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gao_GAO-16-818

gao_GAO-16-818_0

To incorporate evidence into grantmaking, the White House and OMB have encouraged agencies to use tiered evidence grants, which link funds to an evidence framework. Smaller awards are used to test new and innovative service models; larger awards are used to scale service models with strong evidence. To implement tiered evidence grants, the four agencies in our review add evidence and evaluation requirements throughout the federal grant life cycle. For example, Preliminary evidence tier. Strong evidence tier. For DOL, Education, and CNCS tiered evidence grants, every grantee was required to contract with a third party evaluator to conduct an independent evaluation of its service model and submit it to the respective federal grantmaking agency at the end of the grant period. Agencies Identified Potential Benefits of Tiered Evidence Grants and Described Implementation Challenges Federal Agencies Identified Potential Benefits of Tiered Evidence Grants Officials that we interviewed from the four agencies in our review identified the following potential benefits of tiered evidence grants: Provide incentives to implement service models that are supported by evidence. Some of the grantees we interviewed said that to monitor fidelity, they had to build new systems to collect data—such as attendance data—on how their service models were implemented. In some cases, grantees are required to submit an evaluation plan as part of their grant application. Agency Officials and Grantees Identified Key Factors That Facilitate the Use of Tiered Evidence Grants Officials from the four agencies in our review and grantees identified five key factors that facilitate the use of tiered evidence grants by addressing challenges in administering the evidence and evaluation requirements in tiered evidence grants (see text box). As a result, HHS developed a dissemination tool kit for grantees on communicating evaluation results. Networks for grantees. By relying on ad-hoc collaboration, agencies using tiered evidence grants may miss opportunities to capture and share lessons learned that could strengthen and improve tiered evidence grant making government-wide. In our prior work on collaboration, we reported that collaborative mechanisms, such as interagency groups or collaboration technology, can be used to develop policies, implement programs, and share information. Tiered evidence grants offer a means for agencies to evaluate the effectiveness of their programs and for Congress and agencies to fund programs based on proven and emerging service delivery models. The Office of Management and Budget had no comments on the draft report. The objectives of this report were to describe 1) key features that tiered evidence grants add to federal grant processes, (2) benefits and challenges of using tiered evidence grants, (3) key factors to facilitate the use of tiered evidence grants, and (4) to assess the extent to which the Office of Management and Budget (OMB) and federal agencies are collaborating on evidence and evaluation requirements in tiered evidence grants. We focused on programs that have operated long enough to show implementation results and lessons learned—specifically those established prior to 2013. We selected programs based on design features, including the size of the grant award, whether programs had a matching funding requirement, the timing of when the agency reviewed the evidence, and the number of evidence tiers. We also interviewed national evaluation organizations that agencies contracted with to provide technical assistance to grantees and conduct evaluations across multiple grantees.

Why GAO Did This Study The federal government spends more than $600 billion a year on grants to fund a wide range of programs and services, including those related to social services, education, and health care. To better integrate evidence and rigorous evaluation in federal grantmaking, the Office of Management and Budget (OMB) has encouraged federal agencies to use tiered evidence grant programs. The GPRA Modernization Act of 2010 includes a provision for GAO to periodically review its implementation. The objectives of this report are to describe (1) key features of tiered evidence grants, (2) benefits and challenges of using tiered evidence grants, and (3) key factors to facilitate their use, and (4) to assess the extent to which federal agencies collaborate on tiered evidence grants. To address these objectives GAO identified the five domestic-focused tiered evidence grant programs that were established prior to 2013. GAO reviewed key documents and interviewed officials from these programs. GAO also interviewed grant recipients from three of the grant programs. GAO selected these grant programs using various criteria, such as the number of evidence tiers and their total amount of funding. What GAO Found Tiered evidence grants are a new policy tool federal agencies are using to incorporate evidence of effectiveness into grantmaking. Under this approach, agencies establish tiers of grant funding based on the level of evidence grantees provide on their models for providing social, educational, health, or other services. Smaller awards are used to test new and innovative service models; larger awards are used to scale service models with strong evidence. To implement tiered evidence grants, agencies add evidence and evaluation requirements throughout the federal grant life cycle, including conducting independent evaluations of the grantees' service models and disseminating the evaluation results. Note: Some programs have two tiers—preliminary evidence and strong evidence. Agency officials identified several potential benefits of using tiered evidence grants, such as providing incentives for grantees to implement service models supported by evidence and conducting evaluations to build the evidence base. Officials from the agencies in GAO's review and grantees also identified various challenges with tiered evidence grants. In some cases the agencies identified factors to mitigate the challenges. For example, grantees told GAO that they encountered challenges drafting evaluation plans (which describe the methodology and are generally required for the grant applications). As an example of how agencies addressed this challenge, the Department of Labor contracted with a program evaluation firm to provide grantees with technical assistance and increased the time for grantees to draft evaluation plans that accurately reflected their service models. GAO has previously reported on collaborative mechanisms, such as interagency groups, that can be used to implement programs and share lessons learned. However, currently there is no formal mechanism administered by OMB for agencies to collaborate on tiered evidence grants. By relying on ad hoc collaboration, agencies may miss opportunities to capture and share lessons learned that could strengthen tiered evidence grantmaking. What GAO Recommends GAO recommends that OMB establish a formal means for federal agencies to collaborate on tiered evidence grants. OMB had no comments on the recommendation.

gao_GAO-04-608

gao_GAO-04-608_0

Section 366 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 Section 366 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 required that the Secretary of Defense develop a comprehensive plan for using existing authorities available to the Secretaries of Defense and the military departments to address training constraints caused by limitations on the use of military lands, marine areas, and airspace that are available in the United States and overseas for training. OSD’s Training Range Inventory Does Not Yet Contain Sufficient Information to Use as a Baseline for a Comprehensive Plan OSD’s training range inventory does not yet contain sufficient information to use as a baseline for developing a comprehensive training range plan. OSD’s Training Range Report Does Not Include a Comprehensive Plan Without an inventory that fully identifies available training resources, specific capacities and capabilities, and existing training constraints, it is difficult to frame a comprehensive training range plan to address constraints. As a result, OSD’s report does not include a comprehensive plan to address training constraints caused by limitations on the use of military lands, marine areas, and airspace that are available in the United States and overseas for training—as required by section 366. OSD’s Training Range Report Does Not Fully Meet Other Requirements Mandated by Section 366 OSD’s Implementation of the Department of Defense Training Range Comprehensive Plan report, which is a consolidation of information provided by the services, does not fully meet other requirements mandated by section 366. Conclusions While OSD’s Implementation of the Department of Defense Training Range Comprehensive Plan report addresses some of the mandated requirements, it does not fulfill the requirement for an inventory identifying range capacities or training constraints caused by encroachment or other factors, such as a lack of adequate maintenance or modernization; a comprehensive training range plan to address encroachment on military training ranges; an adequate assessment of current and future training range requirements; a sufficient evaluation of the adequacy of current DOD resources, including virtual and constructive assets, to meet current and future training range requirements; recommendations for legislative or regulatory changes to address training constraints; or plans to improve the readiness reporting system. Instead, the report provides the current status of the services’ various sustainable range efforts in the United States. To improve future reports, we also recommend that OSD provide a more complete report to the Congress to fully address the requirements specified in the section 366 mandate by (1) developing a comprehensive plan that includes quantifiable goals and milestones for tracking planned actions and measuring progress, and projected funding requirements to more fully address identified training constraints, (2) assessing current and future training range requirements and evaluating the adequacy of current resources to meet these requirements, and (3) developing a readiness reporting system to reflect the impact on readiness caused by training constraints due to limitations on the use of training ranges.

Why GAO Did This Study Section 366 of the National Defense Authorization Act for Fiscal Year 2003 required the Secretary of Defense to develop a report outlining a comprehensive plan to address training constraints caused by limitations on the use of military lands, marine areas, and air space that are available in the United States and overseas for training. The foundation for that plan is an inventory identifying training resources, capacities and capabilities, and limitations. In response to section 366, this report discusses the extent to which (1) the Office of the Secretary of Defense's (OSD) training range inventory is sufficient for developing the comprehensive training range plan and (2) OSD's 2004 training range report meets other requirements mandated by section 366. What GAO Found OSD's training range inventory does not yet contain sufficient information to use as a baseline for developing the comprehensive training range plan required by section 366. As a result, OSD's training range report does not lay out a comprehensive plan to address training constraints caused by limitations on the use of military lands, marine areas, and air space that are available in the United States and overseas for training. First, OSD's training range inventory does not fully identify available training resources, specific capacities and capabilities, and existing training constraints caused by encroachment or other factors to serve as the baseline for the comprehensive training range plan. Second, OSD and the services' inventories are not integrated, readily available, or accessible by potential users so that commanders can schedule the best available resources to provide the required training. Third, OSD's training range report does not include a comprehensive plan with quantifiable goals or milestones for tracking planned actions to measure progress, or projected funding requirements needed to implement the plan. Instead, the report provides the current status of the four services' various sustainable range efforts in the United States, which if successful, overtime should provide a more complete picture of the magnitude and impact of constraints on training. OSD's training range report does not fully address other requirements mandated by section 366. For example, the report does not: (1) fully assess current and future training range requirements; (2) fully evaluate the adequacy of current resources to meet current and future training range requirements in the United States and overseas; (3) identify recommendations for legislative or regulatory changes to address training constraints, even though the Department of Defense (DOD) submitted legislative changes for congressional consideration on April 6, 2004; or (4) contain plans to improve readiness reporting.

gao_GGD-98-112

gao_GGD-98-112_0

As of September 30, 1997, IRS had about 2.9 million installment agreements outstanding, worth about $13.2 billion, thus averaging about $4,600 per agreement. Objectives, Scope, and Methodology Our objectives were to (1) describe some of the uses and benefits of EFT, (2) discuss the experiences of two states that use EFT in their tax installment agreement programs and the benefits they have obtained, and (3) discuss the potential benefits IRS might realize by increasing EFT usage in its installment agreement program. We obtained from FMS, but did not independently verify, information on IRS’ cost to process installment agreement payments by paper processes and by EFT. To address our second objective, we identified two states—Minnesota and California—that have made changes to their installment agreement programs that resulted in most delinquent taxpayers using EFT to pay their installments. Information from NACHA shows that, relative to paper transactions, EFT provides lower loan defaults, better accuracy, and reduced mailing and processing costs. These 8,000 EFT agreements represented about 90 percent of the delinquent taxes owed in the new agreements. EFT Has Lowered the Default Rates of Installment Agreements in Minnesota and California According to state officials in Minnesota and California, one of the benefits they have realized by promoting EFT use in their installment agreement programs has been a substantial reduction in the programs’ default rates. Since the requirement was implemented, most of the state’s taxpayers with installment agreements have used EFT, and according to MDOR officials, the default rate for EFT installment agreements dropped to between 3 and 5 percent. As of October 1997, about 6 months after FTB implemented its EFT procedures, the default rate for new EFT agreements was about 5 percent. Officials in both states also said that they experienced increased collections from installment agreements after changing their programs to promote EFT. EFT Has Reportedly Reduced the Administrative Costs of Installment Agreements in Minnesota and California In discussing the benefits of EFT with officials in California and Minnesota, we were told that EFT use reduced the administrative costs of their installment agreement programs. Officials in both states said that the greater use of EFT has reduced the amount of paper processing and mailing costs related to their installment agreement programs. Additional administrative cost savings have occurred because fewer resources were needed to follow up on defaulted agreements. Of the total agreements in 1997, about 41,500—or 1.5 percent—were being paid by EFT. IRS could achieve additional cost savings by not sending taxpayers who make EFT installment payments a monthly statement, as it currently does for all taxpayers with installment agreements. This would save IRS postage and handling costs and would be similar to the practices for EFT installment agreements in Minnesota and California. 13 and 14).

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed the best practices being used by delinquent debt collectors, and if they offer the Internal Revenue Service (IRS) any prospects for improving collection efforts, focusing on the: (1) uses and benefits of electronic funds transfer (EFT); (2) experiences of two states that use EFT in their tax installment agreement programs and the benefits they have obtained; and (3) potential benefits IRS might realize by increasing EFT usage in its installment agreement program. What GAO Found GAO noted that: (1) EFT is widely used by various types of organizations in receiving and transferring money; (2) it is used for various payment transactions and for collecting consumer payments; (3) relative to paper transactions, EFT provides better accuracy, lower mailing and processing costs, and fewer delinquencies and defaults; (4) because of these benefits, some financial organizations routinely offer incentives to consumers who enter into EFT arrangements; (5) both Minnesota and California changed their installment agreement programs to promote tax payments by EFT; (6) Minnesota has required taxpayers entering into new installment agreements since July 1995 to pay by EFT, with some exceptions; (7) in April 1997, California initiated procedures to let taxpayers make installment agreement payments by EFT; (8) as of mid-November 1997, EFT usage was about 90 percent in Minnesota and about 60 percent in California; (9) according to state officials, Minnesota and California both have seen a sharp decrease in their installment agreement default rates, in part due to EFT; (10) in Minnesota, officials said that default rates were reduced from about 50 percent to between 3 and 5 percent; and in California, officials said that they were reduced from about 40 percent to about 5 percent; (11) officials in both states said that the lower default rates have resulted in collecting revenues from installments faster; (12) officials in both Minnesota and California said they have achieved administrative cost savings from greater use of EFT, which has reduced the amount of paper processing and mailing costs related to their installment agreement programs; (13) additional administrative cost savings have occurred because fewer resources have been needed for follow-up collection enforcement on defaulted agreements; (14) IRS' installment agreement program has not taken advantage of the benefits of EFT to the extent that Minnesota and California reported, as only about 1.5 percent of IRS' delinquent taxpayers were using EFT for installment agreements as of September 30, 1997; (15) because its current program is similar to these states' non-EFT programs, it seems likely that IRS could expect to achieve a reduction in its installment agreement default rates and lower administrative costs if more taxpayers paid their installments by EFT; and (16) in fiscal year 1997, IRS' costs to process EFT installment payments were 37 percent lower than the cost to process non-EFT installment payments.

gao_GGD-96-156

gao_GGD-96-156_0

Research Reviews Found No Direct Evidence That Education Programs Prevent the Occurrence of Child Sexual Abuse Fifteen of the 16 research reviews concluded that there was no evidence from the empirical studies they reviewed that demonstrated the effectiveness of education programs in actually preventing the occurrence of child abuse. Eight of the reviews concluded that these programs were effective in teaching children skills, such as saying no or leaving the scene. Limitations in Outcome Measures A majority of the research reviews noted that the outcome measures used in evaluation studies were not valid indicators of prevention. Such measures are widely used, both to test for gains in knowledge about sexual abuse and to test whether children say they will use the self-protection strategies that they have learned in education programs. Eight of the reviews noted that some studies failed to pretest children on measures of knowledge and skills, or on measures of fear and anxiety, before exposing them to the education program. A number of reviews identified inadequate follow-up periods. Conclusions A growing number of studies are being done on the effectiveness of child sexual abuse education programs, many of which were assessed in the research reviews described and synthesized in this report. However, nearly all these reviews reported that definitive conclusions could not be drawn because no study yet had developed measures of whether these programs were effective in reducing the incidence of child sexual abuse. There was consensus that to demonstrate the effectiveness of sexual abuse education programs more and better research would be required.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed research results on programs designed to educate children on how to avoid becoming victims of sexual abuse. What GAO Found GAO found that: (1) of the numerous studies that are being done on the effectiveness of child sexual abuse education programs, there is no direct evidence that any of these programs are effective in reducing the incidence of child sexual abuse; (2) although the research focused on whether children could acquire knowledge about sexual abuse and learn skills to avoid abusive situations, it was not clear whether children actually retained or used the knowledge they acquired in these programs; (3) research reviews agreed that these programs were most effective in teaching concepts to older children and when using active rather than passive methods; (4) definitive conclusions regarding program effectiveness could not be drawn because of numerous methodological limitations; (5) the outcome measures used in the evaluation studies were not valid indicators of prevention because many of the results were self-reported and outcome measures were not standardized; (6) many of the research studies lacked comparison groups, did not pretest children's knowledge, skills, and anxiety prior to their entrance into programs, and had inadequate follow-up periods; and (7) better research is needed to demonstrate the effectiveness of sexual abuse education programs.

gao_NSIAD-95-75

gao_NSIAD-95-75_0

Total Executive Compensation Aerospace corporate officers, in addition to their annual salary, receive the standard benefit package that is available to all employees and several additional benefits that are available only to them. Table 1 summarizes the total fiscal year 1994 compensation provided to Aerospace’s 12 corporate officers and 20 senior managers based on actual benefits paid and salaries as of September 30, 1994. Executive Salaries From September 1991 to September 1994, the average annual salary for all Aerospace executives (corporate officers and senior management personnel) increased by 23 percent, from about $125,000 to about $153,300. During those 3 years, the total cost of salaries for Aerospace executives increased by 78 percent, from about $2.75 million to about $4.91 million, primarily due to salary increases of up to 29 percent for individual executives during 1992 and a 45-percent increase in the number of executives from 22 to 32. Although Aerospace notified the Air Force 3 weeks before implementing the increase, the Air Force expressed concern that Aerospace did not present the salary increase and supporting documentation to the government in time to allow the Air Force to review the increase and determine its reasonableness. From September 1991 to September 1994, Aerospace increased the number of its executives by 45 percent, from 22 to 32. During the same period, Aerospace nonexecutive employment decreased by about 17 percent, from 3,973 to 3,303. As a result, the ratio of executives to nonexecutive employment decreased from 1 per 181 employees to 1 per 103 employees. Table 3 compares the number of executives and the total number of employees since September 1991. Hiring Bonuses In 1993, Aerospace paid two executives hiring bonuses of $30,000 each. DCAA Audit of Aerospace Compensation Costs After the Air Force’s request in June 1992, DCAA initiated a review of Aerospace’s compensation. DCAA agreed and, as a result of using additional data, issued a revised report in January 1994, which no longer questioned the reasonableness of corporate officers’ salaries and reduced the compensation costs considered unreasonable for other employees. In the Fiscal Year 1995 DOD Appropriations Act, the Congress placed a limit on defense FFRDC compensation after July 1, 1995. As of September 30, 1994, there were 16 Aerospace executives with annual salaries of more than $148,400, the current Executive Schedule Level I salary amount. According to the act, the Inspector General is to (1) assess the validity of the data submitted by FFRDCs, justifying salaries that exceed the Executive Schedule Level I rate; (2) compare the compensation paid to those individuals exceeding that rate with the compensation of similar technical and professional staff from profit and nonprofit organizations that must compete for defense work and with government officials of comparable expertise and responsibility; and (3) examine other appropriate forms of nonsalary compensation, such as bonuses and retirement plans.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed executive compensation at The Aerospace Corporation, which operates an Air Force-sponsored federally funded research and development center (FFRDC). What GAO Found GAO found that: (1) as of September 1994, Aerospace employed 32 senior management personnel (referred to as Aerospace executives), 12 of which were corporate officers; (2) the officers' total annual compensation averaged about $240,200 and their annual salary averaged about $176,400; (3) corporate officers' benefits included a retirement plan that is not available to senior management personnel or other employees; (4) the total annual compensation for the other 20 Aerospace executives that were not corporate officers averaged about $154,300 and their annual salary averaged about $139,500; (5) from September 1991 to September 1994, total salary cost for all Aerospace executives increased by 78 percent, from about $2.75 million to about $4.91 million, primarily due to salary increases of up to 29 percent for individual executives during 1992 and a 45-percent increase in the number of executives from 22 to 32 between 1991 and 1994; (6) during that time, the average annual executive salary increased by 23 percent, from about $125,000 to about $153,300; (7) Aerospace officials told GAO that increasing both the salaries and the number of executives were sound management decisions based on the best information available at the time and were justified for a number of reasons, including to better align Aerospace with its customers; (8) in addition, in 1993, Aerospace paid two executives hiring bonuses of $30,000 each. Aerospace classified these bonuses as nonreimbursable costs, consistent with the Federal Acquisition Regulation (FAR); (9) between September 1991 and September 1994, the number of nonexecutive employees at Aerospace decreased by 17 percent, from 3,973 to 3,303; (10) this decrease, coupled with the increase in the number of executives, reduced the ratio of executives to total nonexecutive employees from 1 per 181 employees to 1 per 103 employees; (11) in an audit started in response to Aerospace's June 1992 salary increases, the Defense Contract Audit Agency (DCAA) initially questioned the reasonableness of corporate officers' salaries and fringe benefits; (12) in its final report, however, DCAA no longer questioned the reasonableness of corporate officers' salaries but recommended that Aerospace provide further support for corporate officers' fringe benefits; (13) the Air Force and Aerospace have been working to resolve the issues raised by DCAA's audit; (14) fiscal year 1995 appropriations legislation limits employee compensation at the Department of Defense (DOD) FFRDCs, effective July 1, 1995, to a rate not to exceed Executive Schedule Level I; and (15) as of September 30, 1994, 16 Aerospace executives had annual salaries of more than $148,400, the current Executive Schedule Level I salary amount.

gao_AIMD-98-122

gao_AIMD-98-122_0

An important element of this reform initiative is that the Secretary has established the Defense Management Council to, in effect, serve as DOD’s internal board of directors. Risk in Reducing Budget Before Savings Are Achieved DOD is planning to reduce out-year operations and maintenance budgets in anticipation of the savings that will accrue from the DRIs. Consequently, reducing out-year budgets before savings are more clearly known increases the risk that operating units and field commanders will not have sufficient funds to meet their readiness needs. If they do not, one of two things could happen. Either money will have to be moved from other parts of the defense budget to pay for shortfalls in operations and maintenance accounts or support functions will be underfunded. Rather, they are being counted on to improve the quality of service provided to the warfighters and other defense business customers and to meet personnel reduction targets that have already been planned. In past reform initiatives, DOD took the savings from future year budgets. Reengineering Initiatives Show Promise, but Implementation Challenges Remain We have either completed or have ongoing work associated with several of the reengineering initiatives in the DRI report. As shown in table 1, DOD expects the travel reengineering initiative to result in significant processing improvements and cost savings. This has not been an easy process. Military Services and Defense Agencies Need to Capitalize on Consolidation and Regionalization Opportunities The DRI report includes several military service and support agency consolidation, restructuring, and regionalization initiatives that are intended to make DOD activities more efficient and support DOD’s planned personnel reductions. As with the reengineering initiatives, most of these initiatives have been going on for several years but still face implementation challenges. The program was to be implemented in three overlapping phases during fiscal years 1995-99 and was expected to save substantial amounts of money. The DISA megacenters operate as part of the defense working capital fund and bill their customers for the processing support they provide. Implementing DRI Requires DOD to Address the Underlying Causes of Its Management Problems As we have reviewed DOD programs and management initiatives over the years, we have made hundreds of recommendations to help DOD correct its problems. It is not clear from the DRI report, however, how these initiatives will collectively eliminate the paper that is passed among the many DOD systems and it is not clear if, and to what extent, savings and productivity will be realized.

Why GAO Did This Study GAO discussed its work on the Department of Defense's (DOD) latest reform initiatives, focusing on: (1) risks associated with reducing budgets before savings are achieved; (2) challenges associated with implementing DOD's various business process reengineering initiatives; (3) opportunities to capitalize on consolidation and regionalization opportunities; and (4) underlying management problems that need to be addressed in implementing the reform initiatives. What GAO Found GAO noted that: (1) DOD's plans to reduce outyear budgets before the magnitude of savings is clearly known are not without risks; (2) this risk is that operating units and field commanders will not have sufficient funds to meet their readiness needs; (3) past reform initiatives, like the Defense Management Review of the early 1990s, started with much the same hope and promise of the Defense Reform Initiative (DRI); (4) however, for a number of reasons, they were not able to sustain themselves and fully achieve hoped for results; (5) in many cases, DOD reduced its operations and maintenance budgets up front, in anticipation that the savings would be realized; (6) when these savings did not materialize as quickly or to the extent expected, two things happened; (7) either money was deferred from other parts of the defense budget to pay for shortfalls in operations and maintenance accounts or support functions were unfunded; (8) GAO sees the same type of risk with the DRI; (9) many of the DRI business process reengineering initiatives must overcome significant challenges if they are to be implemented in a timely, efficient, and effective manner; (10) while DOD expects these initiatives to save an unspecified amount of money, it is also counting on them to bring world-class business processes to DOD and improve the quality of service provided to defense customers; (11) GAO's overall impression is that the initiatives have the potential to save significant amounts of money and improve the quality of service they provide; (12) however, in some cases, DOD either faces significant implementation challenges or is not thinking broadly enough in implementing the reform; (13) significant opportunities exist to achieve savings from consolidating, restructuring, and regionalizing initiatives; (14) however, GAO's past work on these initiatives shows that DOD has not been able to fully capitalize on the potential offered by such consolidations; and (15) achieving success in the DRIs requires DOD to address the underlying causes of its systemic management problems.

gao_GAO-09-31

gao_GAO-09-31_0

For the four installations, compliance with the first requirement—to notify enlisted servicemembers of their impending separation because of a personality disorder—was at or above 98 percent. Our review of the documentation in the enlisted Navy servicemembers’ separation packets found that compliance varied by requirement. Compliance with the Requirement Related to the Personality Disorder Diagnosis Ranged from 40 to 78 Percent Across the four installations, the percentage of enlisted servicemembers’ separation packets that had documentation indicating compliance with all three parts of the second requirement—that enlisted servicemembers separated because of a personality disorder (1) be diagnosed with a personality disorder (2) by a psychiatrist or psychologist who (3) determines that the personality disorder interferes with servicemembers’ ability to function in the military—ranged from 40 to 78 percent. Compliance with the Requirement for Formal Counseling Ranged from 40 to 99 Percent We found that compliance with the requirement that enlisted servicemembers receive formal counseling about their problem with functioning in the military ranged from 40 to 99 percent. Of the separation packets that we reviewed, 95 percent had documentation indicating that enlisted servicemembers had been notified of their impending separation because of a personality disorder. The requirement that enlisted servicemembers be diagnosed with a personality disorder by a psychiatrist or psychologist who determines that the personality disorder interferes with servicemembers’ ability to function in the military had a compliance rate of 82 percent for the 56 remaining enlisted Navy servicemembers’ separation packets that we reviewed. DOD Does Not Have Reasonable Assurance That Its Separation Requirements Have Been Followed DOD does not have reasonable assurance that its key personality disorder separation requirements have been followed. DOD policy directs the military services to implement and ensure consistent administration of DOD’s requirements for separating enlisted servicemembers because of a personality disorder. In turn, according to officials in each of the military services, the military services delegate to commanders with separation authority at the military installations sole responsibility for ensuring that the requirements are followed for enlisted servicemembers under their command. When we asked about the low rates of compliance for some of the separation requirements that we found at the Army, Air Force, and Marine Corps installations we visited and for the enlisted Navy servicemembers’ records that we reviewed, the military officials responsible for reviewing the separation packets with whom we spoke could not explain why these separations were approved if compliance with the separation requirements was not documented in the separation packet. Having given sole responsibility to the commanders with separation authority to ensure compliance, the military services have not established a way to determine whether these commanders are ensuring that DOD’s key requirements are met. Recommendations for Executive Action To help ensure that DOD’s requirements for personality disorder separations are met and to help increase assurance that these separations are appropriate, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness to 1. direct the Secretaries of the Army, the Air Force, and the Navy and the Commandant of the Marine Corps to develop a system to ensure that personality disorder separations are conducted in accordance with DOD’s requirements and 2. ensure that DOD monitors the military services’ compliance with DOD’s personality disorder separation requirements. For our review, we examined (1) the extent to which selected military installations complied with DOD requirements for separating enlisted servicemembers because of a personality disorder, (2) how DOD ensures compliance with personality disorder separation requirements by the military services, and (3) the extent to which enlisted servicemembers who are separated because of a personality disorder selected protections available to them. We included enlisted servicemembers who deployed at least once in support of Operation Enduring Freedom (OEF) or Operation Iraqi Freedom (OIF).

Why GAO Did This Study At DOD, a personality disorder can render a servicemember unsuitable for service. GAO was required to report on personality disorder separations and examined (1) the extent that selected military installations complied with DOD's separation requirements and (2) how DOD ensures compliance with these requirements. GAO reviewed a sample of 312 servicemembers' records from four installations, representing the Army, Air Force, and Marine Corps, that had the highest or second highest number of Operation Enduring Freedom or Operation Iraqi Freedom servicemembers separated because of a personality disorder. The review is generalizable to the installations, but not to the services. GAO also reviewed 59 Navy servicemembers' records, but this review is not generalizable to the installation or the Navy because parts of the separation process could have been completed at multiple locations. What GAO Found GAO's review of enlisted servicemembers' records found that the selected military installations GAO visited varied in their documented compliance with DOD's requirements for personality disorder separations. DOD has requirements for separations because of a personality disorder, which is defined as an enduring pattern of behavior that deviates markedly from expected behavior and has an onset in adolescence or early adulthood. The three key requirements established by DOD are that enlisted servicemembers (1) must be notified of their impending separation because of a personality disorder, (2) must be diagnosed with a personality disorder by a psychiatrist or psychologist who determines that servicemembers' personality disorder interferes with their ability to function in the military, and (3) must receive formal counseling about their problem with functioning in the military. For the four installations, compliance with the notification requirement was at or above 98 percent. The compliance rates for the requirement related to the personality disorder diagnosis ranged from 40 to 78 percent. For the requirement for formal counseling, compliance ranged from 40 to 99 percent. GAO's review of the documentation in the enlisted Navy servicemembers' records found that compliance varied by requirement. Ninety-five percent of enlisted Navy servicemembers' records had documentation indicating that enlisted servicemembers had been notified of their impending separation because of a personality disorder. Eighty-two percent had documentation that indicated compliance with the requirement that enlisted servicemembers must be diagnosed with a personality disorder by a psychiatrist or psychologist who determines that the personality disorder interferes with servicemembers' ability to function in the military. Seventy-seven percent had documentation indicating compliance with the requirement for formal counseling. DOD does not have reasonable assurance that its key personality disorder separation requirements have been followed. DOD policy directs the military services to implement and ensure consistent administration of DOD's requirements for separating enlisted servicemembers because of a personality disorder. According to military service officials, the military services delegate to commanders with separation authority at military installations sole responsibility for ensuring that the separation requirements are followed for enlisted servicemembers under their command. When asked about the low rates of compliance for some of the separation requirements that GAO found, military officials responsible for reviewing the servicemembers' records with whom GAO spoke could not explain why these separations were approved if compliance with the separation requirements was not documented in the servicemembers' records. The military services have not established a way to determine whether the commanders with separation authority are ensuring that DOD's key separation requirements are met, and DOD does not have reasonable assurance that its requirements have been followed.

gao_GAO-13-243

gao_GAO-13-243_0

For example, local authorities around the Limerick Generating Station in Pennsylvania told us that the Pennsylvania Turnpike was used as a boundary for part of the 10-mile zone. The REP program coordinates FEMA’s effort to provide policies and guidance to local and state authorities to ensure that they have adequate capabilities to respond and recover from a radiological incident at a commercial nuclear power plant. NRC and FEMA Guide Licensees and Local and State Authorities in Radiological Emergency Preparedness NRC and FEMA are responsible for guiding licensees and local and state authorities in radiological emergency preparedness. NRC and FEMA’s Regulations and Guidance Establish the Framework for On-site and Off-site Radiological Emergency Preparedness NRC and FEMA’s regulations for radiological emergency preparedness, originally issued in 1980 and 1983, respectively, are based upon 1980 guidance developed by a joint NRC and FEMA Steering Committee.The regulations include 16 planning standards that nuclear power plants and local and state authorities are to address in their radiological emergency response plans. Licensees Manage Emergency Preparedness On-site Licensees are responsible for managing on-site radiological emergency preparedness and developing and maintaining radiological emergency response plans that define specific actions and activities that the nuclear power plant must take to prepare for and respond to a potential incident at the plant. For example, according to FEMA regulations and guidance, appropriate local and state organizations are to take a number of planning actions, including the following: identifying and assigning the principal roles, such as the responsibilities for the emergency management and law enforcement personnel who lead the emergency planning, preparedness, and response functions, and the support roles for federal agencies (e.g., FEMA) and volunteer organizations (e.g., the American Red Cross); coordinating classifications for different levels of emergencies and protective action strategies that are consistent with those established by the nearby nuclear power plant; establishing and describing the methods, both primary and backup, that are to be used to communicate between all local and state governments within the emergency planning zone and with the public; and establishing and describing an emergency operations center for use in directing and controlling response functions. Licensees are to (1) use these evacuation time estimates in formulating protective action recommendations and (2) provide the estimates to local and state authorities for use in developing off-site protective action strategies. Each nuclear power plant and its relevant local and state authorities must conduct an exercise every 2 years that demonstrates their abilities to implement their respective emergency plans. FEMA conducted a review of local and state authorities’ ability to respond to a radiological incident and concluded that off-site radiological preparedness was adequate to justify restarting the plant. NRC and FEMA Require That the Public within the 10- Mile Zone Be Informed Annually about Preparedness, but NRC Has Little Information about Public Awareness Outside This Zone NRC and FEMA require licensees and local and state authorities to provide emergency preparedness information annually to the public within the 10-mile emergency planning zone, and NRC has studied public awareness within the zone. NRC and FEMA Require Licensees and Local and State Authorities to Provide Detailed Information Annually to the Public within the 10- Mile Planning Zone NRC and FEMA’s regulations and guidance establish the framework for how licensees and local and state authorities are to inform the public about how to respond during a radiological emergency and provide educational information about radiation. NRC and FEMA do not require public information efforts for radiological emergency preparedness outside the 10-mile emergency planning zone. Furthermore, most of those who responded to the survey reported that they believe they are likely to follow directions from local and state authorities in the event of an incident at the nuclear power plant. Recommendation for Executive Action To better inform efforts for nuclear power plant emergency preparedness and planning, we recommend that NRC Commissioners obtain information on public awareness of radiological emergency preparedness for communities outside the 10-mile emergency planning zone and the likely response of those communities in the event of a radiological incident at a nuclear facility and consider how these results may affect estimates for shadow evacuations outside the zone. NRC explained that it has conducted considerable research on evacuations and has confidence that shadow evacuations generally have no significant impact on traffic movement. We believe the task force’s finding that there are gaps in public awareness and understanding regarding nuclear incidents supports our recommendation that NRC should obtain information on public awareness and the likely responses of communities outside the 10-mile zone in the event of a radiological incident at a nuclear power plant. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.

