GAO is making three recommendations, including that JIATF-West establish a vital few, consistent performance measures for its overall performance; and that DHS develop outcome-based performance measures for the JTFs' activities. DOD and DHS concurred with the three recommendations.

The U.S. government has identified illicit drugs, as well as the  transnational and domestic criminal organizations that traffic and smuggle  them, as significant threats to the public, law enforcement, and the  national security of the United States. Deaths related to the use of drugs,  including illicit drugs, such as cocaine, heroin, fentanyl, and other  synthetic opioids, have risen in recent years. For example, according to  the Centers for Disease Control and Prevention’s National Center for  Health Statistics, in 2017, over 70,000 people died from drug overdoses  compared to approximately 47,000 such deaths in 2014.

For the past decade, one key priority of U.S. efforts to combat the effects  of illicit drugs has been to reduce their availability. Many federal  departments and agencies are involved in efforts to reduce the availability  of drugs by countering the trafficking and flow of illicit drugs into the  United States. Among them are the Department of Defense (DOD) and  the Department of Homeland Security (DHS). Regarding counterdrug  efforts, DOD is the lead department responsible for detecting and  monitoring (tracking) illicit drug trafficking into the United States and DHS  is responsible for securing the U.S. air, land, and sea borders to prevent  illegal activity. Both DOD and DHS created and lead interagency task  forces to help facilitate and strengthen efforts across federal agencies to  conduct counterdrug missions and activities to combat the flow of illicit  drugs into the United States. Given the number of federal counterdrug  task forces that exist, we focused this review on the two DOD and three  DHS joint task forces that conduct counterdrug missions and activities  and have overlapping areas of responsibility, particularly in the maritime  domain. In particular, for DOD we included Joint Interagency Task  Forces (JIATF)—JIATF-South and JIATF-West. These interagency task  forces were formed in 1989 as partnerships between military and federal  law enforcement agencies to coordinate and conduct counterdrug  operations. For DHS, we included three Joint Task Forces (JTFs)—JTF- East, JTF-West, and JTF-Investigations—that were created in 2014 to  enhance and unify DHS efforts, and those of its component agencies  (components), to secure the U.S. southern border and approaches to the  United States via land, sea, or air.

These five task forces have a role in U.S. counterdrug efforts, such as by  supporting the removal of cocaine bound for the United States and  strengthening interagency and foreign partners’ counterdrug capabilities.  However, questions have been raised about their effectiveness and the  extent of coordination between them, including potential duplication of  counterdrug missions and activities. You asked us to review these five  task forces’ coordination efforts, and their ability to conduct operations  effectively. In this report, we (1) describe the missions of JIATF-South,  JIATF-West, and the three DHS JTFs; (2) assess the extent to which  these task forces coordinate effectively with one another to minimize  duplication of missions and activities; and (3) examine how these task  forces measure the effectiveness of their missions and activities.

To describe the missions of the task forces, we collected and reviewed  documentation related to each task force’s missions and activities, such  as mission statements, guidance, memoranda, policies, and prior reports.  We also interviewed officials from each of the task forces, as well as key  components and offices, such as U.S. Customs and Border Protection  (CBP), Immigration and Customs Enforcement (ICE), and the U.S. Coast  Guard (Coast Guard). We obtained from these officials additional details  related to the task forces’ missions and activities, including information on  any task force reorganization efforts that have taken place since fiscal  year 2014, such as the JIATF-West reorganization in early 2016. We  analyzed similarities and differences across the task forces, including the  departments and agencies that provide staff to support the tasks forces,  as well as the varied agency representation on the task forces’ leadership  positions.

To assess the effectiveness of the task forces’ coordination, we examined  documentation related to task force coordination, such as strategic plans,  guidance, and memoranda of understanding and agreement. Additionally,  we collected and reviewed documentation on the extent to which the task  forces coordinated with one another, such as joint operations plans and  joint investigation reports; as well as the mechanisms used for  coordination, such as joint meetings and the use of liaisons. We also met  with officials at each of the five task forces to discuss and observe the  task forces’ planning and coordination efforts. Further, we developed a  set of 17 structured interview questions—which we derived from our  Duplication, Overlap, and Fragmentation guide and our prior work on  collaboration and coordination best practices—to interview a group of  knowledgeable officials at each of the five task forces on their  coordination efforts. Specifically, we asked officials in each of the task  forces to describe the nature of the task force’s coordination efforts, to  include: (1) the presence of a collaborative relationship with each of the  other task forces; (2) the circumstances under which it coordinates; (3)  the various mechanisms used to coordinate; and (4) views on the  effectiveness of the coordination with each of the other task forces. To  quantify these results, we conducted a network analysis in which we  aggregated the responses to our structured interview questions about the  nature and mechanisms used by the task forces to communicate and  coordinate with one another and developed a representation of the  patterns of collaboration among the task forces. We then analyzed these  networks to determine the extent to which the task forces were using  mechanisms our prior work had identified as best practices for effective  coordination. We then used task force documentation, such as joint  operations after action reports, to validate the responses regarding the  coordination mechanisms used. We also assessed the interview  responses we received from the task forces regarding their interactions  with the other joint task forces as a means to corroborate each task  force’s responses.

To examine how the task forces measure the effectiveness of their  missions and activities, we identified performance measures the task  forces used for assessing the effectiveness of their missions and activities  from fiscal years 2014 through 2018. Specifically, we reviewed each of  the task forces’ annual performance measures and reports and any  available results for this time period. We assessed the task forces’  performance measures against criteria, such as departmental  performance assessment standard operating procedures, best practices  to enhance performance management and measurement processes we  have identified in our prior work, and federal internal control standards  related to monitoring performance. Additionally, we examined measures  against relevant requirements in the 2017 National Defense Authorization  Act. To assess the reliability of the performance measures and any  underlying data used to inform the performance assessments from fiscal  years 2014 through 2018, we reviewed documentation, such as data dictionaries, system manuals, and user guides. We also interviewed task  force officials to better understand the processes for inputting and  monitoring the quality of the data and inputs, and how they identify and  address any deficiencies. Additionally, we interviewed task force officials  about how the data and other inputs were used, and the methodologies  for assessing the task forces’ missions and activities. We found the data  to be sufficiently reliable for the purposes of reporting how task forces  measure the effectiveness of their missions and activities.

We conducted this performance audit from May 2018 to July 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

Roles and Responsibilities in Federal Counterdrug Missions and Activities

As previously mentioned, multiple federal departments and components  have responsibilities for combating the flow of illicit drugs into the United  States. Figure 1 summarizes the missions and responsibilities of the  federal departments and components primarily responsible for combating  the trafficking of illicit drugs.

DOD and DHS Joint Task Forces Involved in Counterdrug Missions and Activities

In 1989, DOD created several joint task forces, which aimed to bridge the  military’s counterdrug efforts with those of civilian, federal law  enforcement agencies. These task forces have evolved since then and  eventually developed into the present-day iterations of JIATF-South under  the U.S. Southern Command and JIATF-West under the U.S. Indo-Pacific  Command.

JIATF-South and JIATF-West both consist of representatives from DOD,  DHS, and DOJ components, among others. Coast Guard admirals  currently serve as the Directors of both of the JIATFs. Previously, DOD  service components have led JIATF-South; however, while DOD is  responsible for detection and monitoring of drug flow, it is precluded from  taking law enforcement actions in counterdrug efforts. Task force  officials stated that Coast Guard leadership encourages participation from  both DOD and DHS because the Coast Guard is both a military and a law  enforcement agency. The deputy and vice leadership positions at the  JIATFs are held by officers and civilians from DOD, DHS, and DOJ  components, which allow the task forces to leverage various experiences  and authorities across these components, according to task force  officials.