Why GAO Did This Study On March 11, 2011, a tsunami severely damaged the Fukushima Daiichi nuclear power plant in Japan and led to the largest release of radiation since the 1986 Chernobyl disaster. Japanese authorities evacuated citizens within 19 miles of the plant. GAO was asked to examine issues related to emergency preparedness at nuclear power plants. This report examines (1) federal, licensees’, and local and state authorities’ responsibilities in radiological emergency preparedness, (2) the activities NRC and FEMA take to oversee licensee and local and state radiological emergency preparedness, and (3) NRC and FEMA requirements for informing the public on preparedness and NRC’s understanding of public awareness. GAO reviewed laws, regulations, and guidance; examined emergency plans from licensees and local and state authorities; visited four nuclear power plants; and interviewed federal, local and state, and industry officials. What GAO Found The U.S. Nuclear Regulatory Commission (NRC) and the Federal Emergency Management Agency (FEMA) are collectively responsible for providing radiological emergency preparedness oversight and guidance to commercial nuclear power plant licensees and local and state authorities around the plants. In general, NRC is responsible for overseeing licensees' emergency preparedness at the plant (on-site), and FEMA is responsible for overseeing preparedness by local and state authorities around the plant (off-site). NRC and FEMA have also established a 10-mile emergency planning zone around nuclear power plants. Licensees are responsible for managing on-site radiological emergency preparedness and developing and maintaining plans that define activities that the nuclear power plant must take to prepare for and respond to a potential incident at the plant. Participating local and state authorities within the 10-mile zone must develop protective actions for responding to a radiological incident, including plans for evacuations and sheltering in place. A recent NRC task force considered the adequacy of the zone size and concluded that no change was currently needed but will be re-evaluated as part of its lessons learned efforts for the Fukushima incident. NRC and FEMA conduct activities to ensure that licensees and local and state authorities have adequate plans and capabilities to respond to a radiological incident. For example, NRC and FEMA review emergency plans developed by licensees and local and state authorities to ensure that planning standards are met. In addition, NRC and FEMA observe exercises for each plant that licensees and local and state authorities conduct every 2 years to demonstrate their ability to respond to an incident. NRC also requires licensees to develop estimates of how long it would take for those inside the 10-mile zone to evacuate under various conditions. Licensees are to provide these evacuation time estimates to local and state authorities to use when planning protective action strategies. NRC and FEMA require licensees and local and state authorities, respectively, to provide information annually on radiation and protective actions for the public only inside the 10-mile zone. Those in the 10-mile zone have been shown to be generally well informed about these emergency preparedness procedures and are likely to follow directions from local and state authorities in the event of a radiological emergency. In contrast, the agencies do not require similar information to be provided to the public outside of the 10-mile zone and have not studied public awareness in this area. Therefore, it is unknown to what extent the public in these areas is aware of these emergency preparedness procedures, and how they would respond in the event of a radiological emergency. Without better information on the public's awareness and potential response in areas outside the 10-mile zone, NRC may not be providing the best planning guidance to licensees and state and local authorities. What GAO Recommends To better inform radiological emergency preparedness efforts, GAO recommends that NRC obtain information on public awareness and likely public response outside the 10- mile zone, and incorporate insights into guidance, as appropriate. NRC generally disagreed with GAO's finding, stating that its research shows public response outside the zone would generally have no significant impact on evacuations. GAO continues to believe that its recommendation could improve radiological emergency preparedness efforts and is consistent with NRC guidance.

gao_GAO-06-785

gao_GAO-06-785_0

DOE’s directive, Identifying Classified Information, is the department’s comprehensive guide to classifying, declassifying, marking, and protecting information, documents, and material. DOE Training, Guidance, and Oversight Programs Have Been Effective over Time, but a Recent Change in Oversight Responsibility Has Created Uncertainty DOE’s Office of Classification’s systematic training, comprehensive guidance, and rigorous oversight programs had a largely successful history of ensuring that information was classified and declassified according to established criteria. However, since responsibility for classification oversight was shifted from the Office of Classification to the Office of Security Evaluations in October 2005, the pace of oversight was interrupted—creating uncertainty about how oversight will be performed and whether it will continue to be effective. In September 2005, the Information Security Oversight Office reviewed DOE’s classification program just prior to the shift in responsibility for classification oversight. Since October 2005, the Office of Security Evaluations has completed one inspection of two offices at the Pantex Site in Texas and another inspection of four offices at the Savannah River Site is under way. In April 2006, Office of Security Evaluations officials provided us plans for performing additional oversight inspections for the remainder of 2006. These plans included inspections evaluating classification activity at eight DOE offices at three additional sites. Classification oversight has been incorporated into larger oversight efforts on physical security at DOE sites. According to the Director of the Office of Security Evaluations, the procedures for conducting future oversight are still evolving—including the numbers of sites to be inspected and the depth of analysis to be performed. DOE Internal Reviews Found Very Few Documents Have Been Misclassified, but Document Selection Procedures Are Not Consistent and Lack Transparency On the basis of reviews of over 12,000 classified documents totaling nearly a quarter million pages at 34 sites between 2000 and 2005, DOE officials have found that very few documents are misclassified. Office of Classification inspectors found 20 documents had been misclassified, an error rate of about one-sixth of 1 percent. Most misclassified documents remained classified, just not at the appropriate level or category. Of greater concern would be documents that should be classified but mistakenly are not. When mistakenly not classified, such documents may end up in libraries or on DOE Web sites where they could reveal sensitive RD and FRD to the public. While DOE’s extensive document reviews provided depth and rigor to its oversight inspections, two notable shortcomings in this process were (1) the inconsistent way that inspectors gained access to the many documents they would review and (2) the failure to adequately disclose these procedures in their reports. If the oversight inspections planned for the remainder of 2006 are effectively completed, it will demonstrate resumption in the pace of oversight conducted prior to October 2005. However, if these inspections are not completed, or are not as comprehensive, then the extent and depth of oversight will be diminished and may result in DOE classification activities becoming less reliable and more prone to misclassification. Recommendations for Executive Action To help ensure that DOE classification activities remain effective and result in documents that are classified and declassified according to established criteria, we recommend that the Secretary of Energy take the following three actions: ensure that the classified information oversight program provides oversight to a similar number of DOE sites, as it did before October 2005, and provides a similar depth of analysis; strengthen the review of classified documents by applying selection procedures that more randomly identify documents for review; and disclose the selection procedures used for documents for review in future classification inspection reports.

Why GAO Did This Study In recent years, the Congress has become increasingly concerned that federal agencies are misclassifying information. Classified information is material containing national defense or foreign policy information determined by the U.S. government to require protection for reasons of national security. GAO was asked to assess the extent to which (1) DOE's training, guidance, and oversight ensure that information is classified and declassified according to established criteria and (2) DOE has found documents to be misclassified. What GAO Found DOE's Office of Classification's systematic training, comprehensive guidance, and rigorous oversight programs had a largely successful history of ensuring that information was classified and declassified according to established criteria. However, an October 2005 shift in responsibility for classification oversight to the Office of Security Evaluations has created uncertainty about whether a high level of performance in oversight will be sustained. Specifically, prior to this shift, the Office of Classification had performed 34 inspections of classification programs at DOE sites since 2000. These inspections reviewed whether DOE sites complied with agency classification policies and procedures. After the October 2005 shift, however, the pace of this oversight was interrupted as classification oversight activities ceased until February 2006. So far in 2006, one classification oversight report has been completed for two offices at DOE's Pantex Site in Texas, and work on a second report is under way at four offices at the Savannah River Site in South Carolina. More oversight inspections evaluating classification activity at eight DOE offices are planned for the remainder of 2006. In addition, according to the Director of the Office of Security Evaluations, the procedures for conducting future oversight are still evolving--including the numbers of sites to be inspected and the depth of analysis to be performed. If the oversight inspections planned for the remainder of 2006 are completed, it will demonstrate resumption in the pace of oversight conducted prior to October 2005. However, if these inspections are not completed, or are not as comprehensive as in the past, the extent and depth of oversight will be diminished and may result in DOE classification activities becoming less reliable and more prone to misclassification. On the basis of reviews of classified documents performed during its 34 oversight inspections, the Office of Classification believes that very few of DOE's documents had been misclassified. The department's review of more than 12,000 documents between 2000 and 2005 uncovered 20 documents that had been misclassified--less than one-sixth of 1 percent. DOE officials believe that its misclassification rate is reasonable given the large volume of documents processed. Most misclassified documents remained classified, just not at the appropriate level or category. Of greater concern are the several documents that should have been classified but mistakenly were not. When mistakenly not classified, such documents may end up in libraries or on DOE Web sites where they could reveal classified information to the public. The only notable shortcomings we identified in these inspections were the inconsistent way the Office of Classification teams selected the classified documents for review and a failure to adequately disclose these procedures in their reports. Inspection teams had unfettered access when selecting documents to review at some sites, but at others they only reviewed documents from collections preselected by site officials. Office of Classification reports do not disclose how documents were selected for review.

gao_GAO-04-481

gao_GAO-04-481_0

Treasury Expects to Incur Additional Costs under the No FEAR Act to Seek Reimbursement for Discrimination Claims FMS estimates that in fiscal year 2003 it spent about $334,000 to certify, pay, and seek reimbursement for CDA claim payments and about $240,000 to certify and pay discrimination claims (see tables 1 and 2). FMS estimates that it will have to allocate approximately $171,500 for personnel costs to seek reimbursement for discrimination claims under the No FEAR Act in fiscal year 2004 (see table 3). This estimate includes about $119,500 in costs to set up and administer accounts receivable and seek reimbursement for No FEAR Act payments. Treasury’s estimate of fiscal year 2004 costs for No FEAR Act claim payments also assumed that agency compliance with the No FEAR Act would be similar to that under CDA. Processes for Certifying and Paying CDA and No FEAR Act Claim Payments Are the Same, but Collection Efforts Will Differ Although the certification, payment, and accounting mechanisms that FMS uses for No FEAR Act and CDA payments are virtually the same, some of Treasury’s current and anticipated procedures to seek reimbursement from federal agencies for claims paid under the two laws differ. Under OPM’s No FEAR Act regulations, FMS is required to annually post on Treasury’s public Web site those agencies that either fail to make reimbursements or fail to contact FMS within 45 business days of notice to make arrangements in writing for reimbursement. According to Treasury, while its No FEAR Act collection efforts are just beginning, reimbursement rates under the act may be as low as under CDA because the No FEAR Act, like CDA, does not impose reimbursement deadlines on agencies, and Treasury has very little authority to enforce reimbursement. Amounts Owed to the Judgment Fund Have Increased in the Last 3 Fiscal Years The Judgment Fund was reimbursed for fewer than one of every five dollars agencies owed for each of the 3 fiscal years (see table 4). Similar flexibility exists under the No FEAR Act. Like CDA, the No FEAR Act provides no sanctions that would compel agencies to reimburse the Treasury, and no Treasury authority to take money owed directly from the agency. Agency Comments On March 18, 2004, we provided a draft of this report to Treasury for review and comment. Treasury officials had no official comment on this report, but provided technical and clarifying comments, which we have incorporated as appropriate. Since FMS does not track the cost of processing Judgment Fund claim payments, agency officials could only provide us with estimates of the costs for processing payments and reimbursements for CDA and discrimination payments and the estimated increase in costs for fiscal year 2004 for processing discrimination and any other No FEAR Act claim payments. To determine the extent of federal agencies’ compliance with CDA’s reimbursement requirement, we obtained data through FMS from Treasury’s central accounting system on the amount of money sought and received from agencies in fiscal years 2001, 2002, and 2003. We interviewed Judgment Fund and FMS officials to obtain their views of how effective the reimbursement collection efforts allowed under the No FEAR Act may be.

Why GAO Did This Study The Notification and Federal Employee Antidiscrimination and Retaliation (No FEAR) Act, which took effect October 1, 2003, requires agencies to repay discrimination settlements and judgments paid on their behalf. The No FEAR Act is similar to the Contract Disputes Act (CDA) of 1978, which holds agencies accountable for payment in contract disputes. Under both laws, federal agencies must reimburse the Judgment Fund, which is administered by the Treasury Department. Before the No FEAR Act, agencies did not have to repay the fund. The No FEAR Act requires GAO to review the financial impact on Treasury of administering that law and CDA. Based on this requirement, this report provides information on (1) Treasury's estimates of its costs to process discrimination claim payments and CDA payments in fiscal year 2003 and its costs to process and seek reimbursement for claim payments under lawsuits covered by the No FEAR Act beginning in fiscal year 2004, (2) differences in claims processing and reimbursement efforts under CDA and the No FEAR Act, and (3) the extent of federal agency compliance with CDA's reimbursement requirements and Treasury's view of how effective its No FEAR Act collection efforts may be. We make no recommendations in this report. Treasury officials had no official comment on the report. What GAO Found Treasury estimates that it cost about $334,000 to certify, pay, and seek reimbursement for CDA claim payments in fiscal year 2003, and about $240,000 to certify and pay discrimination claims that year. For fiscal year 2004, assuming relatively constant case and processing cost levels, and agency compliance with reimbursement requirements similar to that experienced under CDA, Treasury estimates that it will incur about $171,500 in personnel costs in order to seek reimbursements for No FEAR claim payments. These include recurring costs to set up and administer accounts receivable and seek reimbursement from agencies for claims paid out of the Judgment Fund and a one-time cost for in-house personnel to upgrade computer systems. Although the certification, payment, and accounting processes that Treasury uses for the No FEAR Act are virtually the same as those used for CDA, the procedures Treasury is required to use to seek reimbursement for claims paid under the No FEAR Act will differ. For example, as part of Treasury's effort to seek reimbursement for No FEAR Act claims paid, No FEAR Act regulations require Treasury to record on its public Web site the failure of agencies to make reimbursement or arrange to make reimbursement within a specified time limit. There is no similar requirement under CDA claims. During fiscal years 2001, 2002, and 2003, federal agencies reimbursed Treasury for fewer than one of every five dollars owed under CDA, with at least 18 agencies having unpaid amounts at the end of each fiscal year. According to Treasury, while its No FEAR Act collection efforts are just beginning, reimbursement rates under the act may be as low as under CDA because the No FEAR Act, like CDA, does not impose reimbursement deadlines on agencies, and Treasury has very little authority to enforce reimbursement.

gao_GAO-07-719T

gao_GAO-07-719T_0

IRS’s Request Increases Enforcement Spending and Identifies Savings, but Provides Limited Justification for Some New Spending, and Other Savings Opportunities Exist IRS’s 2008 budget request proposes to increase spending. Figure 1 shows that this continues a trend since 2004 of shifting a greater portion of spending toward enforcement as compared to service. In the 2008 budget submission, IRS proposes a number of new initiatives, all of which are intended to improve taxpayer compliance—some by increasing staffing for enforcement or making legislative changes, and some by improving taxpayer service or infrastructure. To better understand IRS’s initiatives and their expected benefits and costs, we asked for supplementary documentation on selected new spending initiatives: Improve compliance among small businesses and self-employed (SB/SE) taxpayers: $73.2 million; 485 FTEs Critical upgrades to IT infrastructure: $60 million; 0 FTEs Improve tax gap estimates, measures, and noncompliance detection: $41.0 million; 258 FTEs Improve compliance for large multinational businesses: $26.2 million; 158 FTEs Research effects of taxpayer service on compliance: $5.0 million; 8 FTEs Expand volunteer income tax assistance (VITA): $5.0 million; 46 FTEs Our review of the justifications showed that some had descriptive, cost, and expected performance information while others lacked such information. Changing the menu of taxpayer services: IRS recently issued its comprehensive strategy for improving taxpayer service, including for telephone, walk-in, volunteer and Web site assistance. IRS Has Made Progress on Enforcement, but Enforcement Remains High Risk Because of the Tax Gap IRS has made noticeable progress in its enforcement efforts including increasing the amount of direct enforcement revenue collected, number of collection activities undertaken, and enforcement staff. Nevertheless, enforcement of the tax laws remains high risk, because of the persistence of the tax gap and the lack of a data-based plan. IRS Has Taken Some Steps to Improve Enforcement IRS reported that direct enforcement revenue rose from $43.1 billion in FY 2004 to $48.7 billion in FY 2006 (a 13 percent increase). The tax gap has been a persistent problem in spite of a myriad of congressional and IRS efforts to reduce it, as the rate at which taxpayers voluntarily comply with our tax laws has changed little over the past three decades. Returns Processing Is Comparable to Last Year, Despite Delays with CADE and Implementation of Tax System Changes From January 1 through April 20, 2007, IRS processed approximately 104.6 million individual income tax returns, about the same number as last year, and issued 88.2 million refunds for $203 billion compared to 85.2 million refunds for $190.5 billion at the same time last year. This means that millions of taxpayers did not benefit from faster CADE processing this year. Although electronic filing continues to grow, taxpayers’ use of the Free File program continues to decline. IRS officials reported that tax system changes have had minimal impact on telephone operations so far this filing season. Despite progress made in implementing BSM projects and improving modernization management controls and capabilities, significant challenges and serious risks remain, and further program improvements are needed, which IRS is working to address. In addition, more work remains to be done by the agency to fully address our prior recommendation of developing a long-term vision and strategy for completing the BSM program, including establishing time frames for consolidating and retiring legacy systems. For example, delays in deploying the latest release of CADE to support the current filing season have resulted in continued contention for key resources and will likely impact the design and development of the next two important releases, which are planned to be deployed later this year. Without such information, decisions makers do not have an informed basis on whether to approve and fund new initiatives. For example, the initiative for improving compliance estimates provided no explanation of how the 258 FTEs were determined or basic information on the work such as the number of examinations to be conducted.

Why GAO Did This Study The Internal Revenue Service's (IRS) budget request shows how IRS intends to balance spending for enforcement and taxpayer service, including spending for new initiatives and the Business Systems Modernization (BSM) program. A combination of enforcement and taxpayer service promotes compliance with the tax laws. GAO was asked to (1) compare IRS's proposed FY 2008 budget to prior years' and assess how the new spending initiatives are justified, and (2) describe IRS's enforcement, filing season, and BSM performance. GAO analyses are based on IRS's 2008 budget submission, supplementary IRS data, interviews with IRS officials, and prior GAO reports. Some of GAO's analyses have been reported earlier this year and updated here. What GAO Found IRS's budget proposes to increase spending by almost 5 percent to $11.6 billion. The budget proposes shifting a greater proportion of spending to enforcement, continuing a trend since 2004. IRS projects that revenue from the new initiatives will have a relatively small impact on the tax gap--less than one percent of the gap last estimated at $290 billion in 2001. The tax gap is the difference between what taxpayers owe and voluntarily pay. Justifications for the new initiatives varied with some lacking descriptive, cost, and expected performance information. For example, an initiative for improving compliance estimates provided no information on how the budget and staff needed or work to be done were determined. Without such information, decision makers do not have an informed basis for approving and funding the new initiatives. IRS has made noticeable progress in its enforcement efforts including increasing the amount of enforcement revenue collected and enforcement staffing. For example, between FY 2004 and 2006 enforcement revenue increased 13 percent to $48.7 billion. Nevertheless, enforcement remains on GAO's high-risk list. The tax gap has been a persistent problem in spite of efforts to reduce it, as the rate of taxpayers' voluntarily compliance with the tax laws has changed little over the past three decades. To better target enforcement resources, IRS has requested funding to do additional compliance research which GAO has long supported. Finally, GAO has reported on IRS's lack of a data-based plan to improve compliance. Filing season performance in 2007 improved in some areas compared to prior years', but there have been challenges. As of April 20, IRS processed about 104.6 million individual income tax returns and issued 88.2 million refunds. Electronic filing grew, telephone access is somewhat better, and Web site use continues to grow. However, fewer than 4 percent of eligible taxpayers used the Free File program. The latest release of Customer Account Data Engine (CADE), the new tax processing system, was delayed. As a result, millions of taxpayers did not benefit from CADE's faster processing of refunds. IRS recently issued its plan, the Taxpayer Assistance Blueprint, to improve taxpayer service. Despite progress in implementing BSM projects including for CADE and improving management controls and capabilities, significant challenges and serious risks remain. Delays in the latest release of CADE resulted in continued contention for key resources and will likely impact future releases. IRS has more to do to address GAO's prior recommendations such as developing a long-term strategy that would include time frames for retiring legacy computer systems.

gao_GAO-08-470T

gao_GAO-08-470T_0

DOD’s Office of the Under Secretary of Defense for Intelligence has responsibility for determining eligibility for clearances for servicemembers, DOD civilian employees, and industry personnel performing work for DOD and 23 other federal agencies, and employees in the federal legislative branch. DOD’s Procedures for Projecting Future Industry Investigation Needs Are Evolving, but the Effectiveness of These Efforts Is Unclear DOD has had a long-standing challenge in accurately projecting future industry investigation needs and is developing and implementing new methods to improve its procedures. However, DOD has not yet demonstrated the effectiveness of these changes. In November 2005, OMB reported a governmentwide goal whereby agencies have been asked to work toward refining their projections of required investigations to be within 5 percent of the numbers of actual requests for investigation. However, according to an OPM Associate Director’s May 2006 congressional testimony, DOD exceeded its departmentwide projection by 59 percent in the first half of fiscal year 2006. In May 2004, we addressed DOD’s problems with inaccurately projecting the future number of clearances needed for industry personnel and the negative effect of inaccurate projections on workload planning. In that report, we recommended that OUSD(I) improve its projections of clearance requirements for industry personnel—for both the numbers and types of clearances—by working with DOD components, industry contractors, and the acquisition community to identify obstacles and implement steps to overcome them. In the report on security clearances we are issuing today, we note that DSS has made recent changes to the methods it uses to develop these estimates, and it is conducting research that may change these methods further. In addition to improving the response rate for its annual survey, DSS also changed its methods for computing the projections. However, it is too early to determine the effect of these new methods on the accuracy of DOD’s projections. DOD Faces Additional Long-standing Challenges to Improving the Efficiency and Effectiveness of Its Personnel Security Clearance Program for Industry Personnel DOD must address additional long-standing challenges or issues in order to improve the efficiency and effectiveness of its personnel security clearance program for industry personnel. First, delays in the clearance process continue to increase costs and risk to national security, such as when new industry employees are not able to begin work promptly and employees with outdated clearances have access to classified documents. Second, DOD and the rest of the federal government provide limited information to one another on how they individually ensure the quality of clearance products and procedures. Third, in DOD’s August 2007 report to Congress, it provided less than 2 years of funding-requirements information which limits congressional awareness of future year requirements for this program. Fourth, DOD currently has no comprehensive DOD-specific plan to address delays in its clearance program. We additionally reported that the lack of full reciprocity of clearances is an outgrowth of agencies’ concerns that other agencies may have granted clearances based on inadequate investigations and adjudications. In particular, DOD is relying on a governmentwide effort to reform the clearance system. Agencies involved in this governmentwide effort include the Office of the Director of National Intelligence, DOD, OMB, and OPM. GAO-08-350. DOD Personnel Clearances: Preliminary Observations Related to Backlogs and Delays in Determining Security Clearance Eligibility for Industry Personnel.

Why GAO Did This Study The Department of Defense (DOD) maintains approximately 2.5 million security clearances on servicemembers, federal DOD civilian employees, industry personnel for DOD and 23 other federal agencies, and employees in the legislative branch. Delays in determining eligibility for a clearance can heighten the risk that classified information will be disclosed to unauthorized sources, increase contract costs, and pose problems in attracting and retaining qualified personnel. In this statement, GAO addresses: (1) the status of DOD's efforts to improve its projections of the numbers of clearances needed for industry personnel, and (2) other long-standing challenges that have a negative effect on the efficiency and effectiveness of DOD's personnel security clearance program for industry personnel. This statement is based on a report GAO is issuing today (GAO-08-350) and other prior work, which included reviews of clearance-related documents and interviews of senior officials at DOD and the Office of Personnel Management (OPM). What GAO Found DOD has had a long-standing challenge in accurately projecting the number of clearance investigations that will be required in the future for industry personnel. The Office of Management and Budget (OMB) developed criteria for these projections in November 2005. It established a governmentwide goal for agencies to refine their projections of the number of clearance investigations that will be required in any given year to be within 5 percent of the number of actual requests for investigation. At a May 2006 congressional hearing, an OPM Assistant Director stated that DOD had exceeded its departmentwide projection by 59 percent for the first half of fiscal year 2006. The negative effects of such inaccurate projections include impediments to workload planning and funding. GAO noted the problem with the accuracy of DOD's projections in its February 2004 report and recommended that DOD improve its projections for industry personnel. In the report it is issuing today, GAO noted that DOD has initiated changes to improve its estimates of future investigation needs and is conducting research that may change these methods further. For example, in 2006, DOD took steps to increase the response rate of its annual survey used as a basis for determining its projections. In 2007, it changed its methods for analyzing data that informs its projections. However, DOD has not yet demonstrated the effectiveness of these changes. DOD must address additional long-standing challenges or issues in order to improve the efficiency and accuracy of its personnel security clearance program for industry personnel. First, continuing delays in determining clearance eligibility can result in increased costs and risk to national security. For example, when new employees' clearances are delayed, it affects their abilities to perform their duties fully since they do not have access to classified material. Second, DOD and the rest of the federal government provide limited information to one another on how they individually ensure the quality of clearance products and procedures, which affects reciprocity of clearances. Reciprocity occurs when one government agency fully accepts a security clearance granted by another government agency. GAO's September 2006 report noted that agencies may not reciprocally recognize clearances granted by other agencies because of concerns that other agencies may have granted clearances based on inadequate investigations and adjudications. Third, in DOD's August 2007 report to Congress, it provided less than 2 years of funding-requirements information, which limits congressional awareness of future year requirements for this program. Fourth, DOD does not have a comprehensive DOD-specific plan to address delays in its clearance program. While there is a governmentwide effort to reform the clearance process, it is projected not to be operational until beyond December 2008.

gao_GAO-14-799

gao_GAO-14-799_0

In the more than 30 years since the signing of the treaty, Egypt has been a key strategic partner of the United States in the Middle East. Prosecution of NGOs in Egypt The Egyptian government strongly objected to some of the U.S. government’s planned assistance for democracy and governance after the January 2011 revolution, including the award of funding to unregistered NGOs. Also consistent with their agencies’ policies and internal control standards, State and USAID have taken some steps as far back as 2005 to plan for managing the risks of providing democratic and governance assistance, but they have not taken steps to incorporate lessons learned from the events leading up to and including the prosecution of U.S.-funded NGOs in Egypt into their risk management plans. According to U.S. government and NGO officials, the Egyptian government provided conflicting information regarding the legal status of some NGOs receiving U.S. funds. The U.S. Government Provided the NGOs Prosecuted in Egypt with Diplomatic, Legal, Financial, and Grant Flexibility Support From the time after the December 2011 raids through the conviction of the NGO workers in June 2013, the U.S. government took a number of actions to support the four U.S. NGOs prosecuted in Egypt—Freedom House, ICFJ, IRI, and NDI. The U.S. Government Provided Diplomatic Support to the Prosecuted U.S. NGOs The U.S. government undertook a range of diplomatic to defend the employees of the four U.S. NGOs. The U.S. government also met regularly with officials from the four U.S. NGOs to help them devise strategies for dealing with the Egyptian government. The U.S. Government Provided Financial Support to the Prosecuted U.S. NGOs The U.S. government provided financial support to the four U.S. NGOs by allowing them to use funding from their grants to pay for legal fees, court costs, fines, and other associated costs related to their trial. Specifically, the four organizations that were prosecuted by the Egyptian government are no longer conducting activities inside Egypt. The NGO trial exacerbated existing challenges for some of the other NGOs implementing U.S. democracy and governance programs. The Amount of Funding and Number of Grants Awarded for Democracy and Governance Projects in Egypt Decreased after the NGO Trial Since the beginning of the NGO trial in 2012, the number and total dollar value of grants awarded for democracy and governance activities in Egypt has decreased. Recommendation for Executive Action To help ensure that State and USAID are better positioned to respond to unintended or adverse consequences related to their future democracy and governance assistance in Egypt and other countries, we recommend that the Secretary of State and the USAID Administrator take steps to identify lessons learned from their experiences in Egypt and work to incorporate these lessons into plans for managing risks to their future democracy and governance assistance efforts. Appendix I: Scope and Methodology The objectives of this review were to examine (1) the extent to which the U.S. government identified and managed potential risks of providing U.S. democracy and governance assistance in Egypt; (2) what support, if any, the U.S. government provided to the nongovernmental organizations (NGO) prosecuted by the Egyptian government; and (3) the extent to which U.S. democracy and governance assistance in Egypt has been affected, if at all, by the prosecution of NGO workers. To examine the extent to which the U.S. government identified the potential risks of providing U.S. democracy and governance assistance in Egypt, we reviewed memos approving democracy and governance assistance for Egypt, letters between the U.S. and Egyptian governments discussing the provision of democracy and governance assistance, State cables describing Egyptian government concerns with U.S. assistance, and implementing assistance agreements between the United States and Egypt regarding democracy and governance assistance. We interviewed State and U.S. officials who manage or coordinate democracy and governance assistance for Egypt in Washington, D.C., and Cairo, Egypt.

Why GAO Did This Study For over 30 years, Egypt has been a key strategic partner of the United States and the recipient of billions of dollars of U.S. assistance. Starting with its revolution in January 2011, Egypt has undergone a series of political transitions. Shortly after the revolution, the U.S. government allocated $65 million in assistance for a range of activities to support Egypt's progress toward democracy. However, the Egyptian government objected to the U.S. government providing this assistance directly to NGOs, including to some that it viewed not to be registered under Egyptian law. In June 2013, the Egyptian government convicted employees of four U.S. NGOs. This report examines (1) the extent to which the U.S. government identified and managed potential risks of providing U.S. democracy and governance assistance in Egypt; (2) what support, if any, the U.S. government provided to the NGOs prosecuted by the Egyptian government; and (3) the extent to which U.S. democracy and governance assistance in Egypt has been affected, if at all, by the prosecution of NGO workers. GAO analyzed U.S. government and NGO documents and interviewed U.S., Egyptian, and NGO officials in Washington, D.C., and Egypt. What GAO Found The U.S. government identified potential risks in providing democracy and governance assistance in Egypt, including the Egyptian government's likely objection to the U.S. plan to use $65 million to directly fund nongovernmental organizations (NGO) in 2011. The Egyptian government had repeatedly raised objections to such direct funding since the U.S. Agency for International Development (USAID) began it in 2005. USAID and Department of State (State) guidance calls for the development of risk management plans for their programs. State and USAID have taken some steps to manage the risks of providing democracy and governance assistance in Egypt, including the issuance of an April 2013 cable that provided guidance on how to counter increasing risks to NGOs globally. However, State and USAID have not documented lessons learned from the U.S. experience in Egypt or used these lessons to inform their risk management plans for future democracy and governance assistance. The U.S. government provided the four prosecuted U.S. NGOs with diplomatic, legal, financial, and grant flexibility support. The U.S. government's diplomatic efforts included holding multiple meetings with Egyptian officials to try to defend the NGO employees. U.S. legal support to the NGOs included working with the NGOs' lawyers to develop legal strategies for the case. U.S. financial support allowed the four U.S. NGOs to use a total of $4.9 million in funding from their grants to pay for various legal costs related to the trial. Finally, the U.S. government allowed the four NGOs to modify their grants to adjust their planned activities and time frames as a result of the trial. The Egyptian government's trial of the four U.S. NGOs significantly affected U.S. democracy and governance assistance in Egypt. The four prosecuted U.S. NGOs are no longer conducting activities inside Egypt and modified or stopped a number of their programs. Other NGOs implementing U.S. democracy and governance programs reported experiencing delays in obtaining Egyptian government approval to receive U.S. funds. Since the start of the trial, in 2012, the amount of funding and number of grants awarded for democracy and governance projects in Egypt decreased (see fig.) and some activities are now more challenging for the U.S. government to implement. What GAO Recommends GAO recommends that State and USAID incorporate lessons learned from their experience in Egypt into risk management plans for future democracy and governance assistance efforts. State and USAID concurred with the recommendation.

gao_GAO-08-600

gao_GAO-08-600_0

FMCSA partners with states to provide oversight for safety requirements, including drug testing. Safety audits are required for all new entrants to the trucking industry and are opportunities for FMCSA and states to provide educational and technical assistance to new carriers, explain carriers’ responsibilities under the federal requirements, and check for operational deficiencies. 2). Several Factors Contribute to the Challenges in FMCSA’s Current Drug Testing Program A number of factors create challenges for FMCSA to ensure that all drivers are in a drug testing program, drivers’ ability to avoid detection by a drug test is limited, and drivers who test positive are removed from safety- sensitive duties until they have completed return-to-duty requirements. Limited resources mean many carriers have little likelihood of ever being reviewed, which may reduce the incentive for carriers to follow the regulations. Second, factors that contribute to drivers’ ability to avoid detection include the ease with which the urine specimen can be subverted because of noncompliant collection sites and the wide availability of products for adulterating or replacing the urine sample. Third, factors that lead to potentially thousands of drivers who test positive to continue to drive without completing the required return-to-duty process include the nonreporting of past positive drug tests by drivers to prospective employers and self-employed owner-operators who fail to remove themselves from service. For example, GAO investigators, posing as commercial truck drivers needing DOT drug tests, found that employees at 10 of 24 sites the investigators tested failed to ask an investigator to empty his pants pockets to ensure no items were present that could be used to adulterate the specimen. Widely Available Products and Other Methods Can Be Used to Subvert the Test Several hundred products designed to dilute, cleanse, or substitute urine specimens can be easily obtained. Compliance reviews are conducted for only a small percentage of carriers each year. Reporting Positive Drug Test Information May Reduce the Number of Drivers Who Test Positive or Refuse to Test Yet Continue to Drive Two key options have been suggested to reduce the number of drivers who test positive or refuse to test and continue to drive without going through a return-to-duty process. The options—developing a national database of drug and alcohol testing results that carriers could query, and encouraging or compelling states to suspend the commercial driver’s license (CDL) of a driver who tests positive—differ in their potential effectiveness and feasibility, as shown in table 4. For example, while FMCSA has a rule-making process under way to improve the enforcement of safety audits for new entrants and has plans to initiate a rule-making process to implement a national database, these actions have yet to come to fruition, and FMCSA may have to seek additional authority to ensure service agents report to a database. FMCSA’s rule-making process will also need to consider driver protections and a process by which information can be corrected or removed. A federal ban on subversion products also faces challenges in that it would be difficult to enforce and may not have a significant deterrent effect. Any of these options for improving FMCSA’s drug testing program would require either additional resources or a transfer of resources funding other initiatives that also work to improve road safety. GAO staff who made major contributions to this report are listed in appendix V. Appendix I: Scope and Methodology To determine the factors that contribute to the challenges of ensuring all drivers are in a drug testing program, limiting drivers’ ability to subvert a drug test, and keeping drivers off the road once they are found to test positive, we reviewed Department of Transportation (DOT) and Federal Motor Carrier Safety Administration (FMCSA) regulations, policies, and reports and conducted interviews with individuals from FMCSA and DOT’s Office of Drug and Alcohol Policy and Compliance (ODAPC) and the Department of Health and Human Services’ (HHS) Substance Abuse and Mental Health Services Administration (SAMHSA) to understand the drug testing process and how carrier compliance with drug testing regulations is evaluated and to identify the factors that contribute to the challenges faced by FMCSA.

Why GAO Did This Study Federal law requires commercial drivers to submit urine specimens for drug testing. The Federal Motor Carrier Safety Administration (FMCSA) is responsible for ensuring that motor carriers comply with these regulations. Recent reports have raised concerns that some drivers may not be tested, some may be tested but avoid detection, and some may test positive but continue to drive. GAO was asked to look at these challenges. This report reviews (1) the factors that contribute to challenges related to drug testing and (2) the various options that exist to address these challenges. GAO obtained information from a wide variety of stakeholders in the drug testing industry, and analyzed data from FMCSA and others to determine the potential effectiveness of various options. What GAO Found Many factors contribute to the challenges of detecting drivers who are using illegal drugs and keeping them off the road until they complete the required return-to-duty (treatment) process. Factors contributing to drivers not being in a drug testing program include FMCSA's limited oversight resources for all carriers and limited enforcement options for safety audits of new carriers. Although FMCSA and its state partners review thousands of carriers each year, these reviews touch about 2 percent of the industry. As a result, carriers have limited incentives to follow the regulations. Factors contributing to failures to detect drug use include the ease of subverting the urine test, either because collection sites are not following protocols or because drivers are using products that are widely available to adulterate or substitute urine specimens. For example, GAO investigators, posing as commercial truck drivers needing drug tests, found that employees at 10 of 24 collection sites tested did not ask the investigator to empty his pants pockets, as they are required to do, to ensure he was not carrying adulterants or substitutes. Factors contributing to drivers testing positive yet continuing to drive include drivers not divulging past drug test history, carriers' failure to conduct thorough background checks on a driver's past drug testing history, and self-employed owner-operators' failure to remove themselves from service. GAO's analysis identified the following options as having the greatest potential for addressing these challenges: (1) For increasing the number of drivers tested: strengthen the enforcement of safety audits for new carriers. Stiffer requirements for having a testing program will likely result in more new entrants having effective drug testing programs. DOT has begun this improvement. (2) For reducing opportunities to subvert the test: additional authority to levy fines when collection sites do not follow federal protocols. This could decrease the opportunity to subvert the test. Also, congressional action to ban subversion products at the federal level could make these products more difficult to obtain. (3) For reducing the number of drivers who test positive and continue to drive: a national database of drug testing information. This would allow for more thorough checking of applicants' past test results. FMCSA has begun to lay the groundwork for a database, but FMCSA may need additional authority to ensure accurate reporting of information. Also, using the database to encourage states to suspend a driver's commercial driver's license after a positive drug test or refusal to test would be a more direct way to compel drivers to complete the return-to-duty process. Any of these options would require either additional resources or a transfer of resources that fund other safety-related initiatives, and some of the options require federal or state legislation and rule making. A national database would have to consider driver protections and a process by which information can be corrected or removed.

gao_GAO-06-27

gao_GAO-06-27_0

WHD strives to update its list of consolidated wage determinations annually, issuing 410 consolidated wage determinations covering almost 300 standard occupations in 205 geographic locations. When making a wage determination, WHD analysts consult several sources of information, such as its SCA directory of occupations and data collected through two BLS national wage surveys, for wage data on occupations. Relying on these tools and their own expertise, analysts calculate prevailing wages and fringe benefit amounts for specific geographic locations. Stakeholders contend that the wage determination process is not transparent and that the resulting wages do not always reflect local wage conditions. As a result, analysts spend considerable time responding to inquiries about the methodology used to determine wages. As a result, the directory does not include a broad range of emerging occupations that are covered under SCA. In fact, WHD does not include a description of the methodology used to derive the wage rates in its wage determinations, such as the wage data source used or the procedures analysts’ follow. DOL Enforces SCA by Conducting Investigations, Ensuring Contractor Payments, and Providing Compliance Assistance, but WHD Could Make Better Use of Violation Data WHD enforces SCA by conducting contractor investigations, ensuring contractor payments to employees, and providing compliance assistance to stakeholders. WHD investigates complaints from service contract employees, contractors, federal agencies, unions, and others who allege that contractors have failed to pay either the wages or fringe benefits, or both, specified in service contracts. WHD collects violation data, but it does not fully use these data to plan compliance assistance, target specific service industries or geographic locations for SCA investigation, or set strategic enforcement goals. Without further analysis of prior SCA violation data, WHD cannot ensure that it is using the most effective mix of compliance assistance, complaint-driven investigations, and directed investigations. Appendix I: Objectives, Scope, and Methodology For this report, we described how the Department of Labor (DOL) (1) establishes locally prevailing wages and fringe benefits and (2) enforces the Service Contract Act (SCA). In addition, we interviewed representatives from several service industry unions and key trade associations; analyzed data obtained from DOL, including data on WHD investigations from DOL’s Wage Hour Investigator Support and Reporting Database (WHISARD) database; national, regional and district office training and outreach efforts; file data on debarments; and data from the Federal Procurement Data System (FPDS), including information on the number and total dollar amount of SCA contract actions for fiscal years 2000 through 2003; and interviewed state officials and representatives from private-sector groups who also produce wage and benefit rates in an effort to better understand the relative merits of DOL’s wage determination process. Related GAO Products Department of Labor, Wage and Hour Division, Employment Standards Administration: Service Contract Act; Labor Standards for Federal Service Contracts.

Why GAO Did This Study Recipients of federal government contracts for services are subject to wage, hour, benefits, and safety and health standards under the McNamara-O'Hara Service Contract Act (SCA) of 1965, as amended, which specifies wage rates and other labor standards for employees of contractors. SCA requires the Department of Labor (DOL) to set locally prevailing wage rates and other labor standards for employees of contractors furnishing services to the federal government. DOL's Employment Standards Administration's Wage and Hour Division (WHD) administers the SCA and each year determines prevailing wage and fringe benefit rates for over 300 standard service occupations in 205 metropolitan areas. SCA also authorizes DOL to enforce contractor compliance with SCA provisions. This report describes how DOL (1) establishes locally prevailing wages and fringe benefits and (2) enforces SCA. What GAO Found When making a wage determination, WHD analysts consult several sources of information, such as its SCA directory of occupations and data collected through two Bureau of Labor Statistics national wage surveys, for wage data on occupations. Relying on these tools and their own expertise, analysts calculate prevailing wages and fringe benefit amounts for specific geographic locations. The wage determination process produces a wealth of nationwide wage data for service occupations that WHD makes available online and strives to update annually. However, stakeholders (e.g., unions, contractors, employees, and others) contend that the wage determination process is not transparent and that the resulting wages do not necessarily reflect local wage conditions. For example, WHD does not include a description of the methodology used to derive the wage rates in its wage determinations, such as wage data sources used or the procedures analysts follow. As a result, analysts spend considerable time responding to inquiries about the methodology used to determine wages. WHD enforces SCA by conducting investigations, ensuring contractor payments, and providing compliance assistance to stakeholders. WHD investigates complaints from service contract employees, federal agencies, unions, and others who allege that contractors have failed to pay either the wages or fringe benefits, or both, specified in SCA contracts. WHD collects violation data, but it does not fully use these data to plan compliance assistance, target specific service industries or geographic locations for SCA investigation, or set strategic enforcement goals. As a result, WHD may be overlooking some SCA violators and industries that need further enforcement. A review of prior SCA violation data could provide WHD assurance that it is using the most effective mix of available compliance assistance and investigative efforts.

gao_GAO-13-37

gao_GAO-13-37_0

The Megaports Initiative coordinates with and complements DHS’s Container Security Initiative (CSI), a related program that targets and examines high-risk containers for weapons of mass destruction before they are shipped to the United States. To ensure that countries are able to independently operate and maintain the radiation detection equipment after NNSA transfers the equipment, NNSA has (1) implemented a training program for foreign personnel operating the radiation detection equipment, (2) developed a sustainability program, and (3) developed new technology to address challenges faced at some ports. As of December 2011, NNSA had spent about $850 million on Megaports Initiative activities. As a result, DOE’s fiscal year 2013 Congressional Budget Request states that DOE plans to shift the program’s focus from establishing new Megaports to sustaining existing ones. NNSA has taken a number of actions as a result of proposed budget cuts, including suspending ongoing negotiations for installing Megaports in 17 countries and cancelling planned deployments of new equipment in 5 other countries. Countries Cite Benefits of the Megaports Initiative, but Several Factors Limit Its Effectiveness Foreign officials from countries that we visited reported benefits of the Megaports Initiative, such as gaining a greater capacity to interdict radiological materials, but we also identified several factors that reduce the Initiative’s effectiveness. However, NNSA does not have a long-term plan for ensuring the ongoing sustainability of these Megaports operations. For example, NNSA is not systematically following up with partner countries to ensure that they are effectively operating and maintaining Megaports- funded equipment after NNSA’s final transfer of equipment, maintenance, and related financial responsibilities. We have previously reported that agencies successfully assess performance when they use measures that demonstrate results, cover multiple program priorities, and provide useful information for decision making. These two performance measures, however, have limitations and do not provide sufficient information for decision making. In our December 2011 report, we noted that NNSA officials told us that this performance measure was difficult to quantify and that it would be eliminated for fiscal year 2012 as a result of a DOE “performance measures streamlining initiative.” According to a 2011 House Committee on Appropriations report, the committee is concerned that the Initiative’s performance measures are not adequate to assess the effectiveness of SLD’s activities, and the report states, “the true effectiveness of detectors in preventing proliferation is largely dependent on how well individual countries employ these capabilities in their security operations.” that it is difficult to measure the Megaports Initiative’s outcomes because of its limited performance measures and said that the Initiative does not routinely report what materials it has successfully interdicted. However, in both countries, the Megaports Initiative had functioning RPMs and handheld radiation detection equipment that, according to the Megaports Initiative’s former program manager, CSI officials could have used if they had asked Megaports equipment operators. Conclusions Under its Megaports Initiative, NNSA has installed radiation detection equipment at more than 40 foreign seaports since 2003 and has trained foreign personnel in partner countries to scan shipping containers entering and leaving these seaports—regardless of the containers’ destination—for nuclear or radiological material. NNSA has not finalized a long-term plan for ensuring the sustainability of Megaports operations after NNSA transfers all equipment maintenance, operations, and related financial responsibilities to partner countries. CSI officials in two countries told us that they were using personal radiation detectors—which is a type of equipment intended for personal safety but not appropriate for scanning containers—to scan containers, while more appropriate radiation detection equipment that the Megaports Initiative has provided its partners is located at the same port. Develop and maintain useful and reliable measures to assess the performance of the Megaports Initiative. To strengthen efforts to combat nuclear smuggling overseas, we also recommend that the Administrator of the National Nuclear Security Administration and the Secretary of Homeland Security take the following action: On a periodic basis, jointly assess the extent to which the Megaports Initiative and CSI are effectively leveraging resources and coordinating at foreign seaports where the two Initiatives are co- located. Appendix I: Objectives, Scope, and Methodology The objectives of our review were to assess (1) the status of the Megaports Initiative (Initiative) and the National Nuclear Security Administration’s (NNSA) plans for completing and sustaining it and (2) benefits of the Initiative and factors, if any, that reduce its effectiveness. NNSA agreed with this recommendation and stated that it intends to finalize the sustainability plan.

Why GAO Did This Study NNSA established the Megaports Initiative in 2003 to deter, detect, and interdict nuclear or other radiological materials smuggled through foreign seaports. The Initiative funds the installation of radiation detection equipment at select seaports overseas and trains foreign personnel to use this equipment to scan shipping containers entering and leaving these seaports—regardless of destination. NNSA provides partner countries with maintenance and technical support for about 3 years, after which it transfers the equipment and all related responsibilities to partner countries. GAO was asked to examine (1) the status of the Megaports Initiative and NNSA’s plans for completing and sustaining it and (2) the benefits of the Initiative and factors that reduce its effectiveness. GAO analyzed key documents; interviewed agency officials; and visited eight Megaports in five countries, selected on the basis of port size and unique characteristics, among other things. What GAO Found As of August 2012, the National Nuclear Security Administration (NNSA) had completed 42 of 100 planned Megaports projects in 31 countries and, as of December 2011, NNSA had spent about $850 million on the Megaports Initiative (Initiative). NNSA’s Initiative has equipped these seaports with radiation detection equipment, established training programs for foreign personnel, and created a sustainability program to help countries operate and maintain the equipment. However, the administration’s fiscal year 2013 budget proposal would reduce the Initiative’s budget by about 85 percent, and NNSA plans to shift the Initiative’s focus from establishing new Megaports to sustaining existing ones. As a result, NNSA has suspended ongoing negotiations and cancelled planned deployments of equipment in five countries. Officials from the five countries GAO visited reported benefits of the Megaports Initiative, including increased capacity to interdict nuclear and radiological materials. However, GAO identified several factors that reduce the Initiative’s effectiveness. For example, NNSA has not finalized a long-term plan for ensuring the sustainability of Megaports operations after NNSA transfers radiation detection equipment to partner countries. Without a long-term plan for ensuring countries’ ability to continue Megaports operations, NNSA cannot be assured that its $850 million investment will be sustained. Moreover, the Initiative’s performance measures do not provide sufficient information for decision making because they do not evaluate the impact and effectiveness of the Initiative. GAO has previously reported that agencies successfully assess performance when they use measures that demonstrate results, cover multiple program priorities, and provide useful information for decision making. GAO also found that the Megaports Initiative and the Department of Homeland Security’s (DHS) Container Security Initiative (CSI)—a related program that examines high-risk shipping containers for weapons of mass destruction before they are shipped to the United States—are not sufficiently coordinating. The two Initiatives are co-located at 29 foreign seaports. In two countries, DHS officials told GAO that they were using personal radiation detectors—a type of equipment intended for personal safety but not appropriate for scanning containers—to inspect containers if their radiation detection equipment is broken. However, in both countries, the Megaports Initiative had more suitable equipment that DHS officials could have used. What GAO Recommends GAO recommends that NNSA take actions, including (1) finalizing its long-term plan for ensuring the sustainability of Megaports operations after NNSA’s final transfer of equipment to partner countries and (2) developing and maintaining useful and reliable measures to assess the performance of the Initiative. GAO also recommends that NNSA and DHS jointly assess the extent to which the two Initiatives are effectively coordinating. NNSA and DHS agreed with GAO’s recommendations.

gao_GAO-13-729

gao_GAO-13-729_0

The GPS space segment, which accounts for more than half of the total GPS costs in the Air Force’s current budget is a constellation of satellites that orbit approximately 12,500 miles above the earth. These requirements include evaluation of system capabilities, implementation approaches, technical and programmatic risks, and estimated costs. Air Force GPS Report Met Committee Requirements for the Space Segment The Air Force GPS report identified and assessed nine options for the space segment of a future GPS which were developed as part of a six- step process the Air Force used to conduct the study, to include: Define the purpose, scope, and decision criteria. GPS program officials stated that the cost analyses that support the nine space segment options were not high fidelity estimates but instead estimated at a high level. Although this may be expected given the limited time provided to complete the study and prepare the report, the high-level cost estimates are not at a level that would support programmatic decisions. However, each of the GPS space segment options the Air Force assessed is based on a constellation of 30 satellites. More Information on Key Cost Drivers and Cost Estimates, and Broader Input from Stakeholders are Important for Future Investment Decisions The Air Force GPS report identifies key drivers of cost and capability across the assessed options, but more information on each of these drivers is needed to fully assess their potential effect on the future GPS program. Additionally, the Air Force did not fully consider the cost impact of its dual launch approach. While these individuals largely believe the Air Force report is a good starting point for future GPS decisions, they provided additional, meaningful insights relating to potential risks and costs associated with the individual options as well as with ground control and satellite launch; user equipment capabilities; and the concerns and needs of various GPS users. While not specifically required by the House Armed Services Committee to seek input from others, obtaining input from key stakeholders, such as was provided by the subject matter experts we consulted, the Air Force may have been able to obtain additional insights as it developed and weighed the various GPS options. Going forward, it is important for the Air Force to take a more comprehensive approach in assessing options for making sound future GPS investments. Affirm the future GPS constellation size that the Air Force plans to support, given the differences in the derived requirement of the 24- satellite constellation and the 30-satellite constellations called for in each of the space segment options in the Air Force’s report. Engage stakeholders from the broader civilian community identified in PNT policy in future assessments of options. DOD also concurred with our second recommendation to ensure future assessments of options include full consideration of the space, ground control, and user equipment segments, and are comprehensive with regard to their assessment of costs, technical and programmatic risks, and schedule. To determine the extent to which the Air Force’s report, Lower Cost Solutions for Providing Global Positioning System (GPS) Capability, met the requirements, and to identify additional information that could guide future investment decisions, we assessed the report and the approach, assumptions, and criteria the Air Force used to conduct the study.

Why GAO Did This Study The GPS--a space-based satellite system that provides positioning, navigation, and timing data to users worldwide--has become an essential U.S. national security asset and component in daily life. The GPS program is being modernized to enhance its performance, accuracy and integrity. In 2013, the House Armed Services Committee directed the Air Force to report on lower-cost GPS solutions. The committee also mandated that GAO review the Air Force report. GAO (1) assessed the extent to which the Air Force GPS report met Committee requirements; and, (2) identified additional information that is important in guiding future GPS investments. GAO reviewed the Air Force report, interviewed officials responsible for preparing it, and consulted subject matter experts from the positioning, navigation, and timing advisory community. What GAO Found GAO found the Air Force, the military branch responsible for Global Positioning System (GPS) acquisition, in its report on Lower Cost Solutions for Providing Global Positioning System Capability, broadly addressed all four congressional requirements--system capability, implementation approaches, technical and programmatic risks, and estimated costs--for each option presented for the space segment. GPS consists of three segments--space, ground control, and user equipment--but the study only addressed the space segment, which accounts for the largest share of total GPS costs--more than half--in the Air Force's current budget. The Air Force identified and assessed nine options for future GPS space segments, ranging in cost from $13 billion to $25 billion from fiscal year 2013 through 2030. The report assessed each option based on a constellation or collection of 30 total satellites instead of 24, which is the Air Force's baseline GPS requirement for accuracy. This increase in total satellites raises an issue with the constellation size the Air Force intends to support in the future. Air Force officials stated that the cost analyses supporting the nine options were high-level cost estimates. Although this may be expected given the time constraints and other limitations of the study, these estimates are not at a level that would support future GPS investment decisions. Although the Air Force report is a good starting point, more information on key cost drivers and cost estimates, and broader input from stakeholders would help guide future investment decisions. Specifically, the key cost drivers include dual launch capability (launching two satellites on a single launch vehicle), navigation satellites (smaller GPS-type satellites yet to be developed), and a nuclear detection capability. The cost estimates also excluded the ground control and user equipment segments and cost risk. Further, the Air Force did not obtain inputs from some key stakeholders such as those from the GPS positioning, navigation, and timing advisory community. Consequently, without conducting a more comprehensive assessment that addresses each of these concerns, the Air Force is not yet in a position to make sound future GPS investments. What GAO Recommends GAO recommends the Air Force: (1) affirm the future size of the GPS constellation it plans to support; (2) ensure future assessments are comprehensive and include cost risk and the impact of options on all three GPS segments; and (3) engage the broader stakeholder community in future assessments of options. DOD concurred with these recommendations.

gao_RCED-95-2

gao_RCED-95-2_0

Objectives, Scope, and Methodology You requested that we review the Forest Service’s implementation of certain contract modifications and other provisions of the Tongass Timber Reform Act. More specifically, we determined whether credits that timber harvesters receive for building harvest-related roads are used consistently between long-term and short-term timber sale contracts and whether buffers of standing timber have been left along designated streams as the act requires, and how the Forest Service monitors the buffers’ effectiveness. (See table 2.1.) Contracts Not Modified to Comply With Road Credit Requirement The Forest Service did not revise the provision on the use of road credits in its long-term contracts to make them similar to the provision in its short-term contracts, as required by the reform act. Our concern about the Forest Service’s argument is that although ineffective credits are canceled at the end of both types of contracts, long-term contractors continue to hold a competitive advantage. The Forest Service has since taken sufficient steps to ensure greater compliance with this requirement. We found that before 1994, the Forest Service did not have a regional program to monitor the buffers’ effectiveness. The Forest Service’s policy does not allow this authority to be delegated to district rangers and in all cases requires documentation of the environmental significance. Recommendation To ensure full consideration and disclosure of the environmental impacts of boundary changes to harvest units, we recommend that the Secretary of Agriculture direct the Chief of the Forest Service to require Alaska Regional Office officials to periodially check to ensure that forest supervisors are properly documenting the environmental significance of boundary changes to timber harvest units made after EIS’s have been issued in the Tongass National Forest.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed the Forest Service's implementation of certain unilateral modifications to long-term contracts in Alaska and other requirements of the Tongass Timber Reform Act, focusing on whether: (1) road credits are used consistently between long-term contracts and short-term contracts; (2) buffers of standing timber have been left along designated streams as required; and (3) the Forest Service is requiring full documentation of environmental effects whenever changes are made to timber harvest area boundaries. What GAO Found GAO found that: (1) the Forest Service believes it treats road credits consistently across all contracts, since unused road credits are cancelled at the end of all timber sales contracts; (2) the long-term contractors' ability to carry unused road credits forward for longer periods than short-term contractors gives them an unfair competitive advantage; (3) some streamside buffers did not meet the 100-foot minimum width during the first years immediately following the act's passage, but the Forest Service has since taken steps to enforce this requirement; (4) in 1994, the Forest Service issued guidance and initiated a new monitoring program to ensure the buffers' effectiveness; (5) the Forest Service often does not document the environmental effects of timber harvest boundary changes; (6) in some instances, the forest supervisor has inappropriately delegated his documenting authority to district rangers and waived documentation where he believed boundary changes were insignificant; and (7) the forest supervisor has since withdrawn the authority delegation and established a detailed process for assessing boundary changes.

gao_GAO-12-475

gao_GAO-12-475_0

The federal excise tax rates on different tobacco products are calculated in different ways. CHIPRA also raised the federal excise tax rate on pipe tobacco, but to a rate that is considerably lower. CHIPRA’s 2009 changes in federal excise tax rates on tobacco products also resulted in an immediate shift in the cigar market, with sales of lower- taxed large cigars rising sharply while sales of higher-taxed small cigars dropped. Market Shifts to Avoid Taxes Have Reduced Federal Revenue, and Treasury Has Limited Options to Respond While tax revenue collected for all smoking tobacco products from April 2009 through the end of fiscal year 2011 amounted to $40 billion, we estimate that the market shifts from roll-your-own to pipe tobacco and from small to large cigars reduced federal revenue by a range of approximately $615 million to $1.1 billion for the same period. For example, Treasury has pursued differentiating between roll-your-own and pipe tobacco for tax collection purposes but faces challenges because the definitions of the two products in the IRC do not specify distinguishing physical characteristics. Furthermore, Treasury also has limited options to address the market shift to large cigars. Estimated Federal Revenue Losses from Market Shifts after CHIPRA Range from $615 Million to $1.1 Billion We estimated that federal revenue losses due to the market shifts from roll-your-own to pipe tobacco and from small to large cigars range from $615 million to $1.1 billion. However, according to Treasury comments in the Federal Register, the large differences in tax rates resulting from CHIPRA created an incentive for industry members to present roll-your-own tobacco as pipe tobacco products, thus enabling them to pay a lower tax rate. Before CHIPRA, there was little incentive for small cigar manufacturers to alter their product to meet the definition of a large cigar. FDA Currently Regulates Cigarettes and Roll-Your-Own Tobacco but Not Pipe Tobacco and Cigars When the Tobacco Control Act amended the Food, Drug, and Cosmetic Act in June 2009, it granted FDA immediate regulatory authority over four tobacco products, including cigarettes and roll-your-own tobacco, but did not specify authority over pipe tobacco and small and large cigars. While FDA announced its intent to issue a proposed rule that would subject additional products, including pipe tobacco and small and large cigars, to its regulation, it had not issued the proposed rule as of March 2012. In light of that fact, as Congress continues its oversight of CHIPRA and Tobacco Control Act implementation, it should consider modifying tobacco tax rates to eliminate significant tax differentials between similar products. Specifically, Congress should consider equalizing tax rates on roll-your-own and pipe tobacco and, in consultation with Treasury, also consider options for reducing tax avoidance due to tax differentials between small and large cigars. Our objectives for this report are to (1) review the market shifts among smoking tobacco products since the Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009 went into effect on April 1, 2009; (2) examine the impact of these market shifts on federal revenue and the Department of the Treasury’s (Treasury) actions to respond; and (3) describe differences in regulation of various smoking tobacco products by the Food and Drug Administration (FDA). To address the three objectives in this study, we reviewed documents and interviewed agency officials from Treasury’s Alcohol and Tobacco Tax and Trade Bureau, FDA, and the Centers for Disease Control and Prevention, as well as tobacco industry members, representatives of public health and other nongovernmental organizations, and academics to obtain information on tobacco legislation and regulations, tobacco product sales trends, and consumption patterns.