In 2014, DHS established three new joint task forces — (1) JTF–East, (2)  JTF–West, and (3) JTF–Investigations—as pilot programs to, among  other things, address the smuggling of illicit drugs over the southern  border and approaches to the United States. Additionally, according to  the DHS Southern Border and Approaches Campaign Plan, the JTFs  were created to strengthen the unity of effort within DHS toward common  goals. The 2017 National Defense Authorization Act subsequently  codified these task forces and established new JTF requirements, such  as establishing outcome-based and other appropriate performance  measures to evaluate the effectiveness of each JTF. In 2017, DHS also  created a JTF Coordination Cell to develop JTF performance measures  and enhance awareness among DHS components about the role of the  JTFs, among other things.

The DHS JTFs primarily consist of representatives from CBP, ICE, and  the Coast Guard, and a representative from each of these components  serves as the Director for each of the three JTFs. The deputy leadership  positions of each JTF are held by officers from the other two components.  For example, DHS JTF-West’s director is an officer from CBP, and the  deputy directors are officers from the Coast Guard and ICE. According to  a DHS memorandum, in establishing the JTFs, DHS wanted each JTF to  be led and supported by the different DHS components in order to  integrate their varied capabilities. For more information on the task forces’  leadership and compositions, see table 1.

Each of the five task forces are similarly organized by functional areas  and all include areas such as administration and personnel, intelligence,  and operations. For example, JIATF-South, JIATF-West, and each of the  DHS JTFs have Planning sections, which help guide the task forces’  overarching strategic plans and operations, with input from other sections.  One task force—JIATF-West—further tailored its organizational structure  to its missions and activities. Specifically, JIATF-West reorganized in  January 2016, at the direction of the former U.S. Indo-Pacific Combatant  Commander, to operationalize and combine its Intelligence and  Operations functional areas into a Counternarcotics Operations Center.  According to JIATF-West leadership, the Counternarcotics Operations  Center better reflects the nature of its intelligence gathering and sharing  activities with other federal law enforcement agencies and foreign  countries. JIATF-West officials also stated the task force merged its  section that provided support and training of foreign law enforcement  agencies into its Planning and Engagement section since that section  directs activities related to JIATF-West’s engagement with partner  nations.

As shown in figure 2, the two DOD task forces (JIATF-South and JIATF- West) and two of the three DHS task forces (JTF-East and JTF-West)  have geographical areas of responsibility. In contrast, the third DHS task  force (JTF-Investigations) is focused on coordinating investigations and  information sharing to support DHS and the other two DHS JTFs. As a  result, it does not have a geographical area of responsibility.

Each of the Five Task Forces in Our Review Has a Counterdrug Mission, and Its Activities Vary Based on Threats in Its Area of Responsibility and Available Resources

Example of Joint Interagency Task Force– South (JIATF-South) Activity to Combat  Illicit Drug Trafficking   When JIATF-South receives information about  a potential illicit drug smuggling event, it will  use available air and maritime assets  allocated to it to detect and monitor the  suspect smuggling vessel. Once JIATF-South  locates the suspect vessel and has assets in  place, JIATF-South turns over control of the  assets to the relevant law enforcement  agencies (e.g., the Coast Guard, CBP, etc.) to  interdict the smuggling vessel and any illicit  drugs that may be on board.

JIATF-South: Focuses its activities on detecting, monitoring, and  supporting the interdiction of bulk cocaine movements being  smuggled on noncommercial maritime vessels. According to JIATF- South officials, this focus is partly because the key coca-producing  countries are within its area of responsibility, and partly because  cocaine is a key source of profit for transnational criminal  organizations. JIATF-South is also allocated assets, such as ships  and surveillance aircraft, from DOD and DHS components (such as  the Coast Guard and CBP Air and Marine Operations), as well as  from foreign partners. JIATF-South uses these maritime and air  assets, in conjunction with available intelligence, to detect and monitor  the trafficking of illicit drugs, such as cocaine, being smuggled north  across its area of responsibility. Once JIATF-South detects a  smuggling event occurring, it passes this information and control of  the assets to law enforcement authorities to interdict the smuggling  event. For an example of how this occurs, see the sidebar.

Example of Joint Interagency Task Force– West’s (JIATF-West) Capacity Building   Efforts to Combat Illicit Drug Trafficking   JIATF-West has helped countries in its area of  responsibility—such as Vanuatu—build their  financial investigative capacity by providing  law enforcement training on topics such as  bank records analysis, money laundering  theory, and accounting. This training is  intended to help foreign law enforcement  agencies better detect transnational criminal  organizations’ transactions, thus making it  more difficult for such organizations to operate  in their area of responsibility.

JIATF-West: Focuses its missions and activities on four priorities: (1)  detecting precursor chemicals that can be used to manufacture illicit  drugs, such as synthetic opioids; (2) supporting allies and foreign  partners in combating illicit drug trafficking in its area of responsibility;  (3) monitoring drug flows moving to, from, and through Asia and other  countries in the Indo-Pacific region; and (4) detecting the flow of  fentanyl and other synthetic opioids, according to JIATF-West  documents. According to JIATF-West officials, JIATF-West’s  activities primarily consist of intelligence gathering and collaboration  with law enforcement partners within foreign countries where  precursor chemicals are manufactured or combined to manufacture  illicit drugs. JIATF-West also engages in capacity building with law  enforcement authorities in foreign countries in the Pacific region, such  as the Philippines and Thailand. For an example of JIATF-West’s  capacity building efforts, see the sidebar.

Unlike JIATF-South, JIATF-West does not have assets, such as ships  or aircraft. However, JIATF-West officials stated that even if JIATF- West had assets, it would not alter the focus of its missions and  activities because of the threat transnational criminal organizations  pose and the nature of the flow of illicit drugs and precursor chemicals  in its expansive area of responsibility. For example, JIATF-West  officials told us that precursor chemicals are typically shipped in  commercial cargo containers. Notably, all precursor chemicals are  legal to manufacture and sell for legitimate uses, such as the  production of pharmaceutical drugs and pesticides, and it is difficult to  determine when such chemicals have been diverted for illicit use.  Officials stated that JIATF-West would face legal and logistical  challenges if they were to directly disrupt precursor chemicals being  diverted, such as if the vessel was state-owned or was in a foreign  country’s territorial waters. Thus, even if JIATF-West had assets,  JIATF-West officials noted that the legal and logistical challenges  would not change how the task force approaches its missions and  activities.

DHS JTFs: Focus on coordinating with DHS components (e.g., CBP,  ICE HSI, Coast Guard) to facilitate awareness about cross- component, cross-geographic homeland security issues. The JTFs  have broader missions than countering the flow of illicit drugs. For  example, the JTFs also have responsibilities for coordinating migrant  interdiction and counter-terrorism activities. Further, given their  areas of responsibility, JTF-East primarily focuses on threats along  the southern maritime border of the United States and JTF-West  primarily focuses on threats along the southwest land border. In  contrast, JTF-Investigations focuses on supporting DHS-wide  investigations and sharing information to support the other two task  forces. Similar to JIATF-West, the JTFs do not have physical assets  to support these activities. According to JTF officials, this is partly  because the 2017 National Defense Authorization Act requires the  JTFs to be cost neutral. Additionally, JTF officials stated the JTFs  were not meant to serve a similar function as the DOD combatant  commands and, instead, are meant to help with planning and  coordinating missions and activities across joint operating areas.

The Five Task Forces in Our Review Generally Coordinated Effectively to Help Minimize Duplication of Counterdrug Missions and Activities, Using Various Mechanisms Task Force Officials

Task force officials reported that the task forces effectively coordinated  counterdrug missions and activities to minimize duplication of efforts. The  extent to which the task forces coordinate varied based on whether they  have (1) shared purposes and (2) areas of responsibility with overlapping  or shared geographical boundaries. In particular, those task forces that  have shared purposes and those task forces that have overlapping areas  of responsibility or shared boundaries tended to coordinate with one  another more than with the other task forces. We also found that the task  forces use a variety of mechanisms to coordinate counterdrug missions  and activities, such as the use of working groups and liaison officers, that  our prior work has identified as best practices.

Reported Effective Coordination with the Other Task Forces

Officials we met with from each of the task forces stated that they are  satisfied with the level of coordination that takes place with other task  forces and that the coordination efforts have been effective. Our analysis  of their responses found that of the five task forces, JTF-Investigations’  coordination activities were rated as the most effective by the other four  task forces. JIATF-South was rated the second highest task force in  terms of both the effectiveness of its coordination activities and the  number of other task forces with which it coordinated. Figure 3 provides a  visual representation of the task force officials’ views on the extent to  which the task forces coordinate with one another and the effectiveness  of the coordination efforts. of coordination with the other task forces varies based on the extent to  which the task forces have shared purposes. Of the five task forces,  JTF-Investigations was the one task force that coordinated with all the  other task forces, which is consistent with its purpose to enhance  DHS investigations, coordinate priorities, and share information with  the other joint task forces. As a part of its process in designating  cases as a Homeland Criminal Organization Target (HOMECORT),  JTF-Investigations conducts a Comprehensive Criminal Network  Analysis that identifies links between multiple cases and criminal  organizations that can cross geographical and task force boundaries  (see sidebar for more information on the HOMECORT process).  According to JTF-Investigations officials, this analysis helps identify  cases that may be related and helps to coordinate cases across task  force jurisdictions to prevent duplication of missions and activities. forces told us that they coordinated more with those task forces with  which they had a shared border or joint operating area. For example,  JIATF-South shares a joint operating area or a geographical boundary  with both JTF-East and JIATF-West and, as a result, officials from  these three task forces provided more robust examples of  coordination.

The Task Forces Use a Variety of Mechanisms to Coordinate Missions and Activities

According to task force documentation, such as operational guidance,  and our discussions with task force officials, JIATF-South, JIATF-West,  and the DHS JTFs coordinated with each other on missions and activities  where they have a shared interest, such as a common illicit drug threat.  These coordination activities include information sharing and joint  operations, as well as mechanisms, such as the use of working groups  and liaison officers, which our prior work has identified as best practices  for coordination. According to task force officials, this coordination is  intended to enhance counterdrug efforts and avoid duplication of missions  and activities. As described earlier, the task forces have different mission  focuses that depend on their geographically defined areas of  responsibility, which also help the task forces avoid duplication of  missions and activities. However, as shown earlier in figure 2, there are  some areas of land, sea, and air in which more than one task force may  conduct missions and activities (e.g., between JIATF-South and JTF- East). These areas of overlap are called joint operating areas. According  to our review of task force documents and discussions with task force  officials, within these joint operating areas, the task forces share  intelligence information, coordinate missions and activities with one  another, and sometimes conduct joint operations. For example, in 2018,  JTF-East led and coordinated with JIATF-South on an operation to  increase intelligence and targeting capabilities to disrupt illicit drug  trafficking organizations operating within their joint operating area in the  Caribbean. JTF-East personnel deployed to JIATF-South’s headquarters  to facilitate coordination and information sharing. As a result of this joint  operation, the law enforcement agencies involved seized over 3,700  pounds of cocaine and apprehended 69 migrants, one smuggler, and the  smuggling vessel, according to JTF-East documentation.

Officials from the task forces we spoke with reported coordinating most  frequently through meetings and working groups, and through liaison  officers, as detailed in examples below.

JIATFs: In 2018, JIATF-South and JIATF-West officials developed a  collaborative process to track and target shipments with potential illicit  drugs and precursor chemicals moving between their respective areas  of responsibility. For example, JIATF-West analysts traveled to JIATF- South to initiate the process, and officials stated they continue to work  with JIATF-South analysts remotely on an ongoing basis on such  collaborative efforts.

JTFs: The JTF Coordination Cell hosts quarterly “synchronization  meetings” with the three DHS JTFs to discuss emerging drug and  smuggling trends, ongoing coordination efforts, and investigations.

All five task forces utilize liaison officers to enhance coordination with the  other task forces and components. For example, in 2018, JIATF-West  sent an analyst to JTF-Investigations to coordinate on a HOMECORT  case related to drug threats in the Indo-Pacific region. Further, the five  task forces coordinate with each other and their participating components  through liaison officers that reside at the task forces. For example, JIATF- South officials told us that they coordinate with JTF-East through a Coast  Guard liaison at JIATF-South. Liaison officers also provide direct access  to their components’ information systems, which task force officials said  further aids them in sharing information and coordinating missions and  activities.

In addition to meetings, working groups, and liaison officers, the task  forces utilize other coordination mechanisms, such as memoranda of  understanding and agreement, shared databases, and conferences, as  detailed below.

Memoranda of understanding or agreement: The two JIATFs have  nine separate formal memoranda of understanding or agreement with  various DHS and DOJ components, such as the Drug Enforcement  Administration and ICE, that detail how the task forces and agencies  will coordinate with one another and share resources.

Shared databases: Each of the five task forces, along with other  federal agencies, can submit information, sometimes known as a  “critical movement alert” to shared databases, to alert JIATF-South  about a potential drug event in its area of responsibility. According to  JIATF-South officials we spoke with and our observations, JIATF- South uses these critical movement alerts, along with other  intelligence that may exist, to determine whether it will dedicate assets  to target a smuggling event, in conjunction with other, relevant law  enforcement agencies.

Conferences: Each of the five task forces participates in periodic in- person, telephone, or video conferences to coordinate with one  another and share information on key issues. For example, JIATF- South officials stated they have ongoing discussions once a quarter  via video conference with JIATF-West officials and other federal  agencies and task forces to coordinate on illicit drug threats.

Four of the Five Task Forces’ Performance Measures Do Not Allow Them to Determine the Effectiveness of Their Counterdrug Activities

JIATF-South Uses Various Output and Outcome- Based Measures to Assess the Effectiveness of Its Counterdrug Activities

JIATF-South uses both output-based and outcome-based performance  measures to gauge the effectiveness of its counterdrug missions and  activities, and it reports the results to the DOD Deputy Assistant  Secretary of Defense for Counternarcotics and Global Threats in JIATF- South’s annual Performance Summary Reports. JIATF-South  consistently assesses four key performance measures, called interdiction  continuum measures, using data from the Consolidated Counterdrug  Database to determine the effectiveness of its missions and activities.  Specifically, JIATF-South measures (1) total maritime smuggling events,  (2) targeted smuggling events, (3) detected smuggling events, and (4)  seized or disrupted smuggling events. According to JIATF-South officials,  data on these events allow JIATF-South to develop its primary measure  to determine the effectiveness of its counterdrug missions and activities:  the percentage of smuggling events JIATF-South detected that it handed  off to law enforcement agencies that resulted in disrupted or seized illicit  drugs. These measures and the results for fiscal years 2014 through  2018 are shown in table 2.

From fiscal years 2014 through 2018, the rate at which JIATF-South  successfully detected and handed off smuggling events for interdiction  was generally 70 percent or higher. While JIATF-South officials  acknowledged they have not met the target set by DOD, they noted there  are many factors that influence the effectiveness of JIATF-South’s  counterdrug missions and activities in any given year that are outside of  its span of control. For example, drug trafficking organizations may adapt  their tactics in response to JIATF-South’s activities to make it more  difficult for the task force to target and detect their movements. This could  include changing their trafficking routes or altering the size or type of  smuggling conveyances the drug trafficking organizations use to transport  the illicit drugs.