Why GAO Did This Study In 2009, CHIPRA increased and equalized federal excise tax rates for cigarettes, roll-your-own tobacco, and small cigars. Though CHIPRA also increased federal excise tax rates for pipe tobacco and large cigars, it raised the pipe tobacco tax to a rate significantly below the equalized rate for the other products, and its large cigar excise tax can be significantly lower, depending on price. Treasury collects federal excise taxes on tobacco products. Also passed in 2009, the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) granted FDA regulatory authority over tobacco products. This act directed GAO to report on trade in tobacco products, including the effects of differing tobacco tax rates. This report (1) reviews the market shifts in smoking tobacco products since CHIPRA; (2) examines the impact of the market shifts on federal revenue and Treasury’s actions to respond; and (3) describes differences in FDA’s regulation of various smoking tobacco products. GAO interviewed agency officials, industry members, and public health representatives. GAO analyzed tax and revenue data and reviewed relevant literature. What GAO Found Large federal excise tax disparities among tobacco products, which resulted from the Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009, created opportunities for tax avoidance and led to significant market shifts by manufacturers and price sensitive consumers toward the lower-taxed products. Monthly sales of pipe tobacco increased from approximately 240,000 pounds in January 2009 to over 3 million pounds in September 2011, while roll-your-own tobacco dropped from about 2 million pounds to 315,000 pounds. For the same months, large cigar sales increased from 411 million to over 1 billion cigars, while small cigars dropped from about 430 million to 60 million cigars. According to government, industry, and nongovernmental organization representatives, many roll-your-own tobacco and small cigar manufacturers shifted to the lower-taxed products after CHIPRA to avoid paying higher taxes. While revenue collected for all smoking tobacco products from April 2009 through fiscal year 2011 amounted to $40 billion, GAO estimates that federal revenue losses due to market shifts from roll-your-own to pipe tobacco and from small to large cigars range from about $615 million to $1.1 billion for the same period. The Department of the Treasury (Treasury) has limited options to respond to these market shifts. Treasury has attempted to differentiate between roll-your-own and pipe tobacco for tax purposes but faces challenges because the definitions of the two products in the Internal Revenue Code of 1986 do not specify distinguishing physical characteristics. Treasury also has limited options to address the market shift to large cigars and faces added complexity in monitoring and enforcing tax payments due to the change in large cigar tax rates. Unlike cigarettes and roll-your-own tobacco, pipe tobacco and cigars are not currently regulated by the Food and Drug Administration (FDA) and thus are not subject to the same restrictions on characterizing flavors, sales, or distribution. In 2011, FDA indicated its intent to issue a proposed rule that would deem products meeting the statutory definition of “tobacco product” to be subject to FDA’s regulation. However, FDA had not issued the proposed rule as of March 2012. FDA officials told GAO that developing the rule was taking longer than expected. What GAO Recommends As Congress continues its oversight of CHIPRA and Tobacco Control Act implementation, it should consider equalizing tax rates on roll-your-own and pipe tobacco and, in consultation with Treasury, consider options for reducing tax avoidance due to tax differentials between small and large cigars. Treasury generally agreed with GAO’s conclusions and observations.

gao_GAO-04-216

gao_GAO-04-216_0

The Securities Exchange Act of 1934 requires that a public company’s financial statements be audited by an independent public accountant. Mandatory audit firm rotation was also discussed in congressional hearings to enhance auditor independence and audit quality, but given the mixed views of various stakeholders, the Congress decided the effects of such a practice needed further study. In addition, most Tier 1 firms and Fortune 1000 public companies believe that the pressures faced by the incumbent auditor to retain the client are not a significant factor adversely affecting the auditor appropriately dealing with financial reporting issues that may materially affect a public company’s financial statements. We asked those Tier 1 firms and Fortune 1000 public companies and their audit committee chairs who did not believe that the partner rotation requirement by itself sufficiently achieved the intended benefits of mandatory audit firm rotation to consider the auditor independence, audit quality, and partner rotation requirements of the Sarbanes-Oxley Act as implemented by SEC rules and their views on whether these requirements in total would likely achieve the intended benefits of mandatory audit firm rotation when fully implemented. Therefore, we believe it will take at least several years to gain some experience with the effectiveness of the act’s requirements concerning auditor independence and audit quality. We believe that mandatory audit firm rotation may not be the most efficient way to enhance auditor independence and audit quality, considering the costs of changing the auditor of record and the loss of auditor knowledge that is not carried forward to the new auditor. We also believe that the potential benefits of mandatory audit firm rotation are harder to predict and quantify while we are fairly certain there will be additional costs. Regarding the need for mandatory audit firm rotation, we believe the most prudent course at this time is for the SEC and the PCAOB to monitor and evaluate the effectiveness of the Sarbanes-Oxley Act’s requirements for enhancing auditor independence and audit quality, and ultimately restoring investor confidence. Further, we also believe that currently audit committees, with their increased responsibilities under the Sarbanes-Oxley Act, can play a very important role in enhancing auditor independence and audit quality. Finally, for any system to function effectively, there must be incentives for parties to do the right thing, adequate transparency to provide reasonable assurance that people will do the right thing, and appropriate accountability when people do not do the right thing. Objectives, Scope, and Methodology As mandated by Section 207 of the Sarbanes-Oxley Act of 2002 and as agreed with your staff, to perform our study and review of the potential effects of requiring mandatory rotation of registered public accounting firms, we 1. identified and reviewed research studies and related literature that addressed issues concerning auditor independence and audit quality associated with the length of a public accounting firm’s tenure and the costs and benefits of mandatory audit firm rotation; 2. analyzed the issues we identified to develop detailed questionnaires to obtain the views of public accounting firms and public company chief financial officers and their audit committee chairs on the potential effects of mandatory audit firm rotation, hold discussions with officials of other interested stakeholders, such as institutional investors, federal banking regulators, U.S. stock exchanges, state boards of accountancy, the American Institute of Certified Public Accountants (AICPA), the Securities and Exchange Commission (SEC), and the Public Company Accounting Oversight Board (PCAOB), to obtain their views on the issues associated with mandatory audit firm rotation, and obtain information from other countries on their experiences with mandatory audit firm rotation; and 3. identified restatements of annual 2001 and 2002 financial statements of Fortune 1000 public companies due to errors or fraud that were reported to the SEC during 2002 and 2003 through August 31, 2003, to determine whether the restatement occurred before or after a change in the public companies’ auditor of record, and test the value of the “fresh look” commonly attributed to mandatory audit firm rotation.

Why GAO Did This Study Following major failures in corporate financial reporting, the Sarbanes-Oxley Act of 2002 was enacted to protect investors through requirements intended to improve the accuracy and reliability of corporate disclosures and to restore investor confidence. The act included reforms intended to strengthen auditor independence and to improve audit quality. Mandatory audit firm rotation (setting a limit on the period of years a public accounting firm may audit a particular company's financial statements) was considered as a reform to enhance auditor independence and audit quality during the congressional hearings that preceded the act, but it was not included in the act. The Congress decided that mandatory audit firm rotation needed further study and required GAO to study the potential effects of requiring rotation of the public accounting firms that audit public companies registered with the Securities and Exchange Commission. What GAO Found The arguments for and against mandatory audit firm rotation concern whether the independence of a public accounting firm auditing a company's financial statements is adversely affected by a firm's long-term relationship with the client and the desire to retain the client. Concerns about the potential effects of mandatory audit firm rotation include whether its intended benefits would outweigh the costs and the loss of company-specific knowledge gained by an audit firm through years of experience auditing the client. In addition, questions exist about whether the Sarbanes-Oxley Act requirements for reform will accomplish the intended benefits of mandatory audit firm rotation. In surveys conducted as part of our study, GAO found that almost all of the largest public accounting firms and Fortune 1000 publicly traded companies believe that the costs of mandatory audit firm rotation are likely to exceed the benefits. Most believe that the current requirements for audit partner rotation, auditor independence, and other reforms, when fully implemented, will sufficiently achieve the intended benefits of mandatory audit firm rotation. Moreover, in interviews with other stakeholders, including institutional investors, stock market regulators, bankers, accountants, and consumer advocacy groups, GAO found the views of these stakeholders to be consistent with the overall views of those who responded to its surveys. GAO believes that mandatory audit firm rotation may not be the most efficient way to strengthen auditor independence and improve audit quality considering the additional financial costs and the loss of institutional knowledge of the public company's previous auditor of record, as well as the current reforms being implemented. The potential benefits of mandatory audit firm rotation are harder to predict and quantify, though GAO is fairly certain that there will be additional costs. Several years' experience with implementation of the Sarbanes-Oxley Act's reforms is needed, GAO believes, before the full effect of the act's requirements can be assessed. GAO therefore believes that the most prudent course of action at this time is for the Securities and Exchange Commission and the Public Company Accounting Oversight Board to monitor and evaluate the effectiveness of existing requirements for enhancing auditor independence and audit quality. GAO believes audit committees, with their increased responsibilities under the act, can also play an important role in ensuring auditor independence. To fulfill this role, audit committees must maintain independence and have adequate resources. Finally, for any system to function effectively, there must be incentives for parties to do the right thing, adequate transparency over what is being done, and appropriate accountability if the right things are not done.

gao_GAO-02-1122T

gao_GAO-02-1122T_0

Challenges to Effective Information Sharing The success of a homeland security strategy relies on the ability of all levels of government and the private sector to communicate and cooperate effectively with one another. Activities that are hampered by organizational fragmentation, technological impediments, or ineffective collaboration blunt the nation’s collective efforts to prevent or minimize terrorist acts. Addressing the Challenges GAO believes that the challenges facing the homeland security community require a commitment to focus on transformational strategies, including strengthening the risk management framework, refining the strategic and policy guidance structure to emphasize collaboration and integration among all relevant stakeholders, and bolstering the fundamental management foundation integral to effective public sector performance and accountability. Implementation of these strategies along with effective oversight will be necessary to institutionalize and integrate a long-term approach to sustainable and affordable homeland security.

What GAO Found To protect the nation from terrorist attacks, homeland security stakeholders must more effectively work together to strengthen the process by which critical information can be shared, analyzed, integrated and disseminated to help prevent or minimize terrorist activities. The success of a homeland security strategy relies on the ability of all levels of government and the private sector to communicate and cooperate effectively with one another. Activities that are hampered by organizational fragmentation, technological impediments, or ineffective collaboration blunt the nation's collective efforts to prevent or minimize terrorist acts. The challenges facing the homeland security community require a commitment to focus on transformational strategies, including strengthening the risk management framework, refining the strategic and policy guidance structure to emphasize collaboration and integration among all relevant stakeholders, and bolstering the fundamental management foundation integral to effective public sector performance and accountability. Implementation of these strategies along with effective oversight will be necessary to institutionalize and integrate a long-term approach to sustainable and affordable homeland security.

gao_GAO-15-623

gao_GAO-15-623_0

In 2011, the Air Force established a process for certifying new competitors to be able to launch national security satellites, and in November 2012, the Under Secretary of Defense for Acquisitions, Technology, and Logistics directed the Air Force to introduce a competitive procurement environment for up At the time of this decision, those 14 missions were the to 14 launches.only ones that were within the lift capability of the potential competitor, SpaceX’s Falcon 9 launch vehicle; the missions that the Falcon 9 was not capable of launching were included in ULA’s Phase 1 contract. The acquisition approach for the procurement of launch services in Phase 2 is currently under development. The Air Force is Changing its Approach to Acquiring Launch Services, and Its New Approach Will Provide Less Insight Into Contract Costs and Performance in Favor of Incentivizing Competition The Air Force is changing its approach to acquiring launch services with the Phase 1A contracts, which will alter its insights into some program cost and performance data. Specifically, the Air Force intends to introduce competition for certain launches, treat these launches as a commercial item procurement, and award firm-fixed-price contracts for the launches. In addition to providing cost information, the data from ULA’s business systems also gives the Air Force insight into contract performance. Air Force officials use this data to identify risks in the program that could affect its cost, schedule or performance, and allow them to identify these risks early enough to mitigate them. While the Air Force considers the level of CCDR data sufficient for monitoring launch costs in a competitive acquisition environment, it is not a direct substitute for cost insight gained through ULA’s current non-commercial contract. Had the Air Force chosen to make part or all of the competitive launch contracts non-commercial cost- reimbursement, it would have required the contractors to submit data from DOD-approved business systems. According to the Air Force, competition among launch providers benefits the government both by having commercial marketplace pressures assure prices are reasonable, and by growing the launch industrial base, which increases the potential that more than one launch company will be commercially viable in the future. Minimizes the Air Force’s cost risk: For the Phase 1A competitive launches, the Air Force will use firm-fixed-price contracts, which place greater responsibility upon the contractor for cost control and minimize the service’s cost risk. The work that the Air Force put into the PWS development gave the Air Force confidence that the procurement of the launch services as a commercial item could be successful, because the full scope of the Air Force’s needs were considered and included in the PWS and thus, the contract. Restricts launch schedule flexibility: The contract structure for Phase 1A launches will limit the Air Force’s flexibility to make changes to the launch schedule to manage satellite delays. The Air Force’s ability to modify its launch schedule and exchange satellite payloads when satellite production delays occur has been an important part of the EELV program, and under the Phase 1 contract with ULA, it has flexibility in this process. The EELV Program Faces Risks That Could Impact Future Competitions The Air Force is currently updating its EELV acquisition strategy but it is not clear whether it plans to gather sufficient knowledge to address the EELV program’s future acquisitions risks. However, the commercial launch market is currently undergoing changes, and the ability of both the federal government and the commercial launch market to sustain two or more launch providers is unknown at this time. Given the lack of recent experience with the Air Force’s competitive acquisition approach to procuring launch services and uncertainties about the launch industry going forward, it is important for DOD to ensure it can incorporate lessons learned from the first phase of competition into future phases of its acquisition strategy. Recommendation for Executive Action When planning for the next phase of national security space launches, Phase 2, we recommend the Secretary of the Air Force consider using an incremental approach to the next launch services acquisition strategy. Planning for acquisitions on a short term basis will help ensure that the Air Force does not commit itself to a strategy until the appropriate amount of data is available to make an informed decision, and will allow for flexibility in responding to a changing launch industry. Appendix I: Scope and Methodology To determine the cost and performance data that the Department of Defense (DOD) requires from contractors under the first competitive launch contracts and how those data compare to what is required from the incumbent contractor, we examined the first competitive launch Request for Proposals issued in 2014, which was later canceled, as well as the National Space Transportation Policies of 2004 and 2013, parts 12 and 15 of the Federal Acquisition Regulation (FAR), and the Commercial Space Act of 1998. Additionally, we reviewed past and current Evolved Expendable Launch Vehicle (EELV) program contracts and examined the cost reporting requirements. To determine the benefits and drawbacks of the Air Force’s approach for the first competitive launches, we interviewed acquisition and contracting officials at DOD, CAPE, the Air Force, and the EELV program office. To understand the risks facing the Air Force when planning for future launch acquisitions, we reviewed commercial launch market forecasts, the National Defense Authorization Act for Fiscal Year 2015, and interviewed Air Force officials regarding Phase 2 acquisition strategy planning.

Why GAO Did This Study The Air Force's EELV program is the primary provider launches for military and intelligence satellites. The Air Force is working to introduce competition into the program, which for almost 10 years had one company capable of providing launches. In working to introduce competition into launch contracts, the Air Force is changing its acquisition approach for launch services, including the amount of cost and performance data that it plans to obtain under future launch contracts. Given these expected changes, the National Defense Authorization Act for Fiscal Year 2015 included a provision for GAO to examine this new approach. This report examines the (1) Air Force's new approach for competing launches, the resulting changes on the types of cost or performance data required and commensurate business systems needed compared to what is currently required of the incumbent contractor, and the benefits and drawbacks of this approach; and (2) risks the Air Force faces when planning for future launch acquisitions. To address these questions, GAO reviewed acquisition documents and the contract request for proposals, and interviewed DOD and contractor officials. What GAO Found The Air Force intends to make significant changes to its acquisition approach for acquiring launch services under the Evolved Expendable Launch Vehicle (EELV) program which will alter its current access and insights into certain cost and performance data. The United Launch Alliance (ULA)—EELV's incumbent provider—currently provides national security space launch services under a cost-reimbursement contract for a non-commercial item. Under this type of contract, the Air Force is able to obtain from ULA cost and performance data from contractor business systems. The Air Force uses this business data for a variety of purposes, including monitoring contractor performance and identifying risks that could affect the program's cost, schedule, or performance. However, for at least the first phase of future launches, the Air Force chose to change its acquisition approach to procure launch as a commercial item using a firm-fixed-price contract, which will prevent the service from collecting business data at the same level of detail. As a result, the Air Force will have significantly less insight into program costs and performance than what it has under the current contract with ULA, though according to the Air Force the level of information gathered is sufficient for monitoring launch costs in a competitive environment. The acquisition approach chosen for the first competitive launches offers some benefits to the government, including increased competition, but it could limit program oversight and scheduling flexibility. The Air Force asserts that the use of full and open competition procedures in a commercial item acquisition will increase the potential to keep more than one launch company viable. The Air Force's use of commercial item contracts eliminates the need for contractors to develop the business systems associated with a cost-reimbursement contract and generally places greater responsibility upon the contractor for cost control. However, the Air Force has struggled with EELV program management and lack of oversight in the past, and removing the requirement for cost and performance data could leave it vulnerable to similar problems in the future. Also, the first competitive contracts will limit the Air Force's flexibility in modifying its launch schedule, and schedule changes resulting from satellite production delays may result in added costs. Satellite delays have historically been an issue for the program, and the Air Force's ability to modify the launch schedule is an important component of the current acquisition approach with ULA. The Air Force is at risk of making decisions about future EELV acquisitions without sufficient knowledge. The Air Force plans to develop an acquisition strategy for the next phase of competitive launches before it has any actionable data from the first competitive launches. In addition, the Air Force views competition as crucial to the success of its new acquisition strategy, yet the viability of a competitive launch industry is uncertain. The launch industry is undergoing changes, and the ability of the domestic industry to sustain two or more providers in the long-term, while desirable, is unclear. Additionally, only one company is currently certified to compete with ULA for national security launches, and there are no other potential competitors in the near future. To adequately plan for future competitions and ensure informed decision making before committing to a strategy, it will be important for the Air Force to obtain knowledge about its new acquisition approach and on the launch industry. What GAO Recommends GAO recommends that, when planning for the next phase of competition for launches, the Air Force use an incremental approach to the next acquisition strategy to ensure that it does not commit itself to a strategy until data is available to make an informed decision. DOD concurred with the recommendation.

gao_GAO-01-748

gao_GAO-01-748_0

It also discusses the degree to which HHS’ fiscal year 2000 reports and fiscal year 2002 plans address concerns and recommendations by the Congress, us, the HHS OIG, and others. Conclusions It is difficult to fully assess HHS’ progress in fiscal year 2000 toward achieving the outcomes we reviewed because lags in reporting performance data are common for many of its components such as ACF, CDC, SAMHSA, and FDA. In some cases, the delays are associated with the need to obtain performance data from states and local organizations. Some HHS components are working to improve the timeliness of data submitted by others and, in some instances, have reported trend data to show that progress is being made. For example, both ACF and CDC supplied fiscal year 1999 performance data in their current performance reports—data that were not available until this year. It is likely that ACF’s and CDC’s fiscal year 2001 performance reports will include fiscal year 2000 performance data that were not available this year. While it may not always be realistic to expect the availability of complete data at the same time annual performance reports and plans are issued, trends will become apparent as the number of performance reports grows with each passing year. Appendix II: Comments From the Department of Health and Human Services

Why GAO Did This Study This report reviews the Department of Health and Human Service's (HHS) fiscal year 2000 performance report and fiscal year 2002 performance plan required by the Government Performance and Results Act of 1993 to assess HHS' progress in achieving selected key outcomes that are important to its mission. What GAO Found It is difficult to fully assess the HHS' progress in fiscal year 2000 toward achieving the outcomes GAO reviewed because lags in reporting performance data are common for many of its components such as the Administration for Children and Families (ACF), Centers for Disease Control and Prevention (CDC), the Substance Abuse and Mental Health Services Administration, and the Food and Drug Administration. In some cases, the delays are associated with the need to obtain performance data from states and local organizations. Some HHS components are working to improve the timeliness of data submitted by others and, in some instances, have reported trend data to show that progress is being made. For example, both ACF and CDC supplied fiscal year 1999 performance data in their current performance reports--data that were not available until this year. It is likely that ACF's and CDC's fiscal year 2001 performance reports will include fiscal year 2000 performance data that were not available this year. While it may not always be realistic to expect the availability of complete data at the same time annual performance reports and plans are issued, trends will become apparent as the number of performance reports grows with each passing year.

gao_RCED-97-155

gao_RCED-97-155_0

To better understand EPA’s initiatives and strategy to implement them, several congressional committees asked that we provide a broad overview of EPA’s reinvention efforts, focusing on (1) what the initiatives are and how the agency is structured to carry them out and (2) what key issues need to be addressed for these initiatives to have their intended effect. The Administrator recently announced her decision to create the Office of Reinvention to provide overall direction and support for the agency’s reinvention efforts and to lead certain key initiatives. In addition, (1) EPA’s program offices participate in agencywide initiatives and have generated some of their own medium-specific initiatives and (2) each of EPA’s regional offices has established varied structures and strategies to implement both the EPA-wide and program-specific initiatives. Issues to Address If Reinvention Efforts Are to Succeed Many of EPA’s reinvention efforts are consistent with GPRA’s goal of focusing on achieving results, as well as with the recommendations of GAO and other organizations to achieve a more integrated, cost-effective approach toward environmental protection. However, our contacts with EPA headquarters and regional staff; state, industry and environmental organization officials; and other stakeholders in the environmental regulatory process—together with the experiences of other organizations that have attempted to achieve fundamental change—suggest that the agency faces significant hurdles that must be addressed effectively if reinvention is to succeed: • Key stakeholders in the reinvention process have expressed concern over the large number of complex and demanding initiatives currently being undertaken, as well as confusion over the underlying purpose of some of the agency’s major initiatives. • EPA has had difficulty achieving “buy-in” among the agency’s rank and file, which have grown accustomed to prescriptive, medium-by-medium regulation during the agency’s 27-year history. • The agency has had difficulty achieving agreement among external stakeholders, including federal and state regulators and industry and environmental organization representatives—particularly when stakeholders perceive that unanimous agreement is required before progress can be made. • The agency’s process for resolving miscommunication and other problems involving EPA headquarters staff, regional staff, and other stakeholders does not distinguish between problems that require the attention of senior management and those that should be resolved at lower levels within the agency. • EPA has an uneven record in evaluating the success of many of its initiatives. In addition, the current prescriptive, medium-specific environmental laws impose requirements that have led to and tend to reinforce many of the existing regulatory and behavioral practices that EPA is seeking to change. As a consequence, the agency will be limited in its ability to truly “reinvent” environmental regulation within this existing legislative framework.

Why GAO Did This Study Pursuant to a congressional request, GAO examined: (1) what the Environmental Protection Agency's (EPA) reinvention initiatives are and how EPA is structured to carry them out; and (2) what key issues need to be addressed for these initiatives to have their intended effect. What GAO Found GAO noted that: (1) EPA maintains that its reinvention initiatives seek to reduce paperwork and eliminate obsolete rules, make it easier for businesses to comply with environmental laws, use innovation and flexibility to achieve better environmental results, or engage states, tribes, communities, and citizens in partnerships to protect public health and the environment; (2) in February 1997, the Administrator announced her decision to create an Office of Reinvention, which will provide overall direction and support for EPA's reinvention initiatives; (3) in addition: (a) EPA's program offices participate in agencywide initiatives and have generated some of their own, more medium-specific initiatives; and (b) each of EPA's regional offices has established varied structures and strategies to implement both the EPA-wide and program-specific initiatives; (4) while many of EPA's reinvention efforts are consistent with both the Government Performance and Results Act's goal of focusing on achieving results and with past recommendations by GAO and other organizations to achieve a more integrated, cost-effective approach toward environmental protection, EPA faces significant challenges that must be addressed effectively if reinvention is to succeed: (a) key stakeholders in the reinvention process have expressed concern over the large number of complex and demanding initiatives now being undertaken, as well as confusion over the underlying purpose of some of EPA's major initiatives; (b) EPA has had difficulty achieving "buy-in" among the agency's rank and file, who have grown accustomed to prescriptive, medium-by-medium regulation during EPA's history; (c) EPA has had difficulty achieving agreement among external stakeholders particularly when they perceive that unanimous agreement is required before progress can be made; (d) EPA's process for resolving miscommunication and other problems involving EPA headquarters staff, regional staff, and other stakeholders does not distinguish between problems that require the attention of senior management and those that should be resolved at lower levels; and (e) EPA has an uneven record in evaluating the success of many of its initiatives; (5) in addition, the current prescriptive, medium-specific environmental laws impose requirements that have led to, and tend to reinforce, many of the existing regulatory and behavioral practices that EPA is seeking to change; and (6) as a consequence, EPA will be limited in its ability to reinvent environmental regulation within the existing legislative framework.

gao_GAO-04-489

gao_GAO-04-489_0

In other words, federal agencies require statutory authority to contract with each other. When DOE agrees to carry out R&D for another agency and conducts the work in one of its laboratories, DOE asks the contractor who operates its laboratory to undertake the R&D tasks. LDRD is a cost that DOE incurs, both statutorily and contractually, whenever the laboratory’s contractor performs work for DOE. DOE has issued a departmental order for the LDRD program and clarifying memoranda and guidance to ensure departmental compliance with statutory requirements and congressional direction in committee reports. On April 30, 2002, the Secretary of Energy issued a memorandum to the Under Secretary for Nuclear Security and the Under Secretary for Energy, Science and Environment that provided guidance directing that all DOE agreements to perform R&D for other federal agencies provide notice about each participating laboratory’s LDRD program, including (1) the applicable indirect-cost rate, (2) an estimate of the associated cost, and (3) an explanation of the LDRD program’s purpose. Question 5: To what extent does the leadership of federal agencies that give funds to DOE for its laboratories to conduct R&D on their behalf fully understand that up to 6 percent of the funds may be diverted under DOE’s LDRD program to purposes that have nothing to do with the purpose for which the Congress originally appropriated the funds? Specifically, the senior officials in the Office of the Chief Financial Officer (CFO) and/or the Office of General Counsel at each agency told us that the LDRD program’s inclusion as an indirect cost does not limit their ability to comply with their agency’s statutory or appropriations requirements. Managers at the five Office of Science laboratories told us that the LDRD program is important for their efforts to recruit and retain scientists. For the 6 years from fiscal year 1998 through fiscal year 2003, DOE’s nine laboratories spent a total of $1.8 billion, or an average of $296 million per year, on LDRD. In fiscal year 2003, the laboratories received $7.7 billion from DOE and other federal agencies, through reimbursement to DOE, and spent $347 million, or 4.5 percent, on LDRD. DOD and the intelligence agencies accounted for $41 million, or 12 percent. Scope and Methodology To assess DOE’s statutory authority for charging other federal agencies for LDRD, we researched and analyzed statutes and legislative histories and referred to principles of appropriations law. To assess whether the LDRD program is a necessary tool for recruiting and retaining laboratory scientists, we obtained information from cognizant officials at each of DOE’s nine laboratories about the role that LDRD plays in recruiting and retaining scientists and obtained documentation. To provide data on the sources and amounts of LDRD funding, we obtained data from each laboratory on its operating and LDRD funds for fiscal year 1998 through fiscal year 2003.

Why GAO Did This Study The Department of Energy's (DOE) contractor-operated laboratories perform mission-related research and development (R&D) for DOE and other federal agencies. In 1992, DOE established the Laboratory- Directed Research and Development (LDRD) program, under which laboratory directors may allocate funding to scientists to conduct worthy independent research. DOE allows participating laboratories to support their LDRD programs by including a charge of up to 6 percent of the total project cost in the indirect costs for R&D performed for DOE and other federal agencies. GAO was asked to address 11 specific questions on DOE's LDRD program regarding: DOE's statutory authority for charging other federal agencies for LDRD, DOE's policies and procedures for ensuring departmental compliance with statutory requirements and committee report direction, the extent to which DOE believes the LDRD program is a necessary tool for recruiting and retaining laboratory scientists, and the sources and amounts of LDRD funding that each laboratory received from fiscal year 1998 through fiscal year 2003. In commenting on the draft report, DOE agreed with its factual accuracy. What GAO Found By law, when DOE conducts R&D for other federal agencies and uses a laboratory contractor to carry out the tasks, DOE must recover from the other agency all costs, including LDRD, DOE owes its contractor in performing the work. DOE has issued a departmental order and clarifying memoranda and guidance to ensure LDRD program compliance with statutory requirements and congressional direction. For example, the Secretary of Energy's April 2002 guidance requires that agencies funding work at its laboratories be notified about the LDRD program, including the laboratory's indirect-cost rate and an estimate of the associated cost. According to senior budget, legal, and research program officials at six federal agencies that fund work at the DOE laboratories, inclusion of funding for the LDRD program as an indirect cost does not limit their agency's ability to comply with statutory or appropriations requirements. Managers at the four DOE laboratories that primarily conduct nuclear weapons and environmental management R&D told us that LDRD is vital for recruiting and retaining top scientists, while managers at the five Office of Science laboratories said that LDRD plays an important, but less vital, role in recruiting and retaining top scientists. From fiscal year 1998 through fiscal year 2003, DOE's contractor-operated laboratories spent a total of $1.8 billion, or an average of $296 million per year, on LDRD. DOE accounted for 84 percent and the Department of Defense and the intelligence agencies, through their payments to DOE, accounted for 12 percent of the federal support for the LDRD program in fiscal year 2003.

gao_GAO-03-891

gao_GAO-03-891_0

Also known as “in-bond” plants, maquiladoras were allowed to import temporarily, on a duty–free basis, raw materials and components for processing or assembly by Mexican labor and to re-export the resulting products, primarily to the United States. 2). Within the diverse maquiladora sector, the decline was particularly steep in certain industries and in some border cities. At the same time, U.S. border employment in manufacturing and certain other trade-related sectors contracted. Maquiladora production declined about 30 percent from late 2000 to early 2002. During the maquiladora decline, exports, imports, and overall trade through U.S.-Mexico land border ports also dropped. U.S. Border Employment in Manufacturing and Transportation Services Fell, but Overall Employment Growth Continued The decline in Mexico’s maquiladoras was also felt on the U.S. side, as manufacturing employment in border municipalities declined by 6 percent overall from 2000 through 2002. However, industry sources and other experts emphasized that the maquiladoras have also been adversely affected by structural factors, such as increased competition in the U.S. market, particularly from China, Central America and the Caribbean, and by the strength of the Mexican peso, which has further eroded the maquiladoras’ competitiveness. Although many government, academic, and industry sources generally refer to the cyclical downturn in the U.S. economy as a principal factor in the decrease in maquiladora employment and production since the last quarter of 2000, there is no such agreement on the relative importance of other factors associated with the decline of the maquiladoras. Some of these industries represent significant sectors of maquiladora production. Other changes in Mexico’s tax regime have contributed to the climate of investor uncertainty. However, maquiladoras still face fundamental challenges. The challenges still confronting maquiladoras and the pressure from U.S. trade and homeland security policies lend urgency to Mexican efforts to create an environment where cross-border links between U.S. and Mexican firms and communities can continue to prosper. Structure of Employment Growth in the U.S.- Mexico Border Area This appendix examines U.S. employment changes along the U.S.-Mexico border and explores whether employment in the border areas of the United States has been disproportionately affected by the recent slowdown in U.S. economic activity and the associated decline in cross-border trade between the United States and Mexico. 1. 3. As a result, the maquiladoras are partly independent of Mexico’s internal economic trends. Maquiladora Employment Statistics After growing rapidly throughout the 1990s, Mexican national maquiladora employment peaked in October 2000 and declined sharply through March 2002.