JIATF-West Has a Well- Documented Methodology for Assessing Its Activities, but Its Measures Do Not Allow It to Demonstrate the Overall Effectiveness of Its Counterdrug Activities

In September 2014, JIATF-West set up an Assessments Branch to  provide an annual assessment of the task force’s counterdrug efforts that  was intended to inform leadership about whether the task force was  undertaking the best activities to achieve its mission and implementing  them effectively. According to JIATF-West officials, the nature of JIATF- West’s missions and activities make it inherently more difficult to assess  and quantify the effectiveness of its efforts relative to other task forces.  For example, unlike JIATF-South, which is annually allocated assets to  support its missions and activities and can measure results—such as tons  of cocaine seized—JIATF-West’s initiatives and activities are primarily  focused on information sharing and helping partner nations improve their  counterdrug capabilities, activities for which results may be more difficult  to quantify.

To develop its annual assessment report, JIATF-West’s Assessments  Branch evaluates and assigns scores for each of the approximately 20  counterdrug initiatives and more than 100 corresponding activities it  conducts each year. (For an example of a JIATF-West initiative and a  corresponding activity and a description of how they were assessed, see  the sidebar.) In particular, JIATF-West evaluates its initiatives to  determine the progress made toward achieving objectives defined in  JIATF-West’s strategic documents, such as its Theater Counternarcotics  Campaign Plan. Further, JIATF-West evaluates its activities to determine  whether they were executed as planned, including considerations of  whether the activities were done with the intended organizations, at the  specified locations and times, and whether they met stated objectives.  Nevertheless, we identified ways JIATF-West measures its performance  that inhibit its ability to demonstrate its overall effectiveness of countering  the flow of illicit drugs. Specifically, we found that JIATF-West (1) lacks a  vital few performance measures that summarize its overall effectiveness  that can be consistently assessed over time and (2) that it does not have  established targets for assessing the effectiveness of its numerous  missions and activities.

JIATF-West Lacks a Vital Few, Comprehensive Performance Measures That Summarize Its Effectiveness and Are Consistent Over Time

JIATF-West has focused its performance measures on assessing its  numerous initiatives and activities; however, it has not developed a vital  few, comprehensive performance measures that summarize the overall  effectiveness of its numerous initiatives and activities in a manner that  would convey essential information on its counterdrug activities to  decision makers at the DOD command level and above. Such information  could help these decision makers better understand the overall  effectiveness of JIATF-West’s counterdrug missions and activities in  relation to broader U.S. counterdrug efforts. For example, JIATF-West  could develop a performance measure that calculates the percentage of  leads it provides to foreign partners that result in seizures or  apprehensions. Such a measure could demonstrate JIATF-West’s overall  effectiveness in supporting allies and foreign partners in combating illicit  drug trafficking in its area of responsibility, in keeping with one of its  operational priorities.

Guidance on performance measures from the DOD Office of the Deputy  Assistant Secretary of Defense for Counternarcotics and Global Threats  states that agencies should develop a vital few measures, no more than  two or three, which convey essential information on counterdrug activities  to decision makers. JIATF-West used to assess and report such  measures as recently as fiscal year 2015. For example, it reported scores  on the effectiveness of its mission and broader lines of effort, such as  countering illicit drug and precursor chemical flows in its area of  responsibility. However, JIATF-West officials told us they stopped  reporting on these performance measures in fiscal year 2015 because,  from the task force’s perspective, the measures did not provide  meaningful insights into the effectiveness of the task force’s operations.  However, such performance measures could provide meaningful  information on the effectiveness of JIATF-West’s counterdrug activities to  decision makers at the DOD command level and above, even if such  summary information might not affect the effectiveness of operations at  the task force level. We have previously reported on the importance of  developing performance measures that demonstrate broader  effectiveness and have also reported it is worthwhile for agencies to  develop them to better determine and understand the overall  effectiveness of their missions and activities.

Further, JIATF-West is also unable to assess the effectiveness of its  initiatives and activities over time because it has annually changed the  way it measures the effectiveness of more than 100 counterdrug  initiatives and activities. Specifically, JIATF-West has adjusted how it  assesses the initiatives and activities each year since 2014—for example,  by changing the weight scale for scoring its initiatives and activities to  give more emphasis to some over others. These changes to the  methodology make it difficult to compare results and assess the  effectiveness of its activities over time. DOD guidance states that  agencies should have measures that are consistent over time to capture  trend results. In discussing these issues with JIATF-West officials, they  stated that assessing the initiatives and activities provides valuable  information on the effectiveness of the task force’s efforts for internal, task  force management. They acknowledged that JIATF-West’s performance  measures could be improved to allow for assessments of the  effectiveness of the task force’s activities over time, but they added that  they plan to use the same methodology to calculate the task force’s  initiatives and activities scores in the future because this information is  still needed internally. Given that JIATF-West’s individual initiatives and  activities change year to year, however, it will be difficult for JIATF-West  to assess trends in the effectiveness of its initiatives and activities over  time. By also establishing a vital few, comprehensive performance  measures that can be assessed consistently over time, as appropriate,  JIATF-West will be able to better convey trends in the overall  effectiveness of its counterdrug missions and activities over time.

JIATF-West Lacks Specific Performance Targets for Its Initiatives and Activities

JIATF-West has not developed specific performance targets (i.e.,  established acceptable levels of performance or outcomes) for its  initiatives and activities as part of its documented assessment  methodology, and no such targets appear in any of the task force’s  annual assessment reports. When assessing its initiatives and activities,  JIATF-West officials told us it aims to achieve the best possible  outcome—or the highest possible score—for each of the initiatives and  activities it undertakes and assesses. DOD guidance states that targets  should be set for each performance measure to establish a minimum  level of performance to be accomplished within a given time frame.  Additionally, establishing specific performance measure targets that set a  minimum level of performance to achieve could better encourage the task  force to meet the targets and identify ways to improve, as needed.

The DHS JTF Performance Measures Changed from Fiscal Year 2017 to 2018 and Do Not Reflect Outcomes

The DHS JTFs were fully operational in fiscal year 2016 and began  assessing their performance and producing performance reports in fiscal  year 2017. Since they began reporting on their performance, the  measures the JTFs reported changed in fiscal year 2018 and, according  to JTF officials, will change again in fiscal year 2019. Specifically, in the  fiscal year 2017 performance report, the JTFs reported on activities, such  as the amounts of drugs seized, arrests made, and currency seized.  However, according to task force officials, the 2017 report’s performance  measures did not accurately reflect the strategic-level coordination the  JTFs performed. For example, the measures the JTFs reported in fiscal  year 2017 focused on drug seizures and arrests made by the DHS  components. While the drug seizures and arrests made by the DHS  components may have been made possible because of coordination  activities of the DHS JTFs, using data on drug seizures and arrests as  JTF performance measures resulted in double-counting because the  components reported on the same seizures and arrests for their  respective counterdrug programs.

To address these issues for fiscal year 2018, the JTFs and the DHS  Coordination Cell developed a new set of performance measures that  were intended to better reflect the JTFs’ coordination activities and contributions. For example, a new JTF performance measure developed  for fiscal year 2018 included the number of leads that the JTFs provided  to a partner law enforcement agency, DHS component, or foreign  government partner for interdiction or investigative action. Table 3 shows  the evolution of the JTF performance measures from fiscal year 2017 to  fiscal year 2018.

The 2017 National Defense Authorization Act requires the Secretary of  DHS to establish outcome-based and other appropriate performance  measures to evaluate the effectiveness of each joint task force.  Although the DHS JTF Coordination Cell and the JTFs developed  performance measures in fiscal year 2018 that better reflect the specific  missions and activities of the three task forces, these measures are  focused on outputs—such as the number of operations conducted in  combating transnational criminal organizations—and not outcomes, such  as the number or percentage of leads that resulted in seizures of illicit  drugs. According to JTF Coordination Cell officials, the fiscal year 2018  JTF performance measures are not outcome-based because it is difficult  to quantify and capture the contributions of the JTFs through their roles  as coordinators and facilitators of missions and activities that are  conducted by DHS components. Table 4 illustrates each of the DHS JTF  performance results for fiscal year 2018 under the revised measures.

In addition to the changes to the performance measures made from fiscal  years 2017 to 2018, JTF Coordination Cell officials told us in October  2018 they plan to further revise their performance measures for fiscal  year 2019, as they believe their measures could continue to improve to  better reflect the value added by the JTFs and their coordination and  information-sharing activities. JTF Coordination Cell officials further stated  that they had considered linking the fiscal year 2018 performance  measures to relevant strategic-level outcomes in DHS plans. However,  they noted that such outcomes—including the number of drug seizures  and apprehensions—are already reported by the individual DHS  components and they are trying to avoid the double-counting that  occurred in the fiscal year 2017 performance report.

We acknowledge that the types of coordination activities that the JTFs  perform are inherently more difficult to measure, but developing and  implementing outcome-based performance measures that reflect the  value the JTFs add would better position the JTFs to demonstrate the  effectiveness of their coordination efforts. For example, a performance  measure that calculates the percentage of leads provided to components,  partner law enforcement agencies, or foreign government partners that  result in a successful seizure or arrest could help demonstrate the JTFs’  contributions to DHS counterdrug efforts. Further, in designing its  outcome-based performance measures that are reflective of their  coordination and information sharing activities, establishing a consistent  set of performance measures across years, as appropriate, will allow the  JTFs to better assess and convey their progress over time.

In 2017, 70,237 Americans died from an overdose involving synthetic  opioids, heroin, cocaine, and other drugs. The number of annual  overdose deaths has nearly doubled over the past decade. Combating  the trafficking and availability of illicit drugs in the United States is a  government-wide priority that requires a coordinated effort by federal  departments and agencies with counterdrug responsibilities. JIATF- South, JIATF-West, and the three DHS JTFs are five task forces that are  focused on strengthening interagency counterdrug efforts. While these  task forces have worked together to coordinate and avoid duplicative  activities, improvements to the performance measures used by four of the  five task forces could enable them to better determine the effectiveness of  their counterdrug missions and activities. In particular, by developing a  vital few, comprehensive measures that are consistent from one year to  the next, and establishing specific targets against which it can measure  its missions and activities, JIATF-West will be better able to determine the  effectiveness of its missions and activities and assess performance  trends across years. In addition, by developing outcome-based  performance measures that are consistent, the JTFs would be better  positioned to demonstrate the effectiveness of their counterdrug efforts  over time.

We are making a total of three recommendations: two for JIATF-West and  one for DHS.

The Director of JIATF-West should establish a vital few performance  measures that are consistently measured over time. (Recommendation 1)

The Director of JIATF-West should establish specific targets that set a  minimal level of performance. (Recommendation 2)

The Secretary of Homeland Security should develop outcome-based  performance measures for the DHS JTFs that are consistent.  (Recommendation 3)

In May 2019, we provided a copy of this report to DOD, DHS, DOJ, and  the Office of National Drug Control Policy (ONDCP) for review and  comment. In written comments, which are included in appendix II, DOD  stated that it concurred with the two recommendations directed to JIATF- West and noted that JIATF-West plans to conduct an internal evaluation  to establish a vital few performance measures to allow it to measure  performance over time. Additionally, JIATF-West has identified several  areas where it can establish specific targets that set a minimal level of  performance to support DOD priorities. In its written comments, which are  included in appendix III, DHS stated that it concurred with its  recommendation and plans to implement new performance measures in a  phased approach. DHS also provided technical comments, which we  have incorporated into the report, as appropriate. Additionally, ONDCP  provided technical comments, which we have incorporated into the report,  as appropriate. DOJ did not have any comments on the draft report.

We are sending copies of this report to the appropriate congressional  committees, the Acting Secretary of Homeland Security, the Acting  Secretary of Defense, and other interested parties. In addition, the report  is available at no charge on the GAO website at www.gao.gov.

If you or your staffs have any questions about this report, please contact  me at (202) 512-3841or AndersonN@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix IV.

Appendix I: Fiscal Year 2018 Performance Measures and Targets for the Department of Homeland Security Joint Task Forces

This appendix provides further details regarding the performance  measures and performance targets for the Department of Homeland  Security Joint Task Forces.

Appendix II: Comments from the Department of Defense

Appendix III: Comments from the Department of Homeland Security

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Christopher Conrad (Assistant  Director), Kelsey Hawley (Analyst-in-Charge), and Julia Vieweg made key  contributions to this report. Also contributing to the report were Billy  Commons, Pamela Davidson, David Dornisch, Eric Hauswirth, and Susan  Hsu.

Drug Control: DOD Should Improve Its Oversight of the National Guard  Counterdrug Program. GAO-19-27. Washington, D.C.: January 17, 2019.

Colombia: U.S. Counternarcotics Assistance Achieved Some Positive  Results, but State Needs to Review the Overall U.S. Approach.  GAO-19-106. Washington, D.C.: December 12, 2018.

Illicit Opioids: Office of National Drug Control Policy and Other Agencies  Need to Better Assess Strategic Efforts. GAO-18-569T. Washington,  D.C.: May 17, 2018.

Illicit Opioids: While Greater Attention Given to Combating Synthetic  Opioids, Agencies Need to Better Assess their Efforts. GAO-18-205.  Washington, D.C.: March 29, 2018.

Counternarcotics: Overview of U.S. Efforts in the Western Hemisphere.  GAO-18-10. Washington, D.C.: October 13, 2017.

Border Security: Additional Actions Could Strengthen DHS Efforts to  Address Subterranean, Aerial, and Maritime Smuggling. GAO-17-474.  Washington, D.C.: May 1, 2017.

Coast Guard: Resources Provided for Drug Interdiction Operations in the  Transit Zone, Puerto Rico, and the U.S. Virgin Islands. GAO-14-527.  Washington, D.C.: June 16, 2014.

Combatting Illicit Drugs: DEA and ICE Interagency Agreement Has  Helped to Ensure Better Coordination of Drug Investigations.  GAO-11-763. Washington, D.C.: July 28, 2011.

The Departments of Defense and Homeland Security have formed task forces to combat the flow of illicit drugs into the United States. Among other things, these task forces may help coordinate the counterdrug efforts of military and federal law enforcement agencies.

The 5 task forces we assessed coordinate their activities in a manner that helps minimize duplication of effort. However, only 1 had measures to determine the effectiveness of its counterdrug activities, such as an estimate of the percentage of smuggling attempts that task force efforts disrupted.

We made 3 recommendations to establish or improve measurements of performance.


Small Business Administration: Steps Taken on Long-Standing Weaknesses in SBA's Oversight of Tribal 8(a) Firms, but Additional Actions Needed

Federal obligations under SBA's 8(a) Business Development Program totaled about $10.9 billion in fiscal year 2019, according to federal procurement data reported as of October 7, 2019. SBA's 8(a) program is one of the federal government's primary vehicles for developing socially and economically disadvantaged small businesses, including firms owned by ANCs. One of the key benefits of this program is the ability for ANC-owned firms to receive federal contract awards that have been set aside solely for 8(a) firms. From 2006 through 2016, GAO issued three reports detailing the limitations of SBA's oversight and monitoring of ANC-owned firms participating in the 8(a) program.