Why GAO Did This Study Mexico's maquiladoras have evolved into the largest component of U.S.-Mexico trade. Maquiladoras import raw materials and components for processing or assembly by Mexican labor and reexport the resulting products, primarily to the United States. Most maquiladoras are U.S. owned, and maquiladoras import most of their components from U.S. suppliers. Maquiladoras have also been an engine of growth for the U.S.-Mexico border. However, the recent decline of maquiladora operations has raised concerns about the impact on U.S. suppliers and on the economy of border communities. Because of these concerns, GAO was asked to analyze (1) changes in maquiladora employment and production, (2) factors related to the maquiladoras' decline, and (3) implications of recent developments for maquiladoras' viability. What GAO Found After growing rapidly during the 1990s, Mexican maquiladoras experienced a sharp decline after October 2000. By early 2002, employment in the maquiladora sector had contracted by 21 percent and production had contracted by about 30 percent. The decline was particularly severe for certain industries, such as electronics, and certain Mexican cities, such as Tijuana. The downturn was felt on the U.S. side of the border as well, as U.S. exports through U.S.-Mexico land border ports fell and U.S. employment in manufacturing and certain other trade related sectors declined. The cyclical downturn in the U.S. economy has been a principal factor in the decrease in maquiladora production and employment since 2000. Other factors include increased global competition, particularly from China, Central America, and the Caribbean; appreciation of the peso; changes in Mexico's tax regime for maquiladoras; and the loss of certain tariff benefits as a result of the North American Free Trade Agreement. Maquiladoras face a challenging business environment, and recent difficulties have raised questions about their future viability. Maquiladoras involved in modern, complex manufacturing appear poised to meet the industry's challenges. Still, experts agree that additional fundamental reforms by Mexico are necessary to restore maquiladoras' competitiveness. U.S. trade and homeland security policies present further challenges for maquiladoras.

gao_GAO-15-534

gao_GAO-15-534_0

State regulators also require insurance companies to maintain specific levels of capital. However, a few stakeholders stated that it is unclear who the group-wide regulator would be for these insurers. Insurers in the United States are not required to move capital among regulated insurance entities, and some stakeholders noted that the extent to which the international capital standards would require group-wide capital to be fungible among legal entities is uncertain. Furthermore, there is some uncertainty about the legal mechanisms that would be used to implement the standards in the United States. In addition, requiring insurers to hold more capital could be costly for all affected insurers but could also disproportionately affect some types of insurers. Views Differ on the Need for the International Group- Level Standards Stakeholders Disagreed on the Systemic Risk Posed by Insurance Activities In its support for the development of an international capital standard for insurers, the Financial Stability Board has cited supporting financial stability as a reason the standards are needed. However some stakeholders said that nontraditional, noninsurance activities could increase a company’s interconnections. Many experts and industry representatives we spoke with said that insurers do not pose systemic risk based on size alone, but some have said that size is an important factor. But they have not yet taken steps to help ensure that leadership will be sustained over the long term, consistent with leading practices that we have previously identified. Primarily, U.S. IAIS members and industry stakeholders mentioned: this is the first time that the federal agencies and state regulators had worked together on international insurance matters in IAIS, and the United States has never before had a supervisory standard for group capital for insurers; U.S. activity surrounding the capital standards was still in its early stages and had increased only recently; U.S. IAIS members are not statutorily required to collaborate with each other, and are sorting through ideological challenges related to the integration of federal authorities in U.S. insurance regulation; and the responsibility for the implementation and enforcement of the proposed standards would be split among many regulators. However, some stakeholders said that the effectiveness of the collaborative effort remained unproven because it had yet to achieve its long-term goal of establishing a more unified U.S. view on the ICS, and that it was unclear whether the U.S. IAIS members would be able to agree on related issues, such as insurance group capital standards. Although U.S. IAIS members have different authorities and are not required to collaborate in IAIS, they have said that establishing a more unified U.S. view on the ICS is important because doing so would allow the U.S. IAIS members to better contribute to IAIS discussions on capital standards. Additional steps taken now to enhance and sustain collaboration, while the development of international capital standards is in the relatively early stages, could help U.S. IAIS members better advocate for standards that reflect the interests of U.S. insurance regulators, industry, and consumers over the long term. Recommendation To enhance and sustain future U.S. participation in the development of international capital standards for insurers, the Secretary of the Treasury should direct the Director of FIO, in consultation with the Federal Reserve and NAIC, to enhance future collaborative interagency efforts by following additional leading practices for collaboration, such as taking steps to sustain leadership over the long term and publicly reporting on their efforts, for example in annual reports. In concurring with our recommendation that FIO enhance future collaborative efforts by following additional leading practices, FIO said that the agency would build on its existing collaboration process by following leading collaboration practices discussed in the report. Appendix I: Objectives, Scope, and Methodology To examine the development and potential effects of these international capital standards for U.S. insurers, we reviewed (1) the status of the development and implementation of the international standards; (2) what is known about the potential effects of applying international capital standards to U.S. insurers; (3) industry and other stakeholder views on the need for an international group-level capital standard for insurance companies; and (4) the extent to which U.S. regulators are collaborating with each other, and considering the views of industry and other stakeholders, in developing a U.S. position on international capital standards. Specifically, we interviewed federal agencies—the Federal Insurance Office, the Board of Governors of the Federal Reserve System, and the Financial Stability Oversight Council (FSOC)—as well as the National Association of Insurance Commissioners (NAIC) and several former and current state insurance regulators that will likely supervise internationally active insurance groups (IAIG).

Why GAO Did This Study Large, internationally active insurance companies accounted for 28 percent of the aggregate insurance premiums underwritten in the United States in 2014. IAIS is developing international group-level capital standards for these insurers. Although these standards are not yet complete and U.S. regulators have not yet determined how they might be implemented, some regulators and insurers have expressed concerns. GAO was asked to review the potential effects of the standards, the need for them, and U.S. involvement in their development. This report examines (1) the status of the development and implementation of the international standards; (2) what is known about their potential effects; (3) views on the need for the standards; and (4) the extent to which U.S. regulators are collaborating in developing a U.S. position on the standards. To address these questions, GAO reviewed IAIS and U.S. agency documentation and relevant literature; assessed the extent of collaboration compared to leading practices; and interviewed regulators, IAIS officials, insurers, academics, and other stakeholders that would be affected by or have commented on the standards. What GAO Found International capital standards establishing the amounts of capital that large, internationally active insurers could be required to maintain are in the early stages of development, and much about them remains uncertain. For example, the International Association of Insurance Supervisors (IAIS) has not finalized the methodologies that will be used to determine the required capital levels. Further, implementing the standards at the group level in the United States could be challenging since states, the primary regulators, focus on individual insurance entities rather than on group-level entities or holding companies. At this time, it is unclear which U.S. regulator would implement and enforce the standards or how they would compare with current U.S. capital standards. With so many unknowns, some stakeholders agreed that it was too early to determine the effects of the proposed standards. However, some stakeholders said that any effects could be minimal, since U.S. insurers generally hold high levels of capital. Other stakeholders said that potential positive effects could include the promotion of comparable standards across jurisdictions and the removal of incentives for companies to select locations based on regulatory differences. Some stakeholders also mentioned potential negative effects, including higher costs for insurers required to hold additional capital that could create incentives to stop offering some products or to raise prices. Stakeholders expressed mixed views on the need for international capital standards to address systemic risk. Many stakeholders said that traditional insurance activities were not likely to pose systemic risk, which has been described as a key reason for pursuing the standards. But other stakeholders said that nontraditional noninsurance activities, such as credit default swaps and guaranteed investment contracts, could increase insurers' interconnectedness with other financial market participants and cause systemic effects should an insurer fail. These types of activities contributed to financial problems for the American International Group, Inc. during the 2007-2009 financial crisis. IAIS officials and others said that international capital standards could help address risks from these activities. But some state regulators and industry representatives noted that current U.S. risk-based capital standards and other regulatory tools adequately protected U.S. policyholders and that regulators were coordinating to address potential group-wide risks. The U.S. members of IAIS—including the Federal Insurance Office (FIO), the Federal Reserve, and the National Association of Insurance Commissioners (NAIC)— have improved coordination among themselves as a group but could do more to incorporate leading practices for collaboration. GAO found that the collaborative efforts members had made were consistent with some leading practices, such as establishing shared goals. But U.S. IAIS members have not followed other leading practices, such as ensuring that leadership will be sustained in the long term and publicly reporting on their collaborative efforts. The members said that their efforts were still in the early stages. Adopting these practices would allow U.S. IAIS members to better advocate for standards that reflect the interests of U.S. insurance regulators, industry, and consumers. What GAO Recommends To enhance and sustain U.S. involvement in the development process, FIO, in consultation with the Federal Reserve and NAIC, should take steps to sustain leadership over the long term and publicly report on their collaborative efforts.FIO concurred with the recommendation, stating that it would build on existing collaboration efforts.

gao_GAO-17-607

gao_GAO-17-607_0

Financial and nonfinancial firms use swaps and other derivatives to hedge risk, to speculate, or for other purposes, such as to reduce uncertainty. For example, an airline may enter into a commodity swap to lock in its fuel price over a certain time horizon, so that it can better manage its costs. Section 716 of the Dodd- Frank Act Section 716 prohibits the provision of federal assistance to banks that engage in certain swap activities but allows them to move, or “push out,” such activities to nonbank affiliates of the bank. The amended section 716 affected four U.S. bank swap dealers that conducted structured finance swap activities, and we estimated that these banks “pushed out” about $265 billion of such swaps in notional value (or less than 1 percent of the banks’ total derivatives). We estimated that these banks continue to hold about $10.5 trillion of such swaps in notional value (or around 6 percent of their total derivatives) due to the section 716 amendment. This total is the amount that presumably would have been traded by the four banks if they did not have to push them out to nonbank affiliates to remain eligible for federal assistance. In contrast, BHCs and end-users stated that implementation costs would likely have been significantly greater under the original section 716 due to the larger scope of covered swaps and the much larger volume of affected end-users. End-Users’ Implementation Costs Because section 716 directly affects the relationship between bank swap dealers and end-user clients, both the original and amended provisions involve some operational and legal costs for affected end-users as well. At the same time, this potential benefit likely would have resulted in costs for their BHCs and swap end-users, as discussed earlier. Consistent with such regulatory requirements, our analyses indicate that the 11 U.S. banks that would have been affected by the original section 716 held financial resources needed to support their swap-related credit, liquidity, and market risk exposures as of September 30, 2016. Federal banking regulators and large BHCs are developing resolution strategies that seek to resolve a large BHC, if it were to fail, in an orderly manner and without federal assistance. These strategies, if successful, could help enable the BHC and its bank swap dealer to unwind or sell its swaps in an orderly manner and avoid value destruction. Specifically, we examined (1) the number of U.S. banks and the value of their swaps affected under the amended section 716 and that would have been affected under the original section 716; (2) the actual and potential costs or negative effects of the amended and original section 716 for U.S. banks and swap end-users, (3) U.S. banks’ risks associated with swap activities that continue to be carried on by the banks due to the section 716 amendment and mitigating factors, and (4) the effects of section 716 and other Dodd-Frank Act requirements on risk to taxpayers in the event of a bank failure. Objective 1 To examine the number of U.S. banks and the value of their swaps affected under the amended section 716 and that would have been affected under the original section 716, we reviewed both versions of the provision; analyses of section 716 prepared by the federal bank regulators (the Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC)) and four large banks; regulations issued by the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) on the registration of swap and security-based swap dealers and major swap and security-based swap participants; list of entities provisionally registered as swap dealers with CFTC; and reports, studies, and other materials on section 716, swaps, or asset- backed securities issued by GAO, law firms, market participants, and others. Objectives 3 and 4 To examine the banks’ risks associated with swap activities that continue to be carried on by the banks due to the section 716 amendment and the effects of section 716 and other Dodd-Frank Act requirements on risk to taxpayers in the event of a bank failure, we reviewed the Dodd-Frank Act’s prudential and resolution reforms and related regulations, including on risk-based and leverage capital requirements, liquidity requirements, total loss-absorbing capacity, global systemically important bank holding companies, the Volcker rule, orderly liquidation authority, and resolution plan requirements; joint feedback and guidance provided by the Federal Reserve and FDIC to bank holding companies on their resolution plans; Federal Reserve’s and OCC’s bank examination manuals and related derivatives guidance; publicly available regulatory filings submitted by U.S. banks registered as swap dealers or their parent holding companies, including SEC annual or quarterly filings and resolution plans; and industry, academic, and other studies or reports examining the role of derivatives in the recent financial crisis and ways to mitigate risks posed by derivatives under the U.S. Bankruptcy Code. In 2015 and 2016, all section 716 banks and their BHCs were market risk firms. Appendix IV: Estimating Certain Risks for U.S. Banks That Would Have Been Affected by the Original Section 716 The original section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) generally prohibited the provision of federal assistance to banks registered as swap dealers that engaged in equity swaps, commodity (except for precious metals) swaps, and noncleared credit default swaps activity, unless, among other things, the institution limited its swap activities to hedging and other similar risk mitigating activities directly related to the institution’s activities. Our methodology included the following steps. These reforms, if successful, can help BHCs with banks that are large swap dealers wind-down their swaps in an orderly manner and preserve their value.

Why GAO Did This Study Given the role of derivatives in contributing to the 2007—2009 financial crisis, the Dodd-Frank Act includes various provisions that subject the swap market and its participants to greater regulation, including section 716. Proponents of section 716 sought to prohibit banks from engaging in riskier swap activities that could cause the banks to need federal assistance backed by taxpayers. Opponents of section 716 maintained that swaps trading by banks did not significantly contribute to the financial crisis. In late 2014, section 716 was amended to narrow its scope of prohibited swap activities. Banks generally were required to begin complying with the amended section 716 in July 2015. GAO was asked to examine various effects of the amended and original versions of section 716. This report examines the provision's effect on U.S. banks and their BHCs, end-users of swaps, and taxpayers in light of other Dodd-Frank Act reforms. GAO analyzed publicly available data on swaps and derivatives held by banks and their BHCs and reviewed laws and regulations applicable to swaps as well as academic, industry, and GAO reports, research, and other materials. GAO also interviewed federal banking and swaps regulators, 15 U.S. banks that were registered as swap dealers and thus covered by section 716, end-users that were or would have been affected by section 716, an industry association, and experts, such as academics researching the swaps market. What GAO Found Since the 1980s, banks have been engaging in swaps: financial contracts (derivatives) in which two parties “swap,” or exchange, payments based on changes in asset prices or other values. A variety of firms (end-users) use swaps to hedge risk, to speculate, or for other purposes. For example, an airline may use swaps to lock in its fuel price to hedge against a future price rise. End-users engage in swaps through swap dealers, and some large banks act as swap dealers, exposing them to risks. Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)—also known as the “swaps push-out rule”—requires banks registered as swap dealers, in effect, to stop engaging in certain swap activities to remain eligible for federal financial assistance but allows them to “push out” such activities to nonbank affiliates within the same bank holding company (BHC). As originally enacted, section 716 would have covered certain equity, commodity, and credit default swaps activities, but amendments made in 2014 now cover only certain swap activity based on asset-backed securities. GAO analyses of the effects of the amended and original versions of section 716 on U.S. banks and their BHCs, swap end-users, and taxpayers in light of other Dodd-Frank Act reforms found the following: A significantly larger volume of swaps would have been pushed out under the original section 716. The amended section 716 affected four U.S. banks and caused them to push out an estimated $265 billion of swaps in notional value as of September 30, 2016, or less than 1 percent of their total derivatives. The original version would have affected 11 U.S. banks (including the 4 banks) and could have affected an estimated $10.5 trillion of swaps in notional value, or about 6 percent of their total derivatives, if the provision had not been amended. Section 716 increases risks and costs for BHCs and end-users . Under the amended version, banks moved their covered swap activities to nonbank affiliates, requiring the affiliates and clients to incur legal and operational costs. Banks and end-users told GAO that moving the swaps can increase their risks and, in turn, costs. Such risks and costs likely would have been greater under the original version because of its broader scope. Other Dodd-Frank Act provisions mitigate risks . Section 716 seeks to reduce a bank's risk of failure and potential need for federal assistance, but the act's other reforms also seek to mitigate such risks. For example, regulators have subjected banks to enhanced prudential and other requirements that can help to mitigate their swap-related risks. Consistent with such requirements, GAO's analyses indicate the 11 U.S. banks that would have been affected by the original section 716 held financial resources needed to support their swap-related credit, liquidity, and market risk exposures as of September 30, 2016. Federal banking regulators and BHCs with the largest bank swap dealers are continuing to develop resolution strategies that seek to resolve a large BHC in an orderly manner and without federal assistance if it were to fail. These strategies, if successful, can help BHCs to wind-down or sell their swaps in an orderly manner and avoid value destruction.

gao_GAO-03-1150T

gao_GAO-03-1150T_0

To address these and other weaknesses, ATSA created the Transportation Security Administration and established security requirements for the new agency with mandated deadlines. As of September 2001, FAA had implemented some of these recommendations and was addressing others, but its progress was often slow. Legislation Transferred Most Aviation Security Responsibilities to TSA ATSA defined TSA’s primary responsibility as ensuring security in all modes of transportation. Since September 2001, Multiple Initiatives Have Increased Aviation Security Over the past 2 years, TSA and FAA have taken major steps to increase aviation security. FAA has focused its efforts on enhancing the security of the nation’s air traffic control systems and facilities. 2); hired and deployed more than 20,000 individuals to screen all checked has been using explosives detection systems or explosives trace detection equipment to screen about 90 percent of all checked baggage as of December 31, 2002; has been using alternative means such as canine teams, hand searches, and passenger-bag matching to screen the remaining checked baggage; confiscated more than 4.8 million prohibited items (including firearms, knives, and incendiary or flammable objects) from passengers; and has made substantial progress in expanding the Federal Air Marshal Service. These concerns about the system will need to be addressed as it moves toward implementation. Potential Vulnerabilities Remain in Several Aviation Sectors Although TSA has focused much effort and funding on ensuring that bombs and other threat items are not carried onto commercial aircraft by passengers or in their luggage, vulnerabilities remain, according to aviation experts, TSA officials, and others. In particular, these vulnerabilities affect air cargo, general aviation, and airport perimeter security. TSA has reported that an estimated 12.5 million tons of cargo are transported each year—9.7 million tons on all-cargo planes and 2.8 million tons on passenger planes. Aviation Security Poses Longer-Term Management and Organizational Challenges TSA’s efforts to strengthen and sustain aviation security face several longer-term challenges in the areas of risk management, funding, coordination, strategic human capital management, and building a results- oriented organization. We have advocated the use of a risk management approach to guide federal programs and responses to better prepare for and withstand terrorist threats, and we have recommended that TSA use this approach to strengthen security in aviation as well as in other transportation modes. Building a Results- Oriented Organization For TSA to sustain enhanced aviation security over the long term, it will be important for the agency to continue to build a results-oriented culture within the new Department of Homeland Security. Prohibits the use of funds authorized in this act for the Computer Assisted Passenger Prescreening System (CAPPS II) until GAO has reported to the Committees on Appropriations that certain requirements have been met, including (1) the existence of a system of due process by which passengers considered to pose a threat may appeal their delay or prohibition from boarding a flight; (2) that the underlying error rate of databases will not produce a large number of false positives that will result in a significant number of passengers being treated mistakenly or security resources being diverted; (3) that TSA has stressed-tested and demonstrated the efficacy and predictive accuracy of all search tools in CAPPS II; and (4) that the Secretary has established an internal oversight board to monitor the manner in which CAPPS II is being developed and prepared. Aviation Security: Terrorist Acts Illustrate Severe Weaknesses in Aviation Security. Aviation Security: Progress Being Made, but Long-Term Attention Is Needed. Major Management Challenges and Program Risks: Department of Homeland Security.

Why GAO Did This Study In the 2 years since the terrorist attacks of September 11, 2001, the security of our nation's civil aviation system has assumed renewed urgency, and efforts to strengthen aviation security have received a great deal of congressional attention. On November 19, 2001, the Congress enacted the Aviation and Transportation Security Act (ATSA), which created the Transportation Security Administration (TSA) within the Department of Transportation (DOT) and defined its primary responsibility as ensuring security in aviation as well as in other modes of transportation. The Homeland Security Act, passed on November 25, 2002, transferred TSA to the new Department of Homeland Security, which assumed overall responsibility for aviation security. GAO was asked to describe the progress that has been made since September 11 to strengthen aviation security, the potential vulnerabilities that remain, and the longer-term management and organizational challenges to sustaining enhanced aviation security. What GAO Found Since September 11, 2001, TSA has made considerable progress in meeting congressional mandates designed to increase aviation security. By the end of 2002, the agency had hired and deployed about 65,000 passenger and baggage screeners, federal air marshals, and others, and it was using explosives detection equipment to screen about 90 percent of all checked baggage. TSA is also initiating or developing efforts that focus on the use of technology and information to advance security. One effort under development, the next-generation Computer-Assisted Passenger Prescreening System (CAPPS II), would use national security and commercial databases to identify passengers who could pose risks for additional screening. Concerns about privacy rights will need to be addressed as this system moves toward implementation. Although TSA has focused on ensuring that bombs and other threat items are not carried onto planes by passengers or in their luggage, vulnerabilities remain in air cargo, general aviation, and airport perimeter security. Each year, an estimated 12.5 million tons of cargo are transported on all-cargo and passenger planes, yet very little air cargo is screened for explosives. We have previously recommended, and the industry has suggested, that TSA use a risk-management approach to set priorities as it works with the industry to determine the next steps in strengthening aviation security. TSA faces longer-term management and organizational challenges to sustaining enhanced aviation security that include (1) developing and implementing a comprehensive risk management approach, (2) paying for increased aviation security needs and controlling costs, (3) establishing effective coordination among the many entities involved in aviation security, (4) strategically managing its workforce, and (5) building a results-oriented culture within the new Department of Homeland Security. TSA has begun to respond to recommendations we have made addressing many of these challenges, and we have other studies in progress.

gao_GAO-11-136

gao_GAO-11-136_0

The intelligence community had 120 days to conduct its review. DOD Took Steps to Assess Civilian Senior Leader Workforce Requirements but Did Not Document and Summarize the Results of Its Assessments DOD’s Approach for Assessing Senior Executive Service, Senior Level, and Senior Technical Workforce Requirements In 2008, DOD conducted a baseline review to assess and validate Senior Executive Service, Senior Level, and Senior Technical workforce requirements and reported to Congress that this was a rigorous analysis. Moreover, department officials stated that they did not present their aggregate analysis in a report summarizing the results of the baseline review. They further stated that DOD did not summarize the analysis because the information was only intended to be used to support a variety of human capital management processes taking place in the department. For example, the department said it used information from the baseline review in DOD’s 2009 update to its Civilian Human Capital Strategic Plan. Without clearly documenting or summarizing the information in an analysis that could be readily traced back to the component submissions, DOD is not providing Congress and other stakeholders—such as those in the chain of command—clear insight and visibility into DOD’s validation of requirements for its civilian senior leader workforces and whether those validated requirements reflect the results of its baseline review. A Consistent Approach to Identify, Communicate, and Address Needs Was Used in DOD’s Request for Additional Senior Leaders, but the Defense Intelligence Community’s Approach Lacked Similar Consistency For Most Entities, DOD Conducted an Analytical Assessment of Needs Using Standard Criteria For most entities—the Army, the Navy, the Air Force, the Office of the Director of Administration and Management, the Office of the Chairman of the Joint Chiefs of Staff, and other offices—DOD conducted an analytical assessment of needs using standard criteria. Without the use of common criteria and without better communication of its justifications for additional positions, requests to Congress to increase the number of Defense Intelligence Senior Executive Service personnel will not appear to be well-supported. DOD’s Approach for Developing and Managing Civilian Senior Executive Service Personnel Includes Policies and an Executive Education Program, Though Limitations Exist In addition to identifying the need for civilian senior leaders, DOD has recently established overarching policy for managing and developing its Senior Executive Service workforce. In addition, chief among DOD’s efforts to develop its Senior Executive Service workforce is DOD’s new Defense Senior Leader Development Program, which DOD established in 2008 and, according to program officials, costs an average of $6.5 million per fiscal year. However, according to DOD officials, the department does not have specific metrics for the program. Our prior work on effective strategic workforce planning has shown that high-performing organizations recognize the importance of measuring both the outcomes of human capital strategies as well as the ways that these outcomes have helped the organizations accomplish their missions and programmatic goals. Similarly, DOD must be able to communicate those needs in a manner that facilitates informed decision making. To improve the management and development of DOD’s civilian senior leader workforces, we are recommending that the Secretary of Defense take the following three actions: direct the Under Secretary of Defense for Intelligence to finalize and issue common criteria for the military service intelligence elements and the defense intelligence agencies to use in their assessments of Defense Intelligence Senior Executive Service requirements; direct the Under Secretary of Defense for Personnel and Readiness and the Under Secretary of Defense for Intelligence to better communicate key information, including justifications for each Defense Intelligence Senior Executive Service position needed, during the development and presentation of legislative proposals to congressional decision makers; and direct the Office of the Under Secretary of Defense for Personnel and Readiness to establish clearly defined metrics for the Defense Senior Leader Development Program in order to measure the overall success of the program. However, the department concurred with GAO’s recommendation to document the analysis conducted in future reviews of its civilian senior leaders when such reviews are specifically targeted for an intended outcome. 1. DOD asserted that our statement that “some of the components’ information was incomplete” was not accurate. However, this DOD official was unable to provide us with copies of the assessments completed by the Army and Air Force. 2. 3. In light of the internal control standards, which we reference in our report, we continue to believe that the department should have documented and summarized its analysis. The department asked that the sentence be changed to “DOD’s ability to provide Congress and other stakeholders clear insight and visibility into the defense intelligence community’s validation of requirements for its civilian senior leader workforces can be improved by clearly documented analysis that can be traced back to component submissions.” We disagree with the assumption that certain information does not exist, and we did not add the phrase “clearly documented analysis that can be traced back to components submissions” because it was already stated in a prior sentence in our report and would therefore be duplicative. DOD Civilian Personnel: Comprehensive Strategic Workforce Plans Needed.

Why GAO Did This Study The Department of Defense (DOD) relies heavily on its civilian workforce to perform duties usually performed by military personnel--including combat support functions such as logistics. Civilian senior leaders--some of whom occupy positions that might be cut during DOD's latest attempts to reduce overhead costs--are among those who manage DOD's civilians. In 2007, Congress mandated that DOD assess requirements for its civilian senior leader workforce in light of recent trends. DOD reported its recent reply to this requirement in its 2009 update to the Civilian Human Capital Strategic Plan, which used information from a 2008 baseline review to validate its senior leader requirements. GAO was asked to review DOD's approach for (1) assessing its civilian senior leader workforce requirements, (2) identifying and communicating the need for additional senior leaders, and (3) developing and managing this workforce. GAO reviewed submissions for DOD's baseline review and requests for additional senior leaders, including DOD's intelligence agencies. GAO also interviewed DOD and Office of Personnel Management officials. What GAO Found DOD conducted a baseline review to assess and validate its civilian senior leader requirements but did not document its analysis or summarize the results of the review. Standards for internal controls call for significant events to be documented and summarized to facilitate tracing transactions and related information. Specifically, in April 2008, DOD issued guidance for components outside its intelligence community to conduct a baseline review of its senior leader needs. While DOD reported to Congress that this was a rigorous analysis, GAO found that some of the components' information was incomplete and DOD was unable to provide documentation of an analysis summarizing its results. DOD officials said that they did not summarize the analysis because the information was only intended to support a number of human capital management efforts, including a report to Congress on DOD's Civilian Human Capital Plan. Similarly, DOD's intelligence community, in 2007, issued guidance for assessing its workforce needs but also did not summarize its analysis. DOD officials stated that while the analysis was not summarized, it resulted in a number of key decisions--for example, a reduction in one agency's senior leader needs. However, without documenting and summarizing information in an analysis that could be traced to component submissions, DOD may not be able to provide Congress and stakeholders in its chain of command insight into how it assessed its senior leader needs. While most DOD entities used a consistent, clearly documented approach to identify and communicate needs for additional civilian senior leaders, the defense intelligence community's approach lacked similar consistency. Outside of the defense intelligence community, DOD used common criteria to identify its most urgent needs for additional senior leaders and communicated those needs and justifications through the chain of command. The defense intelligence community, however, assessed its needs for additional personnel using various sets of criteria and communicated those needs as one aggregate number without providing specific justifications to stakeholders and, ultimately, to Congress. GAO's prior work has shown that establishing common criteria and clear communication strategies strengthens agency processes. Without such criteria and a well-defined set of communication expectations, requests to increase senior leaders in the defense intelligence community will not appear to be supported and justified. DOD's approach for managing and developing civilian leaders includes policies and an executive education program but has some limitations. For example, the executive education program--which, according to program officials, costs an average of $6.5 million per year--was created to address problems of a predecessor program, including the lack of a plan for how graduates would be used in the future. The new program, however, does not have clearly defined metrics to measure the progress or success of the program. GAO previously reported that high-performing organizations recognize the importance of measuring how programs meet their goals. What GAO Recommends GAO recommends that DOD (1) document analyses and clarify assessment criteria for determining certain senior leader requirements and (2) create clearly defined metrics for its executive education program. DOD generally concurred with GAO's recommendations.

gao_GAO-01-323

gao_GAO-01-323_0

A key element of this strategy is the establishment of the National Infrastructure Protection Center (NIPC) as “a national focal point” for gathering information on threats and providing the principal means of facilitating the federal government’s response to computer-based incidents. Objectives, Scope, and Methodology Our objectives were to evaluate the progress that the NIPC has made in developing national capabilities regarding cyber threats for analyzing threat and vulnerability data and issuing warnings; enhancing its capabilities for responding to cyber attacks; and outreach and sharing information with government and private-sector entities, including the progress made regarding the InfraGard Program and development of the key asset database. Conclusions While the NIPC has taken some steps to develop analysis and warning capabilities, the strategic capabilities described in PDD 63 have not been achieved. Conclusions The NIPC has provided important support in increasing the FBI’s ability to investigate computer crimes by coordinating investigations and providing technical assistance. The NIPC has also developed crisis management procedures and drafted an emergency law enforcement sector plan, which is currently being reviewed by sector members. Conclusions The NIPC’s information-sharing relationships are still evolving and will probably have limited effectiveness until reporting procedures and thresholds are defined and trust relationships are established.

Why GAO Did This Study To better protect the nation's critical computer-dependent infrastructures from computer-based attacks and disruption, the President issued Presidential Decision Directive (PDD) 63 in 1998. The directive established the National Infrastructure Protection Center as a national focal point for gathering information on threats and facilitating the federal government's response to computer-based incidents. This report evaluates the center's progress in (1) developing national capabilities for analyzing cyber threat and vulnerability data and issuing warnings, (2) enhancing its capabilities for responding to cyber attacks, and (3) developing outreach and information-sharing initiatives with government and private-sector entities. What GAO Found GAO found that although the center has taken some steps to develop analysis and warning capabilities, the strategic capabilities described in PDD 63 have not been achieved. The center has provided important support to the Federal Bureau of Investigation's investigations of computer crimes by coordinating investigations and providing technical assistance. The center has also developed crisis management procedures and drafted an emergency law enforcement sector plan, which is now being reviewed by sector members. The center's information-sharing relationships are still evolving and will probably have limited effectiveness until reporting procedures and thresholds are defined and trust relationships are established.

gao_GAO-02-923

gao_GAO-02-923_0

Background Federal agencies are increasingly expected to demonstrate how their activities contribute to achieving agency or governmentwide goals. These programs also had limited federal reporting requirements. Surveys and Logic Models Helped Address Most Challenges, but External Factors Were Rarely Addressed The agencies we reviewed used a variety of strategies to address their evaluation challenges. Find Common Measures or Encourage Locally Tailored Evaluations Two of the four flexible programs developed ways to assess progress toward national program goals, while the others encouraged local programs to conduct their own evaluations, tailored to local program goals. With such intentional flexibility and diversity, it is often difficult to characterize or summarize the effectiveness of the national program. Most of the programs we reviewed expected the desired behavior change—the intermediate outcome—to take place later, after participants returned home or to their jobs. In most instances, programs measured only short-term and intermediate outcomes, which they claimed would contribute to achieving these ultimate benefits. Then, collaboration with program partners and access to research results and evaluation expertise helped them carry out and increase the contributions of these evaluations. Congressional Interest Congressional concern about program effectiveness resulted in two mandated evaluations and spurred agency performance assessment efforts in two others.

What GAO Found Federal agencies are increasingly expected to focus on achieving results and to demonstrate, in annual performance reports and budget requests, how their activities will help achieve agency or governmentwide goals. Assessing a program's impact or benefit is often difficult, but the dissemination programs GAO reviewed faced a number of evaluation challenges--either individually or in common. The breadth and flexibility of some of the programs made it difficult to measure national progress toward common goals. The programs had limited opportunity to see whether desired behavior changes occurred because change was expected after people made contact with the program, when they returned home or to work. The five programs GAO reviewed addressed these challenges with a variety of strategies, assessing program effects primarily on short-term and intermediate outcomes. Two flexible programs developed common measures to conduct nationwide evaluations; two others encouraged communities to tailor local evaluations to their own goals. Congressional interest was key to initiating most of these evaluations; collaboration with program partners, previous research, and evaluation expertise helped carry them out. Congressional concern about program effectiveness spurred two formal evaluation mandates and other program activities. Collaborations helped ensure that an evaluation would meet the needs of diverse stakeholders.

gao_GAO-07-997T

gao_GAO-07-997T_0

In May 2006, the President called for comprehensive immigration reform that included strengthening control of the country’s borders by, among other things, adding 6,000 new agents to the Border Patrol by the end of December 2008. Under a memorandum of understanding, FLETC hosts the Border Patrol’s training academy in Artesia, New Mexico, and shares the cost of providing training with the Border Patrol. The Border Patrol’s Basic Training Program Exhibits Attributes of an Effective Training Program The Border Patrol’s basic training program exhibits attributes of an effective training program. GAO’s training assessment guide suggests the kinds of documentation to look for that indicate that a training program has a particular attribute in place, such as incorporating measures of effectiveness into its course designs. As shown in table 1, the Border Patrol was able to document that its training program had key indicators in place for the applicable attributes of an effective training program. The core training curriculum used at the Border Patrol Academy has not changed since September 11, but the Border Patrol added new material on responding to terrorism and practical field exercises. With regard to capacity, Border Patrol officials told us they are confident that the academy can accommodate the large influx of new trainees anticipated over the next 2 years. The Average Cost to Train a New Border Patrol Agent in Fiscal Year 2006 Was About $14,700 and Was Comparable to Those of Other Federal and Nonfederal Law Enforcement Training Programs In fiscal year 2006, the average cost to train a new Border Patrol agent at the academy was about $14,700. The Border Patrol’s average cost per trainee at the academy is consistent with that of training programs that cover similar subjects and prepare officers for operations in similar geographic areas. For example, the estimated average cost per trainee for a BIA police officer was about $15,300; an Arizona state police officer, $15,600; and a Texas state trooper, $14,700. Table 3 shows a comparison of Border Patrol’s basic training program with other federal and nonfederal law enforcement basic training programs. Plans under Consideration to Improve Basic Training Efficiency May Present Challenges The Border Patrol is considering several alternatives to improve the efficiency of basic training delivery and to return agents to the sectors more quickly. For example, in October 2007 the Border Patrol plans to implement a proficiency test for Spanish that should allow those who pass the test to shorten their time at the academy by about 30 days. Finally, the Border Patrol is considering what other training it can shift from the academy to postacademy and field training conducted in the sectors, which could further reduce the amount of time trainees spend at the academy. While these strategies may improve the efficiency of training at the academy, officials expressed concern about the sectors’ ability provide adequate supervision and continued training once the new agents arrive at the sectors. Some Border Patrol officials are concerned with having enough experienced agents available in the sectors to serve as first-line supervisors and field training officers for these new agents. In addition to concerns about having a sufficient number of experienced agents to serve as supervisors and field training officers, the Border Patrol does not have a uniform field training program that establishes uniform standards and practices that each sector’s field training should follow.

Why GAO Did This Study In May 2006, the President called for comprehensive immigration reform that included strengthening control of the country's borders by, among other things, adding 6,000 new agents to the U.S. Border Patrol by the end of December 2008. This unprecedented 48 percent increase over 2 years raises concerns about the ability of the Border Patrol's basic training program to train these new agents. This testimony is based on a recent report for the ranking member of this subcommittee on the content, quality, and cost of the Border Patrol's basic training program for new agents and addresses (1) the extent to which the Border Patrol's basic training program exhibits the attributes of an effective training program and the changes to the program since September 11, 2001; (2) the cost to train a new agent and how this compares to the costs of other similar law enforcement basic training programs; and (3) any plans the Border Patrol has developed or considered to improve the efficiency of its basic training program. To address these issues, GAO reviewed relevant documents; observed classroom training and exercises at the Border Patrol Academy in Artesia, New Mexico; assessed the methodologies of training cost estimates; and interviewed Border Patrol officials. What GAO Found The Border Patrol's basic training program exhibits attributes of an effective training program. GAO's training assessment guide suggests the kinds of documentation to look for that indicate that a training program has a particular attribute in place. The Border Patrol's training program included all of the applicable key attributes of an effective training program. The core curriculum used at the Border Patrol Academy has not changed since September 11, but the Border Patrol added new material on responding to terrorism and practical field exercises. Border Patrol officials are confident that the academy can accommodate the large influx of new trainees anticipated over the next 2 years. In fiscal year 2006, the average cost to train a new Border Patrol agent at the academy was about $14,700. While differences in programs make a direct comparison difficult, it appears that the Border Patrol's average cost per trainee at the academy is consistent with that of training programs that cover similar subjects and prepare officers for operations in similar geographic areas. For example, the estimated average cost per trainee for a Bureau of Indian Affairs police officer was about $15,300; an Arizona state police officer, $15,600; and a Texas state trooper, $14,700. The Border Patrol is considering several alternatives to improve the efficiency of basic training delivery at the academy and to return agents to the field more quickly. For example, in October 2007 the Border Patrol plans to implement a proficiency test for Spanish that should allow those who pass the test to shorten their time at the academy by about 30 days. The Border Patrol is also considering what training it can shift from the academy to postacademy training conducted in the field, which could further reduce the amount of time trainees spend at the academy. However, Border Patrol officials have expressed concerns with having a sufficient number of experienced agents available to serve as first-line supervisors and field training officers. The Border Patrol also currently lacks uniform standards and practices for field training, and shifting additional training responsibilities to the field could complicate this situation.

gao_GAO-15-70

gao_GAO-15-70_0

Background As we have previously found, there is no single definition of transit- oriented development; however, research generally describes such a development as a compact, mixed-use, and “walkable” neighborhood located near transit. Since the early 1970s, the federal government has provided a large share of the nation’s transit capital investment through the Capital Investment Grant program. A Variety of Factors and Local Government Policies Can Influence Transit- Oriented Development We found a wide range in the amount of new transit-oriented development since transit operations began for our six case study transit lines. Stakeholders in these cities attributed the amount of transit-oriented development to the influence of a variety of factors including conditions that support of transit-oriented development such as a demand for real estate, challenges that hinder transit-oriented development such as high associated construction costs, and local government policies that encourage transit-oriented development, such as transit supportive zoning. According to planning and transit officials in Santa Clara County, to attract people to transit, transit routes need to move from residential areas to job centers as directly as possible. Challenges That Can Hinder Transit-Oriented Development near Selected Projects Stakeholders from our case studies identified several factors that can hinder transit-oriented development including: (1) the higher construction cost of transit-oriented developments; (2) lenders’ reluctance to finance transit-oriented developments in some cities; (3) lengthy or discretionary local-development approval processes; (4) an unsupportive local population; and (5) land around transit stations that is unattractive for development. According to planning and transit officials in Baltimore, Washington, DC and Charlotte, policies designed to encourage transit-oriented development are most successful when they are tailored to local circumstances such as local residents’ preferences and market demand. While FTA evaluates many of the factors or local policies that we identified that support or hinder transit-oriented development, there are inherent limitations in the extent to which some factors can be fully evaluated. FTA’s Assessment of Factors Related to Land Use and Economic Development Is Consistent with Future Transit-Oriented Development Among our case studies that were assessed for New Starts funding, we found that the amount of transit-oriented development realized—and the factors that local stakeholders told us supported or hindered transit- oriented development—are generally consistent with FTA’s pre- construction evaluation and rating of factors related to transit-oriented development. For example, we included two light-rail projects as case studies that FTA assessed as high or medium-high for land use and economic development. Agency Comments We provided DOT with a draft of this report for review and comment. In addition, this report will be available at no charge on GAO’s website at http://www.gao.gov. Appendix I: Objectives, Scope, and Methodology In this we report we identify: (1) the extent to which transit-oriented development has occurred near select transit lines that received federal funds and which factors or local government policies support transit- oriented development and which factors hinder transit-oriented development, and (2) the extent to which FTA considers factors related to the potential for transit-oriented development when assessing proposed projects, and the extent to which FTA’s assessment of these factors is consistent with the factors that local stakeholders told us affect project’s results. To determine the extent to which transit-oriented development has occurred near these transit projects, we analyzed local land-use data, physically observed development, if any, along these transit lines, and interviewed local planning officials, developers, and other local stakeholders. We also interviewed FTA officials.

Why GAO Did This Study From 2004 to 2014, FTA allocated $18.9 billion to build new or expanded transit systems through the Capital Investment Grant program. One of the key goals for many local governments when planning major capital-transit projects is to encourage transit-oriented development as a way to focus future regional population growth along transit corridors. Transit-oriented development is generally described as a compact and “walkable” neighborhood near transit with a mix of residential and commercial uses. GAO was asked to examine transit-oriented development. This report addresses (1) the extent to which transit-oriented development has occurred near select transit lines that received federal funds and the factors and local policies that affect transit-oriented development, and (2) the extent to which FTA considers factors related to the potential for transit-oriented development when assessing proposed projects and the extent to which FTA's assessment of these factors is consistent with the factors that local stakeholders told GAO affect a project's results. To address these issues, GAO reviewed relevant literature and visited six federally funded case study transit projects in Baltimore, MD; Washington, DC; Charlotte, NC; Santa Clara County, CA; San Francisco, CA; and Houston, TX, selected for diversity in local programs, markets, and geography. During these visits, GAO met with stakeholders, such as local officials and developers. GAO also interviewed FTA officials. In commenting on a draft of this report, DOT noted FTA's long-standing commitment to encourage transit-oriented development. What GAO Found GAO found a wide range in the extent of new transit-oriented development that has occurred since transit operations began for GAO's six federally funded case-study transit projects. There are many examples of new transit-oriented development in San Francisco, CA; Washington, DC; and Charlotte, NC, that local officials attribute—at least in part—to transit in the area. However, in other cities GAO visited, local officials said that there has been very little development around transit stations—or that development took as long as 10 years. Stakeholders in these cities attributed transit-oriented development, or lack thereof, near the projects selected to the influence of several factors, including: conditions that support transit-oriented development, such as demand for nearby real estate, land available to develop, residents' support, and a transit system that provides a direct and efficient connection to jobs; challenges that hinder transit-oriented development, such as high associated costs, difficulty in obtaining financing, a difficult local-government review and approval process, an unsupportive local population, and a physical configuration around transit stations unattractive for development; and local government policies that support transit-oriented development, such as supportive zoning, planning, infrastructure investments, and tax incentives. The Federal Transit Administration (FTA) assesses projects for potential New Starts funding by evaluating several of the factors and local government policies GAO identified as supporting transit-oriented development on a five-point scale ranging from low to high. FTA evaluates access to jobs, available land, and transit-supportive plans and polices—among other things—in assessing each project for economic development and land use, which are two evaluation criteria FTA uses to determine whether a project will be funded. Among four case study projects GAO visited that were assessed by FTA for New Starts, two scored medium-high or better, while two scored medium-low or lower. GAO found that many of the factors or local government policies that supported or hindered transit-oriented development are generally consistent with FTA's summary assessment for economic development and land use. Further, GAO found two projects where transit-oriented development resulted in increased ridership, while projects with less transit-oriented development have fewer riders than expected.

gao_HEHS-00-170

gao_HEHS-00-170_0

Trustee Arrangements Represent Nearly One- Fifth of Outstanding Loans and Share Several Characteristics The Department of Education reports that approximately 125 trustee arrangements exist between eligible and ineligible lenders. These arrangements account for $25.3 billion in outstanding loans— approximately 19 percent of the outstanding balance of all FFELP loans as of December 1999.The 125 arrangements represent liaisons between 16 eligible lender trustees and 31 ineligible lenders. Costs of trustee arrangements fall into two categories—payments to initiate the agreement and annual fees to maintain it. The trustee arrangements we reviewed shared several characteristics. Trustees and ineligible lenders reported similar (1) criteria used by trustees to evaluate ineligibles before they entered into arrangements, (2) elements in trustee arrangement contracts, (3) amounts of review performed of ineligible lenders, and (4) amounts of day-to-day interaction between the trustee and the ineligible lender. The trustee arrangements we reviewed were also similar in the requirements placed on the ineligible lender and the amount of monitoring the trustee performed. Trustee Arrangements Come With Some Protections for Federal Investment in Student Loan Program Trustee arrangements come with some protections to ensure the federal government’s investment in FFELP is secure while allowing ineligible lenders to participate in the program. When these problems occur, the federal government will not reimburse the guarantor or the lender for the associated dollar loss. First, most financial institutions that serve as eligible lender trustees are subject to federal (and in many instances, state) oversight. Education officials stated that because ineligible lenders are generally not subject to financial safety and soundness reviews by government agencies, Education lacks assurance that these lenders would be able to meet their financial obligations in the program. Second, because most eligible lender trustees also hold student loans in their own name and receive regular FFELP- related payments from the government for those loans, the federal government has additional sources from which to recover any repayments due the government on ineligible lenders’ loans that lose their guarantee. For example, both participant groups believe that market participation and loan availability are positively affected since trustee arrangements allow lenders that do not meet HEA’s eligible lender definition to make and hold loans, thus increasing the amount of loan capital available to students. Further, we obtained information through interviews about the impact of the 1998 amendments to HEA on the number of eligible lenders willing to serve as trustees and on the costs of trustee arrangements. To determine the effects of trustee arrangements on participation in the student loan market and the availability of student loans, we interviewed eligible and ineligible lenders, secondary markets, guaranty agencies, servicers, Education officials, and other student loan market participants.

Why GAO Did This Study Pursuant to a congressional request, GAO provided information on student loan trustee arrangements, focusing on the: (1) number and cost of trustee arrangements and their shared characteristics; (2) benefits and protections afforded the federal government through use of trustee arrangements; and (3) effect of trustee arrangements on market participation and the availability of student loans. What GAO Found GAO noted that: (1) the Department of Education reports that approximately 125 trustee arrangements exist between 16 eligible lender trustees and 31 ineligible lenders for the purpose of originating or purchasing student loans; (2) these arrangements account for $25.3 billion in outstanding loans--approximately 19 percent of the outstanding balance of all Federal Family Education Loan Program (FFELP) loans as of December 1999; (3) costs of trustee arrangements fall into two categories--costs to initiate the arrangement and annual costs to maintain it; (4) ineligible lenders GAO interviewed said that the costs did not prohibit them from conducting business in the student loan market; (5) the amount charged by an eligible lender for its trustee services varied and was based on the volume of loans the ineligible lender was anticipated to originate and on the number and kind of other services the trustee provided; (6) both eligible and ineligible lenders reported little, if any, change in the availability of lenders to serve as trustees or the costs of these arrangements since 1998; (7) several characteristics were common among the trustee arrangements GAO reviewed, including the criteria used by trustees to evaluate ineligible lenders before they entered into trustee arrangements, the various elements of the trustee arrangement contracts, and the day-to-day interaction between the trustee and the ineligible lender; (8) trustee arrangements come with some protections to ensure the federal government's investment in FFELP is secure while allowing ineligible lenders to participate in the program; (9) most financial institutions that serve as eligible lender trustees are subject to federal oversight; (10) because most eligible lender trustees also hold student loans in their own name and receive regular FFELP-related payments from the government for those loans, the federal government has recourse for recovering any repayments due the government on ineligible lenders' loans that lose the federal guarantee; (11) Education officials stated that because ineligible lenders are generally not subject to financial safety and soundness reviews by government agencies, Education lacks assurance that these lenders would be able to meet their financial obligations in the program; and (12) both eligible and ineligible lenders said they believe that market participation and loan availability are positively affected by trustee arrangements which allow lenders to make and hold loans.

gao_GAO-03-339

gao_GAO-03-339_0

SEC Strategies Evolved in Response to Major Events Leading to the Appointment of PCAOB Members Faced with appointing five members to the newly created PCAOB in 90 days, SEC lacked a formalized and tested process that documented the roles to be played by the Commissioners and staff. The SEC Chairman initially asked the Chief Accountant to take the lead in identifying potential PCAOB members; however, the other Commissioners never fully endorsed this approach. On October 31, allegations emerged that the SEC Chairman, before the October 25 vote, withheld from his fellow Commissioners material information about Judge Webster’s role at U.S. Technologies, which was relevant to the appointment of Judge Webster as chairman of the PCAOB. No one who attended the meeting contacted SEC’s General Counsel, who was responsible for vetting PCAOB candidates. According to the SEC Chairman, he knew that Judge Webster was the former chairman of the audit committee of the board of directors of U.S. Technologies before the October 25 vote. The review process was still ongoing at the time of our review. Several Factors Contributed to the Breakdown of SEC’s Selection and Vetting Process Although SEC lacked a documented and formalized selection and vetting process for nominees, several factors contributed to the eventual breakdown of the Commission’s ability to select a slate of nominees that could be unanimously appointed. Lack of Pre-Appointment Background Checks and Vetting Exposed Process to Risk As previously mentioned, after the Commission was unable to appoint a consensus candidate for PCAOB chairman by the end of September, the Office of the General Counsel was forced to vet the final slate post- appointment. As a result, the process changed and evolved over time and was neither consistent nor effective. Based on the factors previously discussed including his experience as an auditor, his knowledge of Judge Webster’s long and prominent record of public service, and an understanding that additional vetting would take place post-appointment, the Chief Accountant concluded that this matter did not raise a concern and decided that it was not necessary to inform the Chairman, the other Commissioners, or the Office of the General Counsel of these issues. Further, in our view, the information concerning Judge Webster’s role as chairman of the audit committee of the board of directors of a company that had dismissed its external auditor after the auditor had found material internal control weaknesses should have been shared by the Chief Accountant with the SEC Chairman and other Commissioners prior to the vote. Before any additional members are appointed to the PCAOB, especially the chairman, we recommend that the Commission reach agreement and document the process to be followed, the sequence and timing of key steps, and the roles to be played by the Commission and the staff in the selection and vetting of candidates; develop agreed-upon, detailed selection criteria for PCAOB members and the chairman that fully embrace the principles articulated in the Sarbanes- Oxley Act of 2002; develop a vetting process that ensures that before an applicant is brought to the Commission for serious consideration, certain minimum background and reference checks are performed to ensure that the individual has no potential legal or ethical impairments and ensure that the vetting process is completed before the Commission votes to appoint members to the PCAOB; and determine what candidate information should be documented, analyzed, and shared among the Commission and staff.

Why GAO Did This Study The Sarbanes-Oxley Act of 2002 created, among other things, the Public Company Accounting Oversight Board (PCAOB) to oversee audits of public companies. A divided Securities and Exchange Commission (SEC) appointed the first PCAOB on October 25, 2002. Amid allegations that the SEC Chairman withheld relevant information from the other Commissioners concerning the suitability of the newly appointed PCAOB chairman, GAO was asked to examine SEC's selection process; determine whether the SEC Chairman withheld information from other Commissioners; determine what vetting of candidates took place; and identify what actions led to breakdowns in the process. What GAO Found SEC faced significant challenges in vetting and appointing five members to the newly created PCAOB within 90 days. The SEC Chairman, who had overall responsibility for the appointment process, initially, envisioned a process primarily driven by SEC staff. He asked the Chief Accountant to take the lead in selecting and the General Counsel in vetting PCAOB members. However, this approach was not fully understood or endorsed by the other Commissioners. The overall process that emerged was neither consistent nor effective and changed and evolved over time. Several factors contributed to the eventual breakdown of SEC's selection and vetting process, including the inability of the Commissioners to reach agreement on a formalized process that defined the roles to be played by the Commissioners and staff; insufficient communication between SEC staff and Commissioners; and the lack of articulated selection criteria beyond general criteria provided by the act. Finally, inability to choose a final slate of candidates until the eve of the Commission's vote resulted in the appointment of PCAOB members who had not been fully vetted. On the day of the October 25 vote, the Chief Accountant became aware of information concerning Judge William Webster, who was slated to be the chairman of the PCAOB, and his role as the former chairman of the audit committee of a small company--U.S. Technologies, Inc. However, based on his review of available information, his experience as an auditor, Judge Webster's prominence and reputation, and the fact that additional vetting would occur post-appointment, the Chief Accountant deemed that the information would not affect Judge Webster's nomination. He thus decided not to share the information concerning Judge Webster's role at U.S. Technologies with the SEC Chairman, the other Commissioners, or the General Counsel. As Judge Webster's appointment illustrates, the five individuals chosen for the PCAOB were not systematically vetted prior to appointment. After the selection process broke down in early October when the Commission was unable to agree on a consensus candidate for chairman, the General Counsel was forced to initiate the vetting process on a post-appointment basis, a fact which the Commission was made aware of before the October 25 vote. At the time of our review, the vetting process was still ongoing.

gao_GAO-15-3

gao_GAO-15-3_0

Background I-129F Petition and K Visa Adjudication Processes Within DHS, USCIS is responsible for adjudicating immigration benefit applications, including I-129Fs filed by U.S. citizens to bring a foreign national fiancé(e) to the United States through a K-1 visa. IMBRA Disclosure and Reporting Requirements Both USCIS and State’s Bureau of Consular Affairs play key roles in providing information about petitioners to beneficiaries. DOJ is responsible for pursuing civil and criminal penalties under IMBRA and, pursuant to the Violence Against Women Reauthorization Act of 2013, was required to report to Congress on, among other things, the policies and procedures for consulting with DHS and State in investigating and prosecuting IMBRA violations by petitioners and IMBs. DHS, State, and DOJ Have Processes to Ensure IMBRA Compliance, but DHS and State Could Better Implement Disclosure Requirements USCIS Has Processes to Collect Petitioner Information, but the I-129F Petition Has Errors USCIS has implemented processes to collect information from petitioners; however, USCIS is in the process of revising the current version of the I- 129F petition to address errors or limitations that may limit or otherwise affect the accuracy of petitioners’ disclosure to USCIS of all information required by IMBRA. USCIS is to subsequently provide this information to State, whose consular officers are to share this information with beneficiaries during the K visa interview. In particular, the language on the I-129F petition states that the filing limits apply to petitioners who have filed three or more I-129F petitions, or who have filed three or more I-129F petitions and the first I-129F petition was approved within the last 2 years, whereas the instruction accompanying the I-129F petition aligns more closely with IMBRA and provides that a waiver is required if a prior I-129F petition had been approved in the past 2 years. Relevant guidance to consular officers, found in State’s FAM, outlines procedures consular officers are to follow, including requirements for documenting that beneficiaries have received the required information. State requires consular officers to document within its IVO database whether they made all of these disclosures to the beneficiary during the visa interview. In the cases for which consular officers provided partial notations, we found that the notes varied from “IMBRA given” to “domestic violence brochure given.” Moreover, in 63 of the 147 cases where State’s data indicated that consular officers had interviewed beneficiaries (but for which there was no corresponding USCIS record of the beneficiary requesting a change to Lawful Permanent Resident status) we found in 28 (or about 44 percent) of these 63 cases that consular officers did not document that the IMBRA pamphlet was received, read, and understood by beneficiaries. We reviewed a draft of that cable in October 2014, and it includes, among other things, a reminder for officers to document in IVO that the IMBRA pamphlet was received, read, and understood for all K visa applicants. Incorporating the FAM’s IMBRA-related documentation requirements into State’s training courses for consular officers could help State better ensure that consular officers are aware of the requirements so that they can be better positioned to more consistently document the disclosure of IMBRA information during interviews with K visa applicants. In October 2014, DOJ issued an IMBRA bulletin to assist stakeholders, such as state and local law enforcement entities and women’s and immigrants’ rights organizations, in identifying and reporting IMBRA violations to DOJ for prosecution. USCIS Does Not Collect and Maintain All Data in a Manner Consistent with IMBRA, and Additional Training Could Help to Ensure IMBRA Data Are Accurate and Reliable USCIS Does Not Collect and Maintain All Data Consistent with IMBRA IMBRA mandates that DHS collect and maintain data necessary for us to review IMBRA’s impact on the process for granting K nonimmigrant visas. The remaining six elements were either not collected and maintained electronically or the electronic data collected are not reliable. Rather, USCIS collects and maintains information on whether a waiver is required (rather than submitted), and the reasons for their decisions are handwritten by the officer on the hard copy of the petition and thus were not readily available for purposes of our review. We recommended, among other things, that USCIS ensure its program schedules are developed in accordance with GAO’s best practices guidance. Additional Training on IMBRA Requirements Could Help Ensure Consistent Adjudication and Reliable Data USCIS officers have not consistently adjudicated I-129F petitions or entered complete and accurate data into CLAIMS 3. Specifically, our analysis indicates that USCIS’s data are not reliable for determining (1) the number of I-129F petitions filed by persons who have previously filed I-129F petitions (or multiple filers), or (2) the number of IMBRA waivers required. Data on IMBRA waivers. Taking steps to ensure that all data to be collected in accordance with IMBRA are included with the release of the electronic I-129F petition, and providing additional training, could help USCIS better ensure that IMBRA requirements are properly implemented and that data on petitions are collected and maintained consistent with USCIS procedures. To ensure that fiancé(e)s and spouses applying for K visas receive and understand the information to be provided to them under IMBRA and that consular officers adhere to documentation guidance in the FAM, we recommend that the Secretary of State incorporate the FAM’s IMBRA- related documentation requirements into the Foreign Service Institute’s training curriculum for entry-level and midlevel consular officers. With regard to our third recommendation to DHS that USCIS provide additional training to officers who adjudicate I-129F petitions on the IMBRA-related requirements in the adjudication process, DHS concurred and stated that USCIS has developed a training presentation for officers on IMBRA-related requirements and that all officers adjudicating the I-129F will be required to complete the course by the end of January 2015.

Why GAO Did This Study Enacted in January 2006, IMBRA was passed by Congress to address reports of domestic violence and abuse of foreign beneficiaries married or engaged to U.S. citizens who have petitioned for them to enter the United States on a K visa. As amended, IMBRA requires that the federal government collect and provide to beneficiaries information about petitioners' prior K visa petitions and criminal histories. USCIS is responsible for collecting this information and adjudicating petitions, State is responsible for disclosing information to beneficiaries, and DOJ is authorized to enforce IMBRA. The Violence Against Women Reauthorization Act of 2013 mandates that GAO report on IMBRA implementation. This report examines the extent to which (1) DHS, State, and DOJ have implemented processes to ensure compliance with IMBRA, and (2) DHS collects and maintains reliable data to manage the K visa process. GAO analyzed IMBRA, USCIS, and State policies, procedures, and guidance, and K visa petition data from March 2012 through March 2014. GAO also interviewed USCIS, State, and DOJ officials regarding their agencies' implementation of IMBRA. What GAO Found The Departments of Homeland Security (DHS), Justice (DOJ), and State (State) have processes to help ensure compliance with the International Marriage Broker Regulation Act of 2005 (IMBRA), as amended, but State could better document information on IMBRA disclosures. Specifically, consistent with IMBRA, DHS's U.S. Citizenship and Immigration Services (USCIS) collects information from petitioners—U.S. citizens who apply to bring noncitizen fiancé(e)s, spouses, and their children (beneficiaries) into the country—through I-129F petitions for K visas. DOJ is responsible for pursuing federal civil and criminal penalties for IMBRA violations. State has guidance on processes for providing IMBRA information to beneficiaries (referred to as disclosures), such as a pamphlet outlining for beneficiaries the K visa process and legal rights and resources available to immigrant crime victims. Specifically, State's guidance requires consular officers to document within case notes in State's database whether they made all of the IMBRA-required disclosures to the beneficiary during the visa interview. However, GAO's review of a sample of K visa applications showed that in about 52 percent of interview case notes (76 of 147), consular officers did not document that they had provided beneficiaries the IMBRA pamphlet as required by State's guidance. In October 2014, State drafted a guidance cable for consular officers on IMBRA implementation, including a reminder to follow guidance regarding IMBRA documentation. State's consular officer training courses, however, do not cover IMBRA-related documentation procedures outlined in its guidance. Incorporating IMBRA-related documentation requirements into training courses could help State better ensure that consular officers are aware of the requirements for documenting IMBRA disclosures. Consistent with IMBRA, USCIS is to collect and maintain data on, among other things, eight elements in the K visa process for GAO reporting purposes; however, six of the eight elements are either not reliable or are not collected or maintained in a reportable (i.e., electronic) format. Thus, these elements were not readily available for GAO's review. For example, USCIS is to collect and maintain data on I-129F petitions where the petitioner had one or more criminal convictions. This information is maintained in hard copy in the petition file and thus was not readily available for GAO's review. USCIS has begun planning to electronically capture I-129F petition data under the agency's overarching transformation to an electronic immigration benefits system. However, this transformation has faced significant delays, and as of September 2014, the electronic I-129F petition design requirements have not been finalized. Consistent with federal internal control standards, ensuring that all of the IMBRA-related requirements will be captured with the release of the I-129F electronic petition would better position USCIS to collect and maintain complete data on petitioners for reporting purposes and management oversight. Further, USCIS officers have not consistently adjudicated I-129F petitions or recorded complete and accurate data. Specifically, GAO found that USCIS's data are not reliable for determining the number of I-129F petitions filed by persons who have previously filed I-129F petitions for a fiancé(e) or spouse or that required IMBRA waivers because of, among other things, officer error in recording data on petitions. Additional training for officers could help USCIS better ensure its officers are aware of IMBRA requirements to assist them in maintaining petitions data consistent with IMBRA. What GAO Recommends GAO recommends that State provide training to consular officers on IMBRA documentation requirements. GAO also recommends, among other things, that USCIS ensure that all IMBRA-related data will be captured with the planned electronic release of the I-129F petition and that its officers receive additional training on IMBRA requirements. State and DHS concurred with our recommendations.

gao_GAO-11-505T

gao_GAO-11-505T_0

Background The H-1B program enables companies in the United States to hire foreign workers for work in specialty occupations on a temporary basis. Homeland Security’s U.S. USCIS has primary responsibility for administering the H-1B cap. Demand for H-1B Workers Exceeded the Cap in Most Years and Was Driven by a Small Number of Employers Over the past decade, demand for H-1B workers tended to exceed the cap, as measured by the number of initial petitions submitted by employers, one of several proxies used to measure demand since a precise measure does not exist. As shown in figure 1, from 2000 to 2009, initial petitions for new H-1B workers submitted by employers who are subject to the cap exceeded the cap in all but 3 fiscal years. Over the decade, the majority (over 68 percent) of employers were approved to hire only one H-1B worker, while fewer than 1 percent of employers were approved to hire almost 30 percent of all H-1B workers. Among these latter employers are those that function as “staffing companies” that contract out H-1B workers to other companies. The prevalence of such companies participating in the H-1B visa program is difficult to determine. Most Interviewed Companies Said the H-1B Cap Was Not a Key Factor in Their Decisions to Move Operations Overseas but Cited Other Program Burdens To better understand the impact of the H-1B program and cap on H-1B employers, GAO spoke with 34 companies across a range of industries about how the H-1B program affects their research and development (R&D) activities, their decisions about whether to locate work overseas, and their costs of doing business. Many employers we interviewed cited costs and burdens associated with the H-1B cap and program. Limitations in Agency Data and Systems Hinder Tracking the Cap and H-1B Workers Over Time The total number of H-1B workers in the United States at any one point in time—and information about the length of their stay—is unknown due to data and system limitations. First, data systems among the various agencies that process H-1B applications are not easily linked, which makes it impossible to track individuals as they move through the application and entry process. Limitations in USCIS’s ability to track H-1B applications also hinder it from knowing precisely when and whether the annual cap has been reached each year—although the Immigration and Nationality Act requires the department to do so. Restricted Agency Oversight and Statutory Changes Weaken Protections for U.S. Workers The provisions of the H-1B program designed to protect U.S. workers— such as the requirement to pay prevailing wages, the visa’s temporary status, and the cap on the number of visas issued—are weakened by several factors. First, H-1B program oversight is shared by four federal agencies and their roles and abilities to coordinate are restricted by law. Another factor that weakens protection for U.S. workers is the fact that the H-1B program lacks a legal provision to hold employers accountable to program requirements when they obtain H-1B workers through staffing companies. Finally, changes to program legislation have diluted program provisions for protecting U.S. workers by allowing visa holders to seek permanent residency, broadening the job and skill categories for H-1B eligibility, and establishing exemptions to the cap. Finally, exemptions to the H-1B cap have increased the number of H-1B workers beyond the cap. Such a review may include, but would not necessarily be limited to the qualifications required for workers eligible under the H-1B program, exemptions from the cap, the appropriateness of H-1B hiring by staffing companies, the level of the cap, and the role the program should play in the U.S. immigration system in relationship to permanent residency.