GAO's testimony discusses the highlights of the aforementioned three reports and the extent to which SBA has addressed the recommendations GAO made in those reports, as of October 2019. GAO examined SBA files and other documents, conducted site visits, and interviewed program officials to perform the work of those reports.

In three reports issued between 2006 and 2016, GAO has found persistent weaknesses in the Small Business Administration's (SBA) oversight and monitoring of Tribal 8(a) firms, in particular the Alaska Native Corporations' (ANC) subsidiary firms (ANC-owned firms) that participate in SBA's 8(a) program. Over the course of the program, qualified small, disadvantaged businesses, including ANC-owned firms, can receive federal contract awards that have been set aside solely for such businesses, and business development support from SBA, such as mentoring, financial assistance, and other management and technical assistance. In its three reports, among other things, GAO found that SBA had (1) incomplete information and documentation on ANC-owned firms and their compliance with regulatory requirements; (2) limitations in its ability to track and share key program data needed to enforce its own program; (3) insufficient staffing in its Alaska District Office to carry out necessary and critical monitoring tasks; and (4) inadequate or vague program guidance for clearly communicating to staff how to interpret new regulations.

GAO made 21 recommendations to SBA that address weaknesses in SBA's oversight and monitoring of ANC-owned firms participating in the 8(a) program. SBA has taken steps to implement many of those recommendations, including enhancing training for SBA staff that emphasized program rules, and developing and implementing a regulation that helps SBA better enforce rules against ANC-owned firms obtaining contracts for which they were not necessarily eligible.

However, SBA has not yet implemented recommendations that, if implemented as intended, could significantly improve its oversight of the 8(a) program. For example, SBA has not yet addressed limitations raised in GAO's 2006 and 2016 reports regarding SBA's tracking of revenue information for ANC-owned firms, which limits SBA's oversight of 8(a) rules prohibiting multiple subsidiaries under one ANC from generating revenue in the same primary line of business—which 8(a) program regulations intend to limit. SBA officials informed GAO of the agency's plans to develop an information system capable of addressing this issue. However, at the time of GAO's 2016 report, SBA could not provide detailed information or plans about this system, and as of today, the agency could not provide documentation that this system is operational. As another example, SBA has not addressed GAO's 2006 recommendation to consistently determine whether other small businesses are losing contracting opportunities when SBA awards contracts through the 8(a) program to ANC-owned firms, as required in regulation—an area where GAO found that SBA had fallen short in its oversight. Instead, in 2009, SBA reported that it performed a single analysis of a limited set of procurement data from a limited period and concluded the data did not indicate that other small 8(a) firms (e.g., black-owned, Hispanic-owned, and others) were losing contracting opportunities to ANC-owned firms. However, SBA's actions did not address the intent of GAO's recommendation to “consistently” perform this oversight. Absent action on these recommendations, the program continues to be at risk of noncompliance.

GAO made multiple recommendations in its reports from 2006 through 2016, many of which SBA has taken steps to implement. However, SBA has not addressed key GAO recommendations, including tracking and sharing ANC-related information across SBA regional offices, considering the establishment of criteria thresholds for contract modifications, and developing policies to consistently assess whether other small businesses are losing 8(a) contracts to ANC-owned firms. GAO continues to believe that implementing these recommendations would enhance SBA's oversight and monitoring of firms in the 8(a) program.

Thank you for the opportunity to discuss our prior work on weaknesses in  the Small Business Administration’s (SBA) oversight and monitoring of  Alaska Native Corporations (ANC) subsidiary firms (“ANC-owned firms”)  that participate in the agency’s 8(a) program and the actions SBA has  taken to address these weaknesses. The 8(a) program is one of the  federal government’s primary vehicles for developing socially and  economically disadvantaged small businesses, including those firms  owned by ANCs. One of the key benefits of this program is the ability for  ANC-owned firms to receive federal contract awards noncompetitively for  any dollar amount. Federal obligations under SBA’s 8(a) Business  Development Program totaled about $10.9 billion in fiscal year 2019.

From 2006 through 2016, we issued three reports detailing the limitations  of SBA’s oversight and monitoring of ANC-owned firms participating in the  8(a) program. In our 2006 report, we noted that, among other things,  SBA’s program rules did not anticipate the complexity of ANC firm  structures. Our subsequent reports in 2012 and 2016 also found various  limitations in SBA’s oversight, including limitations in SBA’s ability to  share key data across its district offices and long-standing staffing  challenges specific to its Alaska District Office, which oversaw the  majority of ANC-owned firms in the 8(a) program. More recent reports  issued by the SBA Office of Inspector General demonstrate that SBA  continues to face challenges in its oversight of the 8(a) program, in  general.

My testimony today will discuss (1) highlights of the aforementioned  reports related to Tribal firms, including ANC-owned firms, participating in  the 8(a) program, and (2) the extent to which SBA has addressed the  recommendations we made in those reports. From 2006 through 2016,  GAO issued three reports detailing the limitations of SBA’s oversight and  monitoring of ANC-owned firms participating in the 8(a) program. We  reviewed information from SBA on the status of their efforts to implement  the recommendations as of October 2019. We conducted the work on  which this statement is based in accordance with generally accepted  government auditing standards. More detailed information on our  objectives, scope, and methodology for that work can be found in each of  the reports mentioned above. Those standards require that we plan and  perform the audit to obtain sufficient, appropriate evidence to provide a  reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives.

The 8(a) program is designed to assist small, disadvantaged businesses  in competing in the American economy through business development.  Over the course of the program, qualified small, disadvantaged  businesses can receive business development support from SBA, such  as mentoring, procurement assistance, business counseling, training,  financial assistance, surety bonding, and other management and  technical assistance. One of the key areas of support is eligibility for  competitive and sole-source federal contracts that are set aside for 8(a)  businesses, which can be an important factor of the financial  development for ANC-owned firms. Oversight and monitoring of all firms  participating in the 8(a) program are delegated to each of SBA’s 68  district offices nationwide. Of its 68 district offices—staff at the Alaska  District Office were assigned and oversaw the majority of all participating  ANC-owned firms.

ANCs and ANC-owned firms have a unique status in the 8(a) program  and can enter into complex business arrangements In terms of their  organizational structures, ANCs can be either for-profit or not-for-profit  and can own a family of for-profit subsidiary firms, including but not  limited to, wholly owned holding companies that often provide  administrative support to smaller sister ANC-owned firms. As a condition  of the 8(a) program, participating ANC-owned firms must be for-profit.  Generally, ANC-owned firms can remain in the 8(a) program for up to 9  years, provided they maintain their eligibility. During the first four  “developmental” years, participating firms may be eligible for assistance  in program areas including sole-source and competitive 8(a) contract  support, and training in business capacity development and strategies to  compete successfully for both 8(a) and non-8(a) contracts, among other  things. In the last 5 years, firms prepare to transition out of the program,  and are required to obtain a certain percentage of non-8(a) revenue to  demonstrate their progress in developing into a viable business that is not  solely reliant on the 8(a) program.

SBA Has Faced Long-Standing Weaknesses in Its Oversight and Monitoring of Tribal Firms’ Compliance with 8(a) Program Requirements

Across three reports on SBA’s 8(a) program, we have found persistent  weaknesses in the oversight and monitoring of participating Tribal firms,  in particular ANC-owned firms. Specifically, we found that SBA had (1)  incomplete information and documentation on ANC-owned firms’  compliance with regulatory requirements; (2) limitations in its ability to  track and share key program data needed to enforce revenue rules of  Tribal firms, including ANC-owned firms; (3) insufficient staffing in its  Alaska District Office to carry out necessary and critical monitoring tasks  of ANC-owned firms; and (4) inadequate program guidance for clearly  communicating to staff how to interpret new regulations.

Incomplete information and documentation on ANC-owned firms  and their compliance with regulations: We reported in 2016 that during  a 2014 site visit to the Alaska District Office, we noted that incomplete  information and documentation limited SBA’s oversight of the regulatory  requirements specific to ANC-owned firms we examined. For example,  SBA faced significant challenges in providing us with very basic  information on ANC-owned firms, such as the total number of firms  serviced by the agency. For example, during the course of our review, it  took 3 months for SBA to provide us with a list of ANC-owned firms in the  8(a) program, and on three separate occasions SBA officials provided  three separate numbers for the total number of ANC-owned firms— ranging from 226 to 636. We noted in our 2016 report that SBA’s inability  to account for and make available principal information on all of the ANC- owned firms participating in the program raises concerns about the  integrity of the agency’s internal controls and ability to provide effective  and sustained oversight.

As another example, we reported in 2016 that SBA was unable to provide  seven of 30 required agency offer letters for 8(a) contracts that we  requested for our review of contracts that may have been follow-on, sole- source contracts. According to the regulation, these required offer letters are critical documents that could have assisted SBA staff in  understanding a contract’s acquisition history and any small business that  performed this work prior to any subsequent awards. Once an applicant is  admitted to the 8(a) program, it may not receive an 8(a) sole-source  contract that is also a follow-on contract to an 8(a) contract that was  performed “immediately previously” by another 8(a) program participant  (or former participant) owned by the same ANC. We found that SBA’s  inability to enforce the regulatory prohibition against follow-on, sole- source contracts was directly tied to the quality of the documentation it  collected from contracting agencies. While we found that one program  official in the Alaska District Office took steps during our 2016 review to  ask agencies to specifically report whether contracts are follow-on, sole- source awards in offer letters, we have no evidence supporting that this  practice was more broadly adopted by the program as a whole.  Ultimately, we recommended and SBA agreed to enhance its internal  controls and oversight of ANC-owned firms in the 8(a) program by  ensuring that all ANC-owned firm files contain all relevant documents and  information and providing additional guidance and training to SBA staff on  the enforcement of related policies, among other things.

Limitations in tracking and sharing key program data needed to  enforce 8(a) revenue rules: In all three reports mentioned in this  testimony, we found that SBA faced limitations in tracking information on  the primary revenue generators for Tribal firms, including ANC-owned  firms, to ensure that multiple firms under one parent ANC are not  generating their revenue in the same primary line of business—that is,  expressed as and operating under the same North American Industry  Classification System (NAICS) code—which SBA’s regulation intends to  limit. As discussed later in this testimony, we first identified this issue in  our 2006 report, noting that SBA was not effectively tracking ANC-owned  firms’ revenue data to ensure that the sister firms were not generating the  majority of revenue in the same line of business. We recommended that  SBA collect information on the participation of 8(a) ANC-owned firms as  part of required overall 8(a) monitoring, to include tracking the primary  revenue generators for ANC-owned firms and to ensure that multiple  subsidiaries under one ANC are not generating their revenue in the same  primary line of business. Then in our 2012 report, we found that SBA had  not addressed this limitation and recommended that SBA develop a  system that had the capability to track revenues from ANC-owned firms’  primary and secondary lines of business to ensure that ANC-owned firms  under the same parent ANC are not generating the majority of their  revenue from the same primary line of business.

In our 2016 report, we found that SBA still had not developed such a  system and thus was not effectively tracking and sharing the type of  revenue information needed to ensure 8(a) ANC-owned firms are  following the intent of 8(a) revenue rules. For example, we found that  without such a system, sister ANC-owned firms owned by the same ANC  could circumvent the intent of the prohibition. In particular, one sister  ANC-owned firm could generate a greater portion of revenues under its  secondary line of business that another sister ANC-owned firm is using as  its primary line of business. Although this type of activity is not prohibited,  we determined that if such activity is left untracked, a firm’s secondary  line of business could effectively become its primary revenue source in  the same line of business that its sister firm claims for its primary line of  business without actually violating SBA’s regulation. During our 2016  review, we found 5 pairs of ANC-owned firms participating in the 8(a)  program from fiscal years 2011 through 2014 that concurrently generated  millions of dollars in the same line of business as their sister ANC-owned  firm’s primary line of business, while generating less or no revenue under  their own primary line of business. As we found then, such activity  could, intentionally or not, potentially circumvent the intent of SBA’s  prohibition, and as discussed later, we recommended that SBA take  action to prevent ANC-owned firms from circumventing this rule. Figure 1  below illustrates one example we reported on in our 2016 report.

Insufficient staffing levels in SBA’s Alaska District Office: In our 2006  report, we noted that SBA lacked adequate staffing levels in the Alaska  District Office—a district office responsible for the oversight of the  majority of ANC-owned firms. Our reports, and a 2008 report issued by  the SBA’s Office of the Inspector General, have shown that inadequate  staffing was a long-standing challenge and a consistent weakness that  directly contributed to SBA’s inability to provide adequate oversight. In our  2012 report, we noted that ANC-owned firms could quickly outgrow the  program. It should be noted that we recommended that SBA evaluate its  staffing levels in 2006, and in our 2016 report, we found that the staffing  challenges persisted. As a result, we found that SBA needed a sustained  and comprehensive approach to staffing its Alaska District Office in order  to conduct sufficient oversight of ANC-owned firm activities. We were told  that frequent staff turnover directly contributed to the limited number of  staff in the Alaska District Office with ANC firm expertise—limiting their  ability to conduct effective and timely oversight of the ANC-owned firms  participating in the program. An SBA official told us at the time that the  optimum number of staff for the Alaska District Office was five with no  more than 100 assigned 8(a) firm files each; however, that office had 1.5  staff responsible for about 200 files each. We found, based on SBA  documentation and observation during our site visit to Alaska that,  because of this staffing shortage, supervisory review of contract  monitoring activities and annual reviews fell behind, resulting in a backlog  of oversight duties related to ANC-owned firms.

In 2016, we found that SBA took some short-term actions to address the  issues that we identified, such as temporarily redistributing the  management of ANC-owned firm files across several other district offices  and within the Alaska District Office. As for long-term action, SBA officials  provided us with documentation describing the program’s long-term  staffing strategy, which included succession planning and managing  attrition. For example, SBA planned to hire four additional BOS, and an  attorney who understands ANCs. At that time, SBA began implementing  its staffing strategy by hiring additional business opportunity specialists  for its Alaska District Office. However, we have not evaluated whether the agency implemented the remainder of its strategy for succession planning  and managing attrition.

Inadequate program guidance: We reported that SBA lacked program  guidance that could have assisted the Alaska District Office in improving  staff’s knowledge of program rules and monitoring practices. We initially  raised our concern about the need for strong guidance in 2006 given the  unique status in the 8(a) program and relationships entered into by ANC- owned firms. For our 2012 report, SBA officials told us that it was in the  process of updating its program guidance for the program. However, in  our 2016 report, we similarly found that staff lacked sufficient guidance  and training on key program regulations and internal monitoring practices,  and concluded that resulting inconsistent supervisory review of ANC  transactions and related documentation increased SBA’s vulnerability to  compliance and fraud risks.

Several months after we issued our report in 2016, SBA issued updated  standard operating procedures on program rules that address the 2011  regulatory changes related to sister ANC-owned firms receiving follow-on,  sole-source contracts and sister subsidiaries sharing primary NAICS  codes. In addition to updating the guidance, SBA also provided training to  its Alaska District Office staff on its 2011 regulations, specifically training  on prohibitions against follow-on sole source contracts. SBA officials also  told us in 2016 that staff in the Alaska District Office were provided  training in supervisory review and other critical file management  procedures, which we noted were weaknesses.