Why GAO Did This Study This testimony comments on the H-1B program. Congress created the current H-1B program in 1990 to enable U.S. employers to hire temporary, foreign workers in specialty occupations. The law capped the number of H-1B visas issued per fiscal year at 65,000, although the cap has fluctuated over time with legislative changes. The H-1B cap and the program itself have been a subject of continued controversy. Proponents of the program argue that it allows companies to fill important and growing gaps in the supply of U.S. workers, especially in the science and technology fields. Opponents of the program argue that there is no skill shortage and that the H-1B program displaces U.S. workers and undercuts their pay. Others argue that the eligibility criteria for the H-1B visa should be revised to better target foreign nationals whose skills are undersupplied in the domestic workforce. Our comments in this statement for the record are based on the results of our recent examination of the H-1B program, highlighting the key challenges it presents for H-1B employers, H-1B and U.S. workers, and federal agencies. Specifically, this statement presents information on (1) employer demand for H-1B workers; (2) how the H-1B cap impacts employers' costs and whether they move operations overseas; (3) the government's ability to track the cap and H-1B workers over time; and (4) how well the provisions of the H-1B program protect U.S. workers. What GAO Found From 2000 to 2009, the demand for new H-1B workers tended to exceed the cap, as measured by the numbers of initial petitions submitted by employers who are subject to the cap. While the majority (68 percent) of employers was approved for one H-1B worker, demand was driven to a great extent by a small number (fewer than 1 percent) of H-1B employers garnering over one quarter of all H-1B approvals. Cap-exempt employers, such as universities and research institutions, submitted over 14 percent of the initial petitions filed during this period. Most of the 34 H-1B employers GAO interviewed reported that the H-1B program and cap created additional costs for them, such as delays in hiring and projects, but said the global marketplace and access to skilled labor--not the cap--drive their decisions on whether to move activities overseas. Limitations in agency data and systems hinder tracking the cap and H-1B workers over time. For example, data systems among the various agencies that process these individuals are not linked so it is difficult to track H-1B workers as they move through the immigration system. System limitations also prevent the Department of Homeland Security from knowing precisely when and whether the annual cap has been reached each year. Provisions of the H-1B program that could serve to protect U.S. workers--such as the requirement to pay prevailing wages, the visa's temporary status, and the cap itself--are weakened by several factors. First, program oversight is fragmented between four agencies and restricted by law. Second, the H-1B program lacks a legal provision for holding employers accountable to program requirements when they obtain H-1B workers through a staffing company--a company that contracts out H-1B workers to other companies. Third, statutory changes made to the H-1B program over time--i.e. that broadened job and skill categories for H-1B eligibility, increased exceptions to the cap, and allowed unlimited H-1B visa extensions while holders applied for permanent residency--have in effect increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility.

gao_GAO-06-13

gao_GAO-06-13_0

We have advocated that the federal government, including DOD, adopt a comprehensive threat or risk management approach as a framework for decision making that fully links strategic goals to plans and budgets, assesses values and risks of various courses of actions as a tool for setting priorities and allocating resources, and provides for the use of performance measures to assess outcomes. Despite Positive Steps, Additional Actions Needed to Fully Implement the Risk Management Framework Despite positive steps, DOD needs to take additional actions before the risk management framework is fully implemented and DOD can demonstrate real and sustainable progress in using a risk-based and results-oriented approach to strategically allocate resources across the spectrum of its investment priorities. In addition, the framework’s performance goals and measures are not clearly linked to DOD’s current strategic plan and strategic goals. Second, DOD’s department-level performance measures are still a work in progress in that these measures do not provide a well-rounded depiction of DOD’s performance. Although Risk Considered, Linkages Between the Risk Management Framework and Budget Are Unclear According to DOD officials, the department has begun to consider risk in its investment decision making; however, the full extent to which the framework’s risk-based and results-oriented approach has been linked to the fiscal year 2006 budget cycle is unclear. However, the fiscal year 2006 budget submission does not include any specific information on how DOD systematically identified or assessed departmental risks to establish DOD-wide investment priorities. The fourth challenge— integrating the risk management framework with decision support processes and related reform initiatives, into a coherent, unified management approach for the department—relates to key results-oriented management practices. Unless DOD addresses these challenges and successfully implements the risk management framework, or a similar approach, it may continue to experience (1) a mismatch between programs and budgets, and (2) the proportional, rather than strategic, allocation of resources to the services. Without better measures, clear linkages, and greater transparency, DOD will be unable to fully measure progress in achieving strategic goals or demonstrate to Congress and others how it considered risks and made trade-off decisions, balancing needs and costs for weapon programs and other investment priorities. Recommendations for Executive Action To address the challenges associated with implementing the risk management framework, or a similar risk-based management approach, we recommend that the Secretary of Defense take the following four actions: develop or refine department-level performance measures so that they clearly demonstrate performance results and cascade those measures down throughout the department, assign clear leadership with accountability and authority to implement and sustain the risk management framework, develop implementation goals and timelines, and demonstrate the integration of the risk management framework with DOD’s decision support processes and related reform initiatives to improve investment decision making and manage performance results.

Why GAO Did This Study The Department of Defense (DOD) is simultaneously conducting costly military operations and transforming its forces and business practices while it is also competing for resources in an increasingly constrained fiscal environment. As a result, GAO has advocated that DOD adopt a comprehensive threat or risk management approach as a framework for decision making. In its 2001 strategic plan, the Quadrennial Defense Review (QDR), DOD stated its intent to establish an approach--the risk management framework--to balance priorities against risk over time and monitor results against its strategic goals. GAO was asked to (1) assess the extent to which DOD has implemented the framework, including using it to make investment decisions, and (2) identify the most significant challenges DOD faces in implementing the framework, or a similar approach. What GAO Found DOD has taken some positive steps to implement the framework, but additional actions are needed before DOD can show real and sustainable progress in using a risk-based and results-oriented approach to strategically allocate resources across the spectrum of its investment priorities. For example, DOD defined four risk areas, and developed performance goals and department-level measures, but it needs to, among other things, further develop and refine the measures so that they clearly demonstrate results and provide a well-rounded depiction of departmental performance. DOD's current strategic plan and goals also are not clearly linked to the framework's performance goals and measures, and linkages between the framework and budget are also unclear. While DOD officials stated that risk was considered during the fiscal year 2006 budget cycle, DOD's budget submission does not specifically discuss how DOD identified or assessed risks to establish DOD-wide investment priorities. Without better measures, clear linkages, and greater transparency, DOD will be unable to fully measure progress in achieving strategic goals or demonstrate to Congress and others how it considered risks, and made trade-off decisions, balancing needs and costs for weapon programs and other investment priorities. DOD faces four challenges that have affected the implementation of the framework. First, DOD's organizational culture resists department-level approaches to priority setting and investment decisions. Second, sustained leadership, adequate transparency, and appropriate accountability are lacking. Further, no one individual or office has been assigned overall responsibility or sufficient authority for the framework's implementation. DOD also has not developed implementation goals or timelines with which to establish accountability, or measure progress. Finally, integrating the risk management framework with decision support processes and related reform initiatives into a coherent, unified management approach for the department is a challenge that DOD plans to address during the 2005 QDR. However, GAO has concerns about DOD's ability to follow through on this integration, because of its limited success in implementing other management reforms. Unless DOD successfully addresses these challenges and effectively implements the framework, or a similar approach, it will likely continue to experience (1) a mismatch between programs and budgets, and (2) a proportional, rather than strategic, allocation of resources to the services.

gao_GAO-02-781

gao_GAO-02-781_0

Background Satellites provide many significant services, including communication, navigation, remote sensing, imaging, and weather and meteorological support. Further, federal agencies use commercial satellites for services such as communications, data transmission, and remote sensing. Ground stations are important because they control the satellite and receive and process data. Agencies Provide Physical Security for Communications Ground Stations Federal agencies also control the security of the data ground stations that send and receive data over satellites. Agencies Do Not Control All Aspects of Security and Have Limited Ability to Influence Availability and Security Requirements Federal agencies rely on the commercial satellite service provider’s security techniques for the TT&C links, satellites, and satellite control ground stations. Given the importance of satellites to the national economy, the federal government’s growing reliance on them, and the many threats that face them, failure to explicitly include satellites in the national approach to CIP leaves a critical aspect of the national infrastructure without focused attention. Conclusions Commercial satellite service providers use a combination of techniques to protect their systems from unauthorized use and disruption, including hardware on satellites, physical and logical controls at ground stations, and encryption of the links. Satellites are not specifically identified as part of our nation’s critical infrastructure protection approach, which relies heavily on public-private partnerships to secure our critical infrastructures.

What GAO Found Government and private-sector entities rely on satellites for services such as communication, navigation, remote sensing, imaging, and weather and meteorological support. Disruption of satellite services, whether intentional or not, can have a major adverse economic impact. Techniques to protect satellite systems from unauthorized use and disruption include the use of robust hardware on satellites, physical security and logical access controls at ground stations, and encryption of the signals for tracking and controlling the satellite and of the data being sent to and from satellites. When using commercial satellites, federal agencies reduce risks by securing the data links and ground stations that send and receive data. However, federal agencies do not control the security of the tracking and control links, satellites, or tracking and control ground stations, which are typically the responsibility of the satellite service provider. It is important to the nation's economy and security to protect against attacks on its computer-dependent critical infrastructures (such as telecommunications, energy, and transportation), many of which are privately owned. In light of the nation's growing reliance on commercial satellites to meet military, civil, and private sector requirements, omitting satellites from the nation's approach to protecting critical infrastructure leaves an important aspect of our nation's infrastructures without focused attention.

gao_GAO-13-675

gao_GAO-13-675_0

1). FSM and RMI Spending Targeted Education and Health In fiscal years 2007 through 2011, the FSM and RMI spent at least half of their compact sector funds in the education and health sectors. Both countries spent significant amounts of compact funds on personnel in the education and health sectors, which resulted in JEMCO and JEMFAC resolutions aimed at capping the budgetary levels for personnel in these sectors at fiscal year 2011 levels because of concerns about the sustainability of sector budgets as compact funding continues to decline through fiscal year 2023. Without this plan, the FSM may not be able to sustain essential services in the education and health sectors in the absence of compact funding. 6). Data Inconsistencies Hindered Our Assessment of FSM and RMI Progress in the Education and Health Sectors Data reliability issues hindered our assessment of progress by the FSM and RMI in both the education and health sectors for fiscal years 2007 through 2011. Between 2004 and 2006, both countries began tracking education and health indicators, establishing data collection systems, and collecting data for the majority of the indicators and have continued to track data on their indicators since that time. While both countries tracked annual indicators to measure progress in these sectors, in reviewing subsets of these indicators we determined that data for eight of the subset of nine education indicators we reviewed in the FSM and for three of the subset of five education indicators we reviewed in the RMI were not sufficiently reliable to assess progress for the compacts as a whole—for a variety of reasons, some specific to individual indicators, but primarily because of missing, incomplete, or inconsistent data. We found one RMI education indicator to be both reliable and capable of demonstrating progress: the education level of teachers in the RMI. In much of their reporting on these indicators, the FSM and RMI have noted data reliability problems and some actions they have taken to address the problems. The compacts’ joint management and accountability committees have also raised concerns about the reliability of the FSM’s education and health data and the RMI’s health data and required that each country obtain an independent assessment and verification of these data; neither country has met that requirement. Student enrollment data provide another example: Chuuk and Kosrae included both public and private schools in reporting student enrollment data, while Pohnpei and Yap included only public schools. We found that for 2 other health indicators we had no basis to judge their reliability. Health. Health. For example, these governments’ single audits showed repeat findings and persistent problems in noncompliance with U.S. program requirements, such as accounting for equipment. The United States has taken steps regarding the accountability of compact funds, such as establishing the Chuuk Financial Control Commission, but Interior has not coordinated with other U.S. agencies regarding the risk status of the FSM and the RMI for noncompact funds. Furthermore, the offices responsible for compact administration in the FSM, RMI, and United States faced limitations hindering their ability to conduct compact oversight. For example, OIA experienced a staffing shortage that disproportionately affected compact grant oversight compared to other OIA activities, with 5 of 11 planned positions filled in 2012. Recommendations for Executive Action We recommend that the Secretary of the Interior take the following five actions: In order to improve the ability of the U.S. agencies participating in the JEMCO and JEMFAC committees to conduct required oversight of compact funds, direct the Director of Insular Affairs, as Chairman of JEMCO, to coordinate with other JEMCO-member U.S. agencies to have JEMCO take all necessary steps, or, as the administrator of compact grants, to directly take all necessary steps, to ensure that the FSM (1) completes satisfactory plans to address annual decrements in compact funds, (2) produces reliable indicator data used to track progress in education and health, and (3) addresses all single audit findings in a timely manner; and direct the Director of Insular Affairs, as Chairman of the JEMFAC, to coordinate with other JEMFAC-member U.S. agencies to have JEMFAC take all necessary steps, or, as the administrator of compact grants, to directly take all necessary steps, to ensure that the RMI (1) completes satisfactory plans to address annual decrements in compact funds, (2) produces reliable indicator data used to track progress in education and health, and (3) addresses all single audit findings in a timely manner. Regarding data reliability, the RMI generally agreed with our findings of data reliability problems in both the education and health sectors. Appendix I: Objectives, Scope, and Methodology This report examines, for fiscal years 2007 through 2011, (1) the Federated States of Micronesia’s (FSM) and the Republic of the Marshall Islands’ (RMI) use of compact funds in the education and health sectors; (2) the extent to which the FSM and RMI have made progress toward achieving their stated goals in education and health; and (3) the extent to which oversight activities by the FSM, RMI, and the United States ensure accountability for compact funding. We also reviewed the infrastructure development and infrastructure maintenance plans for the FSM and RMI, interviewed officials in the FSM and RMI project management units, and reviewed progress reports submitted by the FSM and RMI. Compact of Free Association: An Assessment of Amended Compacts and Related Agreements.

Why GAO Did This Study In 2003, the U.S. government approved amended Compacts of Free Association with the FSM and the RMI, providing for a total of $3.6 billion in assistance over 20 years. Given the countries' dependence on compact funding, GAO was asked to conduct a review of the use and accountability of these funds. This report addresses (1) the FSM's and RMI's use of compact funds in the education and health sectors; (2) the extent to which the FSM and RMI have made progress toward stated goals in education and health; and (3) the extent to which oversight activities by the FSM, RMI, and U.S. governments ensure accountability for compact funding. GAO also provided information on infrastructure spending and projects in the education and health sectors. GAO reviewed relevant documents and data, including single audit reports; interviewed officials from Interior, other U.S. agencies, and the FSM and RMI; assessed data reliability for subsets of both countries' education and health indicators; and visited compact-funded education and health facilities in both countries. What GAO Found In fiscal years 2007 through 2011, the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) spent at least half their compact sector funds in the education and health sectors. Because both countries spent significant amounts of compact funds on personnel in the education and health sectors, the U.S.-FSM and U.S.-RMI joint management and accountability committees capped budgets for personnel in these sectors at fiscal year 2011 levels due to concerns about the sustainability of sector budgets as compact funding continues to decline through fiscal year 2023. The FSM states completed plans to address annual decreases in compact funding; however, the FSM National Government and the RMI have not submitted plans to address these annual decreases as required. Without plans, the countries may not be able to sustain essential services in the education and health sectors in the future. Data reliability issues hindered GAO's assessment of progress by the FSM and RMI in the education and health sectors for fiscal years 2007 through 2011 for the compacts as a whole. Between 2004 and 2006, both countries began tracking education and health indicators, establishing data collection systems, and collecting data for the majority of the indicators and have continued to track data on their indicators since that time. In education, GAO found 3 of 14 indicators in the subsets of indicators it reviewed for both countries to be sufficiently reliable and 1 also to be capable of demonstrating progress: the education level of teachers in the RMI. GAO found a variety of data reliability problems, such as some FSM states reporting data for both public and private schools while other states included only public schools in their data. In the health sector, GAO determined that data for all 5 of the subset of indicators it reviewed in the FSM were not sufficiently reliable to assess progress for the compacts as a whole, and in the RMI, 1 health indicator was sufficiently reliable and 2 were not sufficiently reliable; for 2 other RMI health indicators, GAO had no basis to judge. In much of their reporting on their education and health indicators, the FSM and RMI have noted data reliability problems and some actions they have taken to address the problems. The U.S.-FSM and U.S.-RMI joint management and accountability committees have also raised concerns about the reliability of FSM's education and health data and RMI's health data and required that each country obtain an independent assessment and verification of these data; both countries have yet to meet that requirement, and, as a result, neither country can determine its progress in these sectors. The single audit reports GAO reviewed indicated challenges to ensuring accountability of compact and noncompact U.S. funds in the FSM and RMI. For example, the governments' single audits showed repeat findings and persistent problems in noncompliance with U.S. program requirements, such as accounting for equipment. The Department of the Interior (Interior) has taken steps regarding accountability of compact funds such as establishing the Chuuk Financial Control Commission, but Interior has not coordinated with other U.S. agencies about the risk status of the FSM and RMI. Furthermore, the FSM, RMI, and U.S. offices responsible for compact administration faced limitations hindering their ability to conduct compact oversight. For example, Interior's Office of Insular Affairs (OIA) experienced a staffing shortage that disproportionately affected compact grant oversight compared to other OIA activities, with 5 of 11 planned positions filled. What GAO Recommends Among other actions, Interior should (1) take all necessary steps to ensure the reliability of FSM and RMI indicators in education and health, (2) assess whether to designate each country as high risk, and (3) take actions to correct its disproportionate staffing shortage related to compact grant implementation and oversight. Interior generally agreed with GAO's recommendations and identified actions taken, ongoing, and planned.

gao_GAO-02-813

gao_GAO-02-813_0

Private and Public Health Insurance Coverage for Children Access to health care services, including mental health services, is highly correlated to having health insurance coverage. While children enrolled in private insurance plans often face limitations in their mental health coverage, such as the exclusion of certain diagnoses from coverage or limits on the number of covered visits for outpatient therapy, children in Medicaid and SCHIP programs generally have coverage for a wide range of mental health services. Despite the availability of public insurance coverage, other factors, such as low Medicaid reimbursement rates that discourage provider participation or SCHIP cost-sharing requirements that may make services unaffordable for some families, could affect children’s access to services. However, many of these plans impose more restrictive limits, such as day or visit limits, on mental health benefits than on other benefits. Federal Programs Can Help Children Who Have Experienced Trauma to Obtain Mental Health Services, But Extent of Assistance Is Largely Unknown and Little Evaluation Has Occurred Beyond insurance, a range of federal programs–-including over 50 grant programs we identified–-can help children who have experienced trauma obtain needed mental health services. Some federal programs have a broader focus, such as general mental health, or are targeted to specific populations, such as children in foster care, but grantees can elect to use program funds to provide mental health and other needed services to children who have experienced trauma and their families.

What GAO Found Eighty-eight percent of children nationwide have private or public health insurance that, to varying degrees, covers mental health services, including those that may be needed to help children recover from traumatic events, such as natural disasters, school shootings, or family violence. Despite the widespread prevalence of health insurance coverage for children, depending on their type of insurance coverage and where they live, children may face certain limitations in coverage or other barriers that could affect their access to needed services. The 16 percent of children who are enrolled in Medicaid and the State Children's Health Insurance Program public insurance programs generally have coverage for a wide range of mental health benefits, and those enrolled in Medicaid are not subject to day or visit restrictions. Beyond providing insurance that can give children access to mental health services, a range of federal programs can help children who have experienced trauma obtain needed services. GAO identified over 50 programs that can be used by grantees to provide mental health and other needed services to children who have never experienced trauma, although many of these programs have a broader focus and were not designed specifically for this purpose.

gao_GAO-02-684T

gao_GAO-02-684T_0

The National Polar- Orbiting Operational Environmental Satellite System Given the expectation that converging the POES and DMSP programs would reduce duplication and result in sizable cost savings, a May 1994 presidential decision directive required NOAA and DOD to converge the two satellite programs into a single satellite program capable of satisfying both civilian and military requirements. To handle these increased data volumes, the four processing centers have begun high-level planning to transform their respective satellite data processing infrastructures. In summary, today’s polar-orbiting weather satellite program is essential to a variety of civilian and military operations, ranging from weather warnings and forecasts to specialized weather products. NPOESS is expected to merge today’s two separate satellite systems into a single state-of-the-art weather and environmental monitoring satellite system to support all users. To prepare for these increased data volumes, the four data processing centers must address key data management challenges— including building up their respective infrastructures and working to be able to efficiently incorporate new data in their derived weather products and models.

Why GAO Did This Study This testimony discusses the planned National Polar-Orbiting Operational Environmental Satellite System (NPOESS). What GAO Found Today's polar-orbiting environmental satellite program is a complex infrastructure encompassing two satellite systems, supporting ground stations, and four central data processing centers that provide general weather information and specialized environmental products to a variety of users, including weather forecasters, the military, and the public. NPOESS will merge the two satellite systems into a single state-of-the-art environment monitoring satellite system, at a significant cost savings. To handle this increased volume of satellite data, the four processing centers will need to build up their respective infrastructures, and they will need to efficiently incorporate new data into their weather products and models.

gao_GAO-08-8

gao_GAO-08-8_0

Background Employer-sponsored pensions fall into two major categories: defined benefit (DB) and defined contribution (DC) plans. Key individual decisions and behaviors that may affect retirement savings include the following: Employee contributions—deposits into the plan account, typically out of current wages. Participation among lower-income workers was particularly limited, and those who did have accounts had very low balances. Most Workers Do Not Have a Current DC Plan, and Participants Have Modest Plan Balances The majority of workers, in all age groups, are not participating in DC plans with their current employers. 2). For all workers with a current or former DC plan, the median total balance was $22,800. Among all workers aged 55 to 64 with a current or former DC plan, the median balance according to the 2004 SCF was $50,000, which would provide an income of about $4,400 a year, replacing about 9 percent of income for the average worker in this group. Workers were more likely to roll over funds when the balances are greater. Low-Income Workers Have Particularly Low DC Plan Coverage and Plan Balances Among workers in the lowest income quartile, only 8 percent participated in a current DC plan, a result of markedly lower access as well as lower participation than the average worker (see fig. Baseline simulations of projected retirement savings for a hypothetical 1990 birth cohort indicate that DC plan savings would on average replace about 22 percent of annualized career earnings, but provide no savings to almost 37 percent of the working population, perhaps because of different factors — working for employers who do not offer a plan, choosing not to participate, or withdrawing any accumulated plan savings prior to retirement. Projected DC Plan Balances Vary Widely by Income, with Many Workers Having No Plan Savings at Retirement Our projections, based on a sample of workers born in 1990, show that workers would save enough in their DC plans over their careers to produce, when converted to a lifetime annuity at the time of retirement, an average of $18,784 per year in 2007 dollars (see table 3). Savings and replacement rates vary widely across income groups. Changing Retirement Decisions or Contribution Limits Would Affect Savings Primarily for Higher-Income Workers Other changes we make in our projections related to plan features or individual behavior affect average replacement rates overall, but with less impact on lower-income workers’ replacement rates and on the number of workers with zero plan savings at retirement. Finally, we model retirement savings in two scenarios in which workers delay retirement by 1 or 3 years. Recent Changes and Proposals Could Have Positive Effects on DC Plan Coverage, Participation, and Savings Recent regulatory and legislative changes and proposals could have positive effects on DC plan coverage, participation, and saving. One annual study of plan sponsors found that in 2004, 12.4 percent of 401(k) plans were automatically enrolling participants, and this number increased to 17.5 percent of plans in 2005. Appendix I: Scope and Methodology To analyze saving in DC plans, we examined data from the Federal Reserve Board’s Survey of Consumer Finances (SCF). We used the latest available survey, from 2004.

Why GAO Did This Study Over the last 25 years, pension coverage has shifted primarily from "traditional" defined benefit (DB) plans, in which workers accrue benefits based on years of service and earnings, toward defined contribution (DC) plans, in which participants accumulate retirement balances in individual accounts. DC plans provide greater portability of benefits, but shift the responsibility of saving for retirement from employers to employees. This report addresses the following issues: (1) What percentage of workers participate in DC plans, and how much have they saved in them? (2) How much are workers likely to have saved in DC plans over their careers and to what degree do key individual decisions and plan features affect plan saving? (3) What options have been recently proposed to increase DC plan coverage, participation, and savings? GAO analyzed data from the Federal Reserve Board's 2004 Survey of Consumer Finances (SCF), the latest available, utilized a computer simulation model to project DC plan balances at retirement, reviewed academic studies, and interviewed experts. What GAO Found GAO's analysis of 2004 SCF data found that only 36 percent of workers participated in a current DC plan. For all workers with a current or former DC plan, including rolled-over retirement funds, the total median account balance was $22,800. Among workers aged 55 to 64, the median account balance were $50,000, and those aged 60 to 64 had $60,600. Low-income workers had less opportunity to participate in DC plans than the average worker, and when offered an opportunity to participate in a plan, they were less likely to do so. Modest balances might be expected, given the relatively recent prominence of 401(k) plans. Projections of DC plan savings over a career for workers born in 1990 indicate that DC plans could on average replace about 22 percent of annualized career earnings at retirement for all workers, but projected "replacement rates" vary widely across income groups and with changes in assumptions. Projections show almost 37 percent of workers reaching retirement with zero plan savings. Projections also show that workers in the lowest income quartile have projected replacement rates of 10.3 percent on average, with 63 percent of these workers having no plan savings at retirement, while highest-income workers have average replacement rates of 34 percent. Assuming that workers offered a plan always participate raises projected overall savings and reduces the number of workers with zero savings substantially, particularly among lower-income workers. Recent regulatory and legislative changes and proposals could have positive effects on DC plan coverage, participation, and savings, some by facilitating the adoption of automatic enrollment and escalation features. Some options focus on encouraging plan sponsorship, while others would create accounts for people not covered by an employer plan. Our findings indicate that DC plans can provide a meaningful contribution to retirement security for some workers but may not ensure the retirement security of lower-income workers.

gao_GAO-11-93

gao_GAO-11-93_0

Abandoned Foreclosures Are Uncommon, but Are Concentrated in Certain Areas and Usually Involve Nonprime Loans and Low-Value Properties Using data from large and subprime servicers and government-sponsored mortgage entities representing nearly 80 percent of mortgages, we estimated that abandoned foreclosures are rare—the total from January 2008 to March 2010 represents less than 1 percent of vacant homes. However, when the costs of foreclosure exceed the expected proceeds from selling the property, servicers typically decide that foreclosure is not financially beneficial. Abandoned foreclosures are also likely concentrated in distressed urban areas. Abandoned foreclosures also occurred most frequently on nonprime loans. According to representatives of counseling agencies, community groups, and some of the homeowners we interviewed, borrowers are often surprised to learn that the servicer did not complete the foreclosure and take title to the house—and that they still own the property and are responsible for such things as maintenance, taxes, an d code violations. Without Updated Property Valuations That Consider Property and Neighborhood Conditions, Servicers May Abandon Foreclosures on Certain Properties By not always obtaining updated property valuations at foreclosure initiation, servicers appeared to increase the potential for abandoned foreclosures to occur. For example, accounting requirements for mortgage loans do not appear to provide incentives for servicers to initiate foreclosures but then not complete them. Because the risks from mortgage servicing generally did not indicate the need to conduct more detailed reviews of these operations, federal banking regulators had not regularly examined servicers’ foreclosure practices on a loan-level basis, including whether foreclosures are completed. The Federal Reserve has also recently increased its attention to mortgage servicing among the institutions over which it has oversight responsibility. Various Actions Are Being Taken by Some Communities to Prevent or Mitigate the Effects of Abandoned Foreclosures, but Each Presents Tradeoffs We identified various actions that some communities are taking to reduce the likelihood of abandoned foreclosures occurring or reduce the burden such properties create for local governments and communities. Communities dealing with abandoned foreclosures may benefit from implementing similar actions, but they may need to weigh the appropriateness of the various actions for their local circumstances as these actions can require additional funding, have unintended consequences, and may not be appropriate for all communities. In addition, regulatory staff cautioned that such a requirement could cause servicers to walk away from properties before initiating foreclosure. However, land banks can also be designed to actively and strategically acquire properties from multiple sources. However, the communities in which they are concentrated often experience significant negative impacts, including producing vacant homes that can be vandalized, reduce surrounding neighborhood property values, and burden local government with the costs associated with maintenance, rehabilitation, or demolition. If servicers had more complete and accurate information on lower-value properties that were more at risk for such declines in value, they may determine that foreclosure is not warranted prior to initiating the process for some properties. Recommendations for Executive Action To help homeowners, neighborhoods, and communities address the negative effects of abandoned foreclosures, we recommend that the Comptroller of the Currency and the Chairman of the Board of Governors of the Federal Reserve System take the following four actions: require that the mortgage servicers they oversee notify borrowers when they decide to charge off loans in lieu of foreclosure and inform borrowers about their rights to occupy their properties until a sale or other title transfer action occurs, responsibilities to maintain their properties, and their continuing obligation to pay their debt and taxes owed; require that the mortgage servicers they oversee notify local authorities, such as tax authorities, courts, or code enforcement departments, when they decide to charge off a loan in lieu of foreclosure; and require that the mortgage servicers they oversee obtain updated property valuations in advance of initiating foreclosure in areas associated with high concentrations of abandoned foreclosures. Specifically, this report addresses (1) the nature and prevalence of abandoned foreclosures, including how they occur; (2) the impact of abandoned foreclosures on communities and state and federal efforts to mitigate the effects of foreclosure; (3) certain practices that may contribute to why mortgage servicers initiate but not complete foreclosures and the extent of federal regulatory oversight of mortgage foreclosure practices; and (4) the various actions some communities are taking to reduce abandoned foreclosures and their impacts.