SBA Has Not Yet Implemented Some Key Recommendations to Address Oversight and Monitoring Weaknesses

To address the weaknesses described above, as well as others related to  oversight and monitoring, our 2006, 2012, and 2016 reports contained a  total of 21 recommendations to SBA.

While SBA has fully implemented 15 of these recommendations, SBA has  not implemented six recommendations—three of which we highlight in  this statement. All six recommendations are important to enhancing  SBA’s oversight of ANC-owned firms in the 8(a) program. We have not  evaluated the operational effectiveness of SBA’s actions to implement the  15 recommendations, but if effectively implemented, those actions should  help SBA improve its oversight and monitoring of ANC-owned firms in the  8(a) program. In response to our recommendations, SBA’s actions  included providing training to its staff that emphasized regulations governing  the requirement for procuring agencies to specifically state whether a  contract is a follow-on contract in their offer letters, which could help  reduce the award of a follow-on, sole-source contracts to sister ANC- owned firms; developing and enacting a regulation that gives SBA the authority,  under certain circumstances, to change an ANC-owned firm’s primary  line of business (expressed as a NAICS code) to the NAICS code that  generates the greatest portion of the firm’s revenue; this action is  intended to help SBA enforce rules preventing sister ANC-owned  firms from operating in the same primary lines of business; and updating and providing written guidance to field staff officials on the  enforcement of follow-on sole-source contract regulations.

However, to date SBA has not provided us with evidence that it has  implemented the three following recommendations, which if implemented  as intended, could significantly improve its oversight of the 8(a) program.  Absent action on these recommendations, SBA exposes the program to  continued noncompliance.

Tracking revenue data and other information on 8(a) ANC-owned  firms: As previously discussed, SBA’s regulation prohibits ANCs from  owning multiple firms that operate under the same primary line of  business (expressed as a primary NAICS code). In each of our 2006,  2012, and 2016 reports we identified weaknesses in SBA’s ability to track  this information in order to prevent sister ANC-owned firms from violating  this rule or circumventing its intent. As a result, in 2006 we recommended  that SBA track the primary revenue generators for ANC-owned firms and  to ensure that multiple subsidiaries under one ANC are not generating  their revenue in the same primary line of business, among other things.  Similarly, in 2012 we recommended that, as SBA is developing a tracking  system, it should take steps to ensure that the system tracks information  on ANC-owned firms, including revenues and other information. In 2006  and 2012, SBA did not indicate whether it agreed with and intended to  implement these recommendations. However, during our 2016 audit, SBA  informed us that it had plans to address this issue, but could not provide  any details. We therefore recommended in 2016 that SBA document this  planned method for tracking revenue generated under subsidiaries’  primary and secondary lines of business. SBA agreed to implement this  2016 recommendation. As part of this recommendation, we stated that  SBA’s documentation should include milestones and timelines for when  and how the method will be implemented. We also recommended that  SBA provide the appropriate level of access to and sharing of relevant  subsidiary data across district offices, including primary and secondary  lines of business and revenue data, once SBA develops a database with  the capabilities of collecting and tracking these revenue data.

In August 2018, SBA informed us that regulations promulgated in 2016  allow it to change an 8(a) ANC-owned firm’s primary line of business  under certain circumstances if the greatest portion of the firm’s revenues  evolved from one line of business to another. In our 2016 report, we  concluded that the new regulations were a step in the right direction but  would be difficult to implement effectively without the proper tracking and  visibility of revenue data that we describe above and in our 2016 report.  In 2018, SBA officials noted that they were testing an analytics tool that,  they said, would allow them to track revenues for ANC-owned firms, as  we recommended. SBA’s estimated completion date for the evaluation  and implementation of this tool was December 31, 2018, but as of October 2019, SBA has not been able to provide documentation on  whether this action has been implemented. We will continue to monitor  SBA’s efforts to implement this recommendation.

Criteria thresholds for contract modifications: As we reported in 2006,  SBA regulation requires that when the contract execution function is  delegated to the procuring agencies, these agencies must report to SBA  certain 8(a) information, including contract modifications. Further, the  agreements between SBA and the procuring agencies that we reviewed  in 2006 require that the agencies provide SBA with copies of all 8(a)  contract modifications within 15 days of the date of the contract award.  However, in our 2006 report, we found that contracting officers were not  consistently following these requirements. While some had notified SBA  when incorporating additional services into the contract or when  modifying the contract ceiling amount, others had not. Hence, we  recommended that when revising relevant regulations and policies, the  SBA Administrator should revisit the regulation that requires agencies to  notify SBA of all contract modifications and consider establishing  thresholds for notification. In 2006, SBA disagreed with this  recommendation and thus had not revisited this regulatory requirement,  but rather reiterated a preexisting requirement to provide all contract  modifications, including administrative modifications, to SBA. We  determined that this action did not fulfill our recommendation as it does  not help to ensure that agencies are going to comply with the regulatory  requirement.

Small businesses potentially losing contracts to 8(a) ANC-owned  firms: In our 2006 report, we found SBA’s oversight had fallen short in  that it did not consistently determine whether other small businesses were  losing contracting opportunities when large, sole-source contracts were  awarded to ANC-owned firms. Further, we found cases where SBA did  not take action when incumbent small businesses lost contract  opportunities when ANC-owned firms were awarded a large sole-source  contract. Hence, we recommended, that when revising relevant  regulations and policies, the SBA Administrator should consistently  determine whether other small 8(a) businesses are losing contracting  opportunities when awarding contracts through the 8(a) program to ANC- owned firms. SBA did not agree with this recommendation, nor did it address the intent of this recommendation by developing a procedure to  consistently perform this action. Instead, SBA reported to us that in 2009  it performed a single analysis of a limited set of procurement data from a  limited period and concluded the data did not indicate that other small  8(a) firms (e.g., small businesses which are unconditionally owned and  controlled by one or more socially and economically disadvantaged  individuals, such black-owned and Hispanic-owned firms) were losing  contracting opportunities to ANC-owned firms. We continue to believe  that without a strategy for consistent monitoring of this issue, SBA is  limited in determining the extent to which other small 8(a) businesses are  being adversely impacted by contracts awarded to ANC-owned firms.

In summary, the findings I have described in my statement today have  persisted over time as SBA has struggled to articulate and execute an  effective overall monitoring and oversight strategy. Implementing our  remaining recommendations could help SBA address its monitoring and  oversight control weaknesses in a comprehensive manner.

Chairwoman Chu, Ranking Member Spano, and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions that you may have at this time.

For further information regarding this testimony, please contact Seto J.  Bagdoyan, (202) 512-6722 or bagdoyans@gao.gov. In addition, contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this statement. Individuals who made key  contributions to this testimony are: Latesha Love (Assistant Director),  Tatiana Winger (Assistant Director), Flavio Martinez (Analyst in Charge),  Carla Craddock, April VanCleef, Tracy Abdo, Marcus Corbin, Colin  Fallon, Julia Kennon, Barbara Lewis, Michele Mackin, Maria McMullen,  James Murphy, Anna Maria Ortiz, William Shear, and Erin Villas.

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The Small Business Administration’s 8(a) program provides business development support to small, disadvantaged businesses—including firms owned by Alaska Native Corporations. Such entities are known as ANC-owned firms.

We previously reviewed participation by ANC-owned firms in this program, and testified about a number of issues that we identified between 2006 and 2016 regarding how SBA monitors and oversees these firms.

For instance, SBA was not able to track and share key program data that it needed to enforce program rules. We also testified that SBA’s Alaska District Office did not have enough staff to effectively monitor these firms.