Why GAO Did This Study Entities responsible for managing home mortgage loans--called servicers--may initiate foreclosure proceedings on certain delinquent loans but then decide to not complete the process. Many of these properties are vacant. These abandoned foreclosure--or "bank walkaway"--properties can exacerbate neighborhood decline and complicate federal stabilization efforts. GAO was asked to assess (1) the nature and prevalence of abandoned foreclosures, (2) their impact on communities, (3) practices that may lead servicers to initiate but not complete foreclosures and regulatory oversight of foreclosure practices, and (4) actions some communities have taken to reduce abandoned foreclosures and their impacts. GAO analyzed servicer loan data from January 2008 through March 2010 and conducted case studies in 12 cities. GAO also interviewed representatives of federal agencies, state and local officials, nonprofit organizations, and six servicers, among others, and reviewed federal banking regulations and exam guidance. Among other things, GAO recommends that the Federal Reserve and Office of the Comptroller of the Currency (OCC) require servicers they oversee to notify borrowers and communities when foreclosures are halted and to obtain updated valuations for selected properties before initiating foreclosure. The Federal Reserve neither agreed nor disagreed with these recommendations. OCC did not comment on the recommendations. What GAO Found Using data from large and subprime servicers and government-sponsored mortgage entities representing nearly 80 percent of mortgages, GAO estimated that abandoned foreclosures are rare--representing less than 1 percent of vacant homes between January 2008 and March 2010. GAO also found that, while abandoned foreclosures have occurred across the country, they tend to be concentrated in economically distressed areas. Twenty areas account for 61 percent of the estimated cases, with certain cities in Michigan, Ohio, and Florida experiencing the most. GAO also found that abandoned foreclosures most frequently involved loans to borrowers with lower quality credit--nonprime loans--and low-value properties in economically distressed areas. Although abandoned foreclosures occur infrequently, the areas in which they were concentrated are significantly affected. Vacant homes associated with abandoned foreclosures can contribute to increased crime and decreased neighborhood property values. Abandoned foreclosures also increase costs for local governments that must maintain or demolish vacant properties. Because servicers are not required to notify borrowers and communities when they decide to abandon a foreclosure, homeowners are sometimes unaware that they still own the home and are responsible for paying the debt and taxes and maintaining the property. Communities are also delayed in taking action to mitigate the effects of a vacant property. Servicers typically abandon a foreclosure when they determine that the cost to complete the foreclosure exceeds the anticipated proceeds from the property's sale. However, GAO found that most of the servicers interviewed were not always obtaining updated property valuations before initiating foreclosure. Fewer abandoned foreclosures would likely occur if servicers were required to obtain updated valuations for lower-value properties or those in areas that were more likely to experience large declines in value. Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers' foreclosure practices, such as whether foreclosures are completed; however, given the ongoing mortgage crisis, they have recently placed greater emphasis on these areas. GAO identified various actions that local governments or others are taking to reduce the likelihood or mitigate the impacts of abandoned foreclosures. For example, community groups indicated increased counseling could prevent some borrowers from vacating their homes too early. Some communities are requiring servicers to list properties that become vacant properties on a centralized registry as a way to identify properties that could require increased attention. In addition, by creating entities called land banks that can acquire properties from servicers that they otherwise cannot sell, some communities have provided increased incentives for services to complete instead of abandon foreclosures. However, these actions can require additional funding, have unintended consequences, such as potentially encouraging servicers to walk away from properties before initiating foreclosure, and may not be appropriate for all communities.

gao_GGD-98-183

gao_GGD-98-183_0

Objectives, Scope, and Methodology Our first objective was to verify, to the extent practical, the amounts GSA attributed to the individual reasons for overestimation of the FBF rental revenue projections for fiscal years 1996, 1997, and 1998. To do this, we developed an understanding of the rental revenue estimation process that PBS used. On the basis of our knowledge of the estimation system and the proposed or actual corrective actions to the system, we determined whether the corrective actions appeared to address GSA’s identified reasons for the overestimation and other identified weaknesses. Our third objective was to determine the budgetary impact of the overestimation on projects and programs in the FBF. In January 1997, PBS informed Congress that it expected its total overestimation of rental revenue for fiscal years 1996 and 1997 to be $847 million. As shown in table 2, PBS identified seven reasons for the overestimation and linked specific dollar amounts to each reason. PBS could not provide documentation showing how it developed the $86 million attributed to the reason that the original fiscal year 1995 rent revenue estimate was higher than actual fiscal year 1995 revenues. These weaknesses included the following: lack of documented policy and procedures for the estimating process; unclear lines of responsibility and accountability for revenue estimates below the level of the PBS Commissioner; lack of supporting documentation necessary to verify forecast information and assumptions; and use of national averages, rather than project-specific data, to forecast occupancy schedules and rental rates. If effectively implemented, these actions should help improve future revenue estimates. The intent of the reserve was to ensure that available obligational authority would not be used until revenue was available to cover those obligations. OMB and PBS officials have stated that the actions taken through the fiscal year 1998 budget will eliminate the impact of the rent estimating problem on the FBF. In addition, in discussing the impact of the fiscal year 1998 budget decision, a GSA official, in responding to a question during an April 24, 1997, congressional hearing, stated “Absent direct appropriations and with the requirement to earmark $680 million in FY 98 Federal Building Fund budget authority to prior year capital projects, GSA will operate below prudent funding levels for building operations and repair and alterations for FY 98.” It is not clear how many, if any, of the proposed new construction or modernization projects would have been included in the President’s budget or funded by Congress in fiscal year 1998 had it not been for the overestimation problem. The actions taken by PBS to establish an obligational reserve to prevent the overobligation of the FBF revenue did not delay 10 of the 11 new construction projects included in the reserve. In addition, deferred maintenance could result in increased future cost.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed the General Services Administration's (GSA) actions in responding to and managing the recent funding problems experienced by its Federal Buildings Fund (FBF), focusing on: (1) verifying, to the extent practical, the amounts GSA attributed to each reason for overstimation of the FBF rental revenue projections for fiscal years 1996, 1997, and 1998; (2) whether the Public Buildings Service's corrective actions appeared to address GSA's identified reasons for the overestimation; and (3) budgetary impact of the overestimation on projects and programs in the FBF. What GAO Found GAO noted that: (1) GSA informed Congress that it expected the total overestimation of rental revenue for fiscal years 1996 and 1997 to be $847 million; (2) GAO verified, to the extent practical given available support, six of GSA's identified seven reasons for the overestimation and the linkage of specific dollar amounts of the overestimation to each of the six reasons; (3) GSA was unable to provide documentation showing how it developed the $86 million it attributed to the remaining reason--the fiscal year (FY) 1995 rent revenue estimate being higher than actual revenues; (4) GAO and others identified several weaknesses in GSA's rental revenue estimation process, such as the lack of documented policy and procedures for the rental revenue estimation process and the lack of supporting documentation necessary to verify forecast information and assumptions; (5) GSA has taken or plans to take corrective actions that, if effectively implemented, should help improve future rental revenue estimates; (6) for FY 1997, GSA took action to prevent the overobligation of FBF revenue by creating a reserve to ensure that obligational authority totalling $680.5 million would not be used until revenue was available to cover those obligations; (7) this action had the potential to affect the projects and programs from which obligational authority was withheld; (8) recent statements by GSA and Office of Management and Budget officials indicated that the impact of the rent estimating problem on the FBF will be resolved by actions taken through the FY 1998 budget; (9) although the $680.5 million appropriated in FY 1998 replenishes the $680.5 million to prior projects, GAO does not believe it necessarily mitigates the effects of not funding GSA's proposed FY 1998 program of new construction and modernization work; (10) GSA has stated that the overestimation problem contributed to a reduction in funding for building operations and basic building repair and alteration; and (11) this reduction could also result in changes in future costs for the same reasons previously mentioned as well as increased repair costs due to more extensive deterioration over time.

gao_GAO-10-807

gao_GAO-10-807_0

Reporting Mechanism Limits the Amount of Information on Local Project Descriptions Detailed information on how subrecipients are spending their Recovery Act funds is limited, in part because data collection for Recovery.gov, through FederalReporting.gov, does not provide specific narrative fields for collecting information on how each subrecipient is using its funds. Because OMB and Education guidance instructs prime recipients to include information about subrecipients in the information they report on FederalReporting.gov, a state is required to report information that captures the overall purpose of the award, including how subrecipients have used the funds. Providing detailed information on how each subrecipient is using the funds within the character limitation would be extremely challenging, if not impossible for some states. Education officials reported they provided this information to recipients to ease the burden of Recovery Act reporting. Few State Project Descriptions Fully Met Our Criteria for Transparency; Many Only Used Education’s Suggested Standard Language We found that 9 percent of the awards for the three programs we reviewed were transparent—that is, they had sufficiently clear and understandable information on the award’s purpose, scope, location, award amount, nature of activities, outcomes, and status of work. We determined that 13 percent contained most, but not all, of this information. We did not find any descriptions that did not include at least some of the information needed to inform the public. Most states (78 percent) only partially met our transparency criteria because their description contained much less information and met only a few attributes of our criteria. We found that for all three education programs, descriptions that contained only Education’s suggested standard language were less transparent than those that entered information specific to the program and activities conducted in their states. For example, the suggested language for the ESEA Title I, Part A program instructed states to enter “Improve teaching and learning for students most at risk of failing to meet State Academic Achievement Standards.” While the use of such language by states may facilitate the process of reporting their section 1512 data (i.e., reduce the reporting burden), it does not provide information on what funds are being spent on (e.g., professional development, technology, or testing assessments) and it provides the public with little information on how funds are being used at the local level. For example, we collected information from seven LEAs in Texas that reported they used ESEA Title I, Part A Recovery Act funds for technology purchases for at-risk students, but the information in Texas’ Recovery Act ESEA Title I, Part A project description contains only the standard language discussed above. Guidance on reporting requirements for Recovery Act grants that pass through a prime recipient to a subrecipient should balance the need for transparency with the reporting burden and these system limitations. Providing more information than offered in Education’s standard language, such as an overview analysis of how localities are spending the funds and the anticipated results, could help the public gain a better understanding of how the funds are being used. Recommendation for Executive Action In order to provide the public with more useful information on how Recovery Act funds are being used, we recommend that the Secretary of Education, in consultation with OMB, remove the standard language for one field—the quarterly activities/project description field—from its guidance and instruct states to include, to the extent possible, information on how the funds are being used and potential project outcomes or results. The award description information is taken directly from Recovery.gov. State Fiscal Stabilization Fund (SFSF) sub-recipients created and retained jobs in several categories. Place of performance (city, state, zip code) Bismarck, North Dakota 585050602 Less Than 50% Completed Special Education - Grants to States, Recovery Act Special Education - Grants to States, Recovery Act The purposes of the Individuals with Disabilities Education Act (IDEA) are to ensure that all children with disabilities have available to them a free appropriate public education (FAPE) that emphasizes special education and related services designed to meet their unique needs and prepare them for further education, employment and independent living; to ensure that the rights of children with disabilities and parents of such children are protected; and to assist States, localities, educational service agencies, and Federal agencies to provide for the education of all children with disabilities; to assist States in the implementation of a statewide, comprehensive, coordinated, multidisciplanary, interagency system of early intervening services for infants and toddlers with disabilities and their families; to ensure that educators and parents have the necessary tools to improve educational results for children with disabilities by supporting system improvement activities; coordinated research and personnel preparation; corrdinated technical assistance, dissemination, and support; and technology developement and media services; and to assess, and ensure the effectiveness of, efforts to educate children with disabilities. These funds covered 234 schools. Scope and Methodology To understand how the Office of Management and Budget (OMB) and Education facilitated implementation of Recovery Act requirements for recipients to describe the use of funds, we reviewed the Act for reporting requirements. This assessment was based on the requirements of the Recovery Act; OMB’s guidance, including OMB’s Recipient Reporting Data Model; the Federal Funding Accountability and Transparency Act of 2006; and professional judgment.

Why GAO Did This Study The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides $70.3 billion for three education programs--the State Fiscal Stabilization Fund (SFSF), Title I of the Elementary and Secondary Education Act (Title I), and Individuals with Disabilities Education Act (IDEA). The Act requires recipients to be accountable for how these funds are being used and what is being achieved. To help attain the level of transparency needed for accountability, recipients are to report quarterly on their award activities and expected outcomes. This information is available to the public on Recovery.gov, the government's official Recovery Act Web site. This report covers three Education programs funded by the Recovery Act. It (1) describes what the Office of Management and Budget (OMB) and the Department of Education (Education) did to facilitate implementation of requirements for recipients to describe the use of funds and (2) assesses the extent to which award descriptions are transparent It also describes reported fund uses for a sample of subrecipients. GAO reviewed requirements for reporting in the Act as well as guidance provided by OMB and Education. GAO assessed the transparency of descriptions for the three education programs on Recovery.gov. What GAO Found Both OMB and Education provided guidance to recipients on how to meet the Recovery Act requirement that they report quarterly on the amount and use of the funds they have received. OMB's guidance was generic for all agencies and instructed recipients to report narrative information that captures the overall purpose of the award, describes projects or activities, and states the expected results. Education's guidance was supplemental and program specific to its formula grants that pass through states as the prime recipient to subrecipients, which are local educational agencies (LEA) and institutions of higher education. However, the Recovery Act reporting system does not provide specific narrative fields for collecting information on how each subrecipient is using the funds. Instead, the states are tasked with reporting on fund use throughout the state, and the reporting system limits the amount of narrative information states may enter. For states with many subrecipients, including detailed information on how each subrecipient is using the funds would be extremely challenging, if not impossible. To ease the reporting burden for prime recipients, Education's guidance provided recipients with suggested standard language for use in important narrative fields. GAO determined that 9 percent of the descriptions fully met our transparency criteria; that is, they had sufficiently clear and complete information on the award's purpose, scope and nature of activities, location, cost, outcomes, and status of work. Most descriptions did not include sufficient information on local fund use. Specifically, while 13 percent had most but not all information, the remaining 78 percent contained much less information and only partially met attributes for transparency. We did not find any descriptions that did not include at least some of the information needed to inform the public. Descriptions limited to Education's standard language were less transparent than those with specific information on the programs and activities subrecipients conducted in the state. For example, officials from seven Texas LEAs told us they used ESEA Title I Recovery Act funds for technology purchases for at-risk students, although the information in Texas' project description uses only the standard language. Guidance on reporting requirements for Recovery Act grants that pass through a prime recipient to a subrecipient should balance the need for transparency with the reporting burden and these system limitations. While most states cannot provide information on how each subrecipient is using its funds, providing more information than Education's standard language, such as an overview analysis of how localities are spending the funds, could help the public gain a better understanding of how the funds are being used. What GAO Recommends GAO recommends that the Secretary of Education, in consultation with OMB, remove the suggested language for the project description field from its guidance and instruct states to include information, to the extent possible, on how the funds are being used and potential project outcomes or results.

gao_NSIAD-96-1

gao_NSIAD-96-1_0

On the basis of prior reviews by us and State’s Office of the Inspector General (OIG), the Committee also recommended that State (1) strengthen controls over personal property, (2) ensure that appropriate training is available for U.S. and foreign service national personnel, (3) implement contracting and procurement improvements, (4) eliminate control problems in cashiering functions, and (5) develop systems to track and collect medical insurance reimbursements. State Has Not Fully Implemented Recommendations State has not implemented our suggestion that all posts establish formal management improvement programs to identify and correct deficiencies. State officials believe that their approach of targeting specific areas for improvement is more appropriate and achieves comparable results in the long term. State has responded to recommendations contained in the House Committee on Government Operations’ report by initiating some specific actions designed to improve its management over embassy operations. Use of Existing Management Tools to Address Weaknesses Senior managers at embassies in Ankara, Tunis, and Dhaka have successfully used existing, agencywide reporting requirements to address and correct management deficiencies. Scope and Methodology We interviewed State Department officials in Washington, D.C., who are responsible for embassy management oversight, to assess actions taken by State to improve the management of its overseas operations. It would also encourage the use of best practices, such as automated travel voucher and accounts receivable tracking system, on a greater scale until agencywide systems are available.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed the Department of State's efforts to improve the management of its embassies, focusing on whether State has responded to previous recommendations concerning embassy management. What GAO Found GAO found that: (1) State has not responded to the recommendation that it establish proactive management improvement programs at its overseas posts because it believes that its approach of targeting specific areas for improvement is more appropriate and achieves comparable longterm results; (2) State has initiated action on some congressional recommendations to improve its embassy management, but deficiencies continue in controls over personal property, training for U.S. and foreign service personnel, contracting and procurement practices, controls over cashiering functions and medical insurance reimbursements, and senior-level oversight; (3) the embassies in Turkey, Bangladesh, and Tunisia have initiated management practices, such as tracking accounts receivable, automating travel vouchers, strengthening internal controls, improving regulation compliance, reducing costs, and enhancing efficiency and effectiveness; and (4) embassy senior managers participate in the day to day operations of their posts and use existing reporting requirements to document administrative problems and decide on appropriate corrective actions.

gao_GAO-05-8

gao_GAO-05-8_0

NBC Training at Army and Marine Corps CTCs Varies, and Units Often Do Not Perform to Acceptable Proficiency Standards Although the Army and the Marine Corps stress in their doctrine, regulations, or orders the need to fully integrate NBC training into training exercises and both have defined what they consider to be essential NBC skills, neither has established minimum NBC tasks for units to perform while they are training at the CTCs. Consequently, during fiscal years 2002 and 2003, Army and Marine Corps units and personnel attending the CTCs received widely varying amounts of NBC training, with some receiving little or none. Many Army Subunits Receive Little NBC Training at the CTCs During our review of Army CTC training that occurred during fiscal years 2002 and 2003, we found that, while most units were exposed to some NBC training at the CTCs, the overall percentage of Army battalion- or brigade-sized units that received extensive NBC training during a rotation was small. NTC training officials estimated that, on average since fiscal year 2002, a typical 20- to 25-day brigade rotation—which may include up to 4,000 soldiers—includes NBC events that cause the entire unit to don the full chemical protective suit for a total of 2 to 3 hours and about 150 to 200 soldiers to train in full protective gear for a total of 18 to 24 hours. In other words, only about 5 percent of the brigade is affected by NBC training that requires wearing full protective gear for more than 2 to 3 hours. We have also reported for more than a decade on problems with Army units’ inadequate home-station training. In 1991, we reported that Army home-station training lacked realism and often did not include NBC training. NBC Training Was Not Conducted at the Marine Corps’ Combined Arms Exercises at Twentynine Palms No NBC training was conducted during combined arms exercises at the Marine Corps’ training center at Twentynine Palms for at least 5 years prior to our review. Establishing minimal NBC tasks for units attending CTCs could provide an opportunity for units’ NBC defense capabilities to be objectively assessed and for CTC observers/controllers to identify units’ NBC equipment shortfalls. Army and Marine Corps After-Action Reporting at the CTCs Does Not Fully Facilitate the Identification of NBC Training Trends The Army and the Marine Corps do not always report lessons learned on NBC training at the CTCs in a way that can be used to identify trends over time and allow for cross-unit and cross-center comparisons. As a result, different types of after-action reports and lessons learned are prepared for CTC training, and these documents might or might not mention NBC training. The NTC does include, in many cases, an assessment of a brigade’s NBC skills in its first week of training. Conclusions The CTCs represent a rare opportunity for Army and Marine Corps units to perform advanced training under conditions that are designed to approximate actual combat as closely as possible, thereby enabling units to assess and build upon skills learned at home stations. The services stress the importance of including NBC defense training in their exercises. NBC lessons learned during training rotations at the combat training centers would be very useful for the services in their attempts to anticipate and train for NBC problems that may occur later during operations. Appendix I: Scope and Methodology To determine the extent to which Army and Marine Corps units participate in nuclear, biological, and chemical (NBC) training at the combat training centers (CTC) and the extent to which these units and personnel perform NBC tasks at the centers to service standards, we interviewed appropriate officials and reviewed pertinent documents and after-action reports at the following locations: Office of the Department of the Army, Deputy Chief of Staff, G-3, Center for Army Lessons Learned, Battle Command Training Program, Combined Arms Center-Training, Combined Arms Research Library, Fort Leavenworth, Kansas; U.S. Army Chemical School, Maneuver Support Center, and the Army Maneuver Support Center Academic Library, Fort Leonard Wood, Missouri; Training Division, Headquarters, U.S. To determine whether the Army and the Marine Corps report NBC training at the CTCs in a standardized format that allows the services to identify trends and lessons learned and to do cross-unit and cross-center comparisons, we collected all available after-action reports from the above-listed locations. The unit must be able to conduct unmasking procedures. Observation. doctrinal improvement.

Why GAO Did This Study The Department of Defense (DOD) believes that it is increasingly likely that an adversary will use nuclear, biological, or chemical (NBC) weapons against U.S. forces. Consequently, DOD doctrine calls for U.S. forces to be sufficiently trained to continue their missions in an NBC-contaminated environment. Given longstanding concerns about the preparedness of DOD's servicemembers in this critical area, GAO has undertaken a body of work covering NBC protective equipment and training. For this review, GAO was asked to determine the following: (1) To what extent do Army and Marine Corps units and personnel attending combat training centers participate in NBC training, and to what extent do these units and personnel perform NBC tasks at the centers to service standards? (2) Do the Army and the Marine Corps report NBC training at the centers in a standardized format that allows the services to identify lessons learned and to do cross-unit and cross-center comparisons? What GAO Found Army and Marine Corps combat training centers provide a unique opportunity for units to perform advanced training under conditions that approximate actual combat, thereby enabling units to assess and build upon skills learned at home stations. Although DOD and both services have stressed the importance of including NBC defense in all types of training, they have not established minimum NBC-related tasks for units attending the centers. Commanders sometimes reduce NBC training to focus on other priority areas. As a result, the extent of NBC training actually conducted at these centers varies widely, and some units receive little or none at all. For example, officials at two Army training centers estimated that during fiscal years 2002 and 2003, a typical unit training rotation for a brigade-sized unit--which may include up to 4,000 soldiers--experienced NBC events that required only about 5 percent of these troops to train in full NBC protective clothing for a total of 18 hours or more. For the Marine Corps, no NBC training was conducted during combined arms exercises at its training center for at least 5 years prior to January 2004. The Marine Corps began to introduce NBC training into its combined arms exercises in two rotations that occurred in January and February 2004 but suspended it because of other priorities related to preparing units for ongoing operations. Without minimum NBC tasks, the services often miss the opportunity to use the centers' unique environment to improve units' proficiency in NBC defense. When Army units did undergo NBC training, observers noted that many units did not perform basic NBC tasks to Army standards. For example, during fiscal years 2002 and 2003, most brigades attending one center did not meet standards for basic NBC tasks such as donning protective gear, seeking overhead shelter, and conducting unmasking procedures. Observers at the Army centers often cited inadequate home-station training as the reason units were not performing basic NBC tasks to standards. Skills in these basic tasks are normally acquired during training at home stations and lay the foundation for acquiring more complex skills associated with large-unit NBC training. When units arrive at the centers with inadequate basic NBC skills, they may not be able to take full advantage of the unique and more complex large-unit NBC training opportunities offered at these centers. The Army and the Marine Corps do not always report lessons learned on NBC training at the centers in a way that can be used to identify trends over time and allow for cross-unit and cross-center comparisons. Army and Marine Corps doctrine stresses the importance of identifying lessons learned during training to enable tailored training at home stations and elsewhere to reduce the likelihood that similar problems will occur during operations. Because service guidance does not require standardized reporting formats, the training centers submit different types of after-action reports that might or might not mention NBC training. This lack of standardized reporting represents opportunities lost to the services to collect comparable data to identify NBC training trends and lessons learned.

gao_GAO-02-864

gao_GAO-02-864_0

The variation among federal agencies is attributable to how and when Congress makes the funds available to the agency and how much flexibility Congress gives the agency in using the fees or other funding sources it collects. A Move to Self- Controlled Funding Would Have Implications for SEC Operations Moving SEC to a more self-controlled funding structure has two important implications for SEC’s operations. First, SEC would have more control over its own budget and funding level, which some SEC and industry officials believe may better enable SEC to take steps to address its increasing workload and some of its human capital challenges, such as recruiting and retaining quality staff. If Congress wanted to give SEC greater control over its budget but still maintain some degree of control over SEC’s funding level, it could place a variety of limitations on SEC’s offsetting collections. On the other hand, Congress and OMB would lose the ability to directly affect the budget and direction of the agency. To determine the implications for SEC operations and congressional and executive branch oversight, we interviewed SEC officials regarding the impact of self-funding on SEC operations.

What GAO Found GAO studied the implications of converting the Securities and Exchange Commission (SEC) to a self-funded entity. Congress has created a range of self-funding structures, or other sources of funding, other than appropriations for the Department of the Treasury's general fund. The variations among these agencies depend on how and when Congress makes the fees available to an agency and how much flexibility Congress gives an agency in using its collected fees without further legislative action. Moving SEC to a more self-controlled funding structure has implications for two important areas. First, SEC would have more control over its own budget and funding level, which some SEC and industry officials believe may better enable SEC to address its increasing workload and some of its human capital challenges, such as its ability to recruit and retain quality staff. The second result would be a loss of checks and balances currently provided by the federal budget and appropriations processes. Moving SEC to a self-controlled funding structure would diminish congressional and executive branch oversight. On the other hand, the congressional authorizing committees would maintain or else could choose to increase their oversight of SEC. However, if Congress wanted to give SEC greater budget flexibility but still maintain some degree of control over SEC's funding level, it could place limitations on SEC's offsetting collections.

gao_GAO-07-502T

gao_GAO-07-502T_0

In addition, Interior’s programs for managing hardrock mining, oil, and gas operations have not adequately protected federal resources from the environmental effects of these activities. Management Problems in Indian and Island Community Programs Persist GAO has reported on management weaknesses in Indian programs for a number of years. While Interior has made major program changes, significant problems continue. Specifically, to remedy decades of problems with the quality and objectivity of its land appraisals, Interior removed the land appraisal function from its land management agencies and consolidated it into a departmental office—the Appraisal Services Directorate—in November 2003. Since our report last fall, Interior has taken encouraging steps to address our recommendations. For example, Interior has stated that it has implemented a compliance inspection program for appraisals that are considered “high risk” to help ensure that such appraisals comply with recognized appraisal standards. We will continue to monitor the department’s progress in this area. Deferred Maintenance Backlog Needs to Be Addressed In addition to the challenges the department faces in adequately maintaining the natural resources under its stewardship, it also faces a challenge in adequately maintaining its facilities and infrastructure. While Interior has made progress addressing prior recommendations to improve information on the maintenance needs of Park Service facilities and BIA schools, the challenge of how the department will secure the significant funding needed to reduce this maintenance backlog to a manageable level remains. Interior Has Not Maximized Revenue Collections from Recreational and Other Uses Interior agencies are authorized—and in some cases required—to collect fees for a variety of uses. However, we found that the agencies were not collecting such fees in the following cases: In May 2006, we reported that the Park Service was not collecting all required fees from companies conducting air tours in or around three highly visited national parks because of (1) an inability to verify the number of air tours conducted over the three national parks and, therefore, to enforce compliance and (2) confusion resulting from differing geographic applicability of legislation governing air tours in national parks. Contract and Grant Management Lack Needed Controls Interior’s management of contracts and grants has been identified as a management challenge by Interior’s IG for a number of years. While some of the programs we evaluated in the past have improved, evaluations of additional programs reveal many of the same persistent management problems—a lack of adequate data to understand the condition of its natural resources and infrastructure and the actions necessary to improve them, a lack of adequate controls and accountability to ensure federal resources are properly used and accounted for, and a lack of adequate strategic planning and guidance for program implementation. Clearly the department needs to address management and control gaps in its programs and ensure its activities are carried out in the most cost-effective and efficient manner, but difficult choices remain for improving the condition of the nation’s natural resources and the department’s infrastructure in light of the federal deficit and long-term fiscal challenges facing the nation. Major Management Challenges and Program Risks: Department of the Interior. Wildland Fire Management: Update on Federal Agency Efforts to Develop a Cohesive Wildland Fire Strategy. Indian Trust Funds: Tribal Account Balances. National Park Service: Status of Efforts to Develop Better Deferred Maintenance Data. Revenue Collection Opportunities Oil and Gas Royalties: Royalty Relief Will Likely Cost the Government Billions, but the Final Costs Have Yet to Be Determined. Oil and Gas Development: Increased Permitting Activity Has Lessened BLM’s Ability to Meet Its Environmental Protection Responsibilities.

Why GAO Did This Study The Department of the Interior is responsible for managing much of the nation's vast natural resources. Its agencies implement an array of programs intended to protect these precious resources for future generations while also allowing certain uses of them, such as oil and gas development and recreation. In some cases, Interior is authorized to collect royalties and fees for these uses. Over the years, GAO has reported on challenges facing Interior as it implements its programs. In addition to basic program management issues, the department faces difficult choices in balancing its many responsibilities, and in improving the condition of the nation's natural resources and the department's infrastructure, in light of the federal deficit and long-term fiscal challenges facing the nation. This testimony highlights some of the major management challenges facing Interior today. What GAO Found The Department of the Interior has made progress in addressing challenges that GAO has identified in such areas as developing and maintaining better data to manage the department's programs and strengthening internal controls. However, numerous important problems remain, as discussed below. Management of resource protection efforts needs to be strengthened. Interior has undertaken steps to improve some of its resource protection efforts, but it has yet to develop a cohesive national strategy to address wildland fire issues, as GAO has recommended. In addition, Interior agencies that manage hardrock mining and oil and gas production on their lands have not effectively carried out their environmental protection responsibilities. Management problems in Indian and island community programs persist. While Interior has implemented major reforms to address weaknesses in managing Indian trust funds and other assets, concerns remain about finalizing organizational changes and delays in decisions about land that the department will take into trust status. In addition, island community programs continue to lack accountability measures. Land appraisals continue to fall short of standards. While Interior has consolidated the land appraisal function into a departmental office to address serious problems with the quality of its appraisals and the millions of dollars that had been lost as a result, a large portion of appraisals that GAO reviewed still did not comply with recognized appraisal standards. Deferred maintenance backlog needs to be addressed. Interior has implemented improved inventory and asset management systems for some programs, but it is not clear how it will address the estimated $17 billion in deferred maintenance. Other programs continue to lack information required to accurately estimate needs. Revenue collection needs more management attention. Interior may not be collecting billions of dollars of revenue from oil and gas royalties; geothermal royalties; and fees from individual recreational uses, air tour operations in and around national parks, and commercial filming and still photography in national parks. Contract and grant management lack needed controls. Because it lacks adequate controls over management of grants and contracts, Interior cannot ensure that millions of dollars in grant and contract funding were used appropriately.

gao_T-RCED-99-104

gao_T-RCED-99-104_0

Community Development: Primarily through grants to the states, large metropolitan areas, small cities, towns, and counties, HUD provides community planning and development funds for local economic development under its Community Development Block Grant (CDBG) and Empowerment Zone/Enterprise Community Programs (EZ/EC), housing development under its HOME Program, and assistance to the homeless under its McKinney Act Homeless Programs. This request includes seven set-asides totaling $210 million. While the budget impact—a net increase of about 9 percent in new budget authority—of the new programs and increases to existing programs that HUD proposes is not overwhelming, the proposed budget does raise questions about HUD’s capacity to manage such an increase. The Details of HUD’s Project-Based Section 8 Program Are Not Clearly Explained in the Budget Proposal One of the largest program increases in HUD’s fiscal year 2000 budget proposal is in its Section 8 housing assistance program (see app. We also believe that the basis for the substantial increase in total Section 8 project-based and tenant-based outlays—$2.5 billion—should be examined, as well as HUD’s rationale for the $4.2 billion advance appropriation for fiscal year 2001 requested in the fiscal year 2000 budget request. Of the 10 set-asides, half are for new initiatives totaling about $60 million. However, our recent work shows that IDIS, as implemented, does not provide detailed performance information. However, HUD plans to convert the current version of IDIS for use in the new grants management system, which may occur over the next several years. The Success of HUD’s New Contract Administration Program Depends on Adequate Contract Selection, Administration, and Oversight Contract Administration is a new initiative in fiscal year 2000 under HUD’s Housing Certificate Fund. HUD is requesting $209 million for this program, of which $42 million will be available to contractors who have not formerly participated in this activity. However, because of the documented weaknesses in HUD’s contracting practices in other areas, we question whether HUD is prepared to administer a new contracting initiative of this size. We, HUD’s Inspector General, and the National Academy of Public Administration have cited weaknesses in HUD’s contracting and procurement practices: inadequate oversight of contracted services because of a lack of skilled, trained staff; workload imbalances; and unclear duties, time frames, costs, and products. Therefore, we believe that to ensure the success of HUD’s contracting for the new Section 8 contract administration initiative, HUD may need to provide some assurances to the Congress that the Department will have an adequate administrative structure and sufficient staffing in place to provide proper oversight of a new contracting program of this magnitude. Empowerment Zone Initiatives and Increases Raise Questions HUD is also proposing an increase in its EZ Program. It is unclear why HUD needs to fund the same communities with two different programs. New Programs and Initiativesa in HUD’s Fiscal Year 2000 Budget Request Low Income Housing Tax Credit Vouchers for the Elderly (Table notes on next page) For this table, GAO defined new programs and initiatives as any program or initiative that the Congress did not fund in fiscal year 1999. However, some of these programs or initiatives may have been funded in prior years. A recorded menu will provide information on how to obtain these lists.

Why GAO Did This Study Pursuant to a congressional request, GAO discussed the Department of Housing Urban Development's (HUD) fiscal year (FY) 2000 budget request, focusing on: (1) new initiatives or significant increases proposed by HUD; and (2) observations about HUD's request for funding related to several areas GAO has reported on in the past year. What GAO Found GAO noted that: (1) to support 19 new programs and initiatives, HUD is requesting nearly $731 million of its $28 billion total request for FY 2000; (2) in each case, Congress did not provide funding for the activity in FY 1999, although in some cases the program has been funded in prior years; (3) GAO is concerned about HUD's overall capacity to plan for, administer, and oversee this many new programs, particularly when HUD itself is undergoing significant organizational reform and when some of the new initiatives are in areas, such as contracting, that HUD's performance has been questioned in the past; (4) one of the most significant increases in HUD's current programs for FY 2000 is a $1 billion increase in its Section 8 rental housing assistance program; (5) however, the budget does not provide sufficient information to evaluate this request; (6) GAO believes a number of associated issues exist that warrant review; (7) HUD's tracking and oversight of its Community Development and Planning grants are made difficult because information in its grants management information system is unreliable; (8) although HUD plans to replace the current system for managing and tracking Community Development Block Grants, a new system is several years away from implementation; (9) in the meantime, HUD's FY 2000 budget request proposes to continue adding set-asides to the block grant; (10) however, HUD cannot be assured that financial tracking of the individual grants and grantees will be adequate; (11) in one of its largest new initiatives, HUD is requesting over $200 million in FY 2000 to fund contract administrators for the contracts it has with owners of multifamily properties in HUD's project-based Section 8 housing assistance program; (12) however, work that GAO, HUD's Inspector General, and the National Academy of Public Administration have done in the past on HUD's contracting activities identified weaknesses in HUD's ability to administer contracts and monitor contractors' performance; (13) however, GAO believes that the success of this program will depend on the adequacy of HUD's contract selection, administration, and oversight of these contracts; (14) HUD is proposing both a new initiative and a program increase in the area of empowerment zones as well as two set-asides in the Community Development Block Grant Program for empowerment zones; and (15) these proposals raise questions about how the programs will coordinate with and benefit from each other because they target similar beneficiaries.

gao_GAO-10-706T

gao_GAO-10-706T_0

Observations on DOD’s 2009 Major Defense Acquisition Program Portfolio In our 2010 assessment of weapon programs, we made several observations concerning DOD’s management of its major defense acquisition portfolio. First, in DOD’s fiscal year 2010 budget, the Secretary of Defense proposed canceling or significantly curtailing programs with projected total costs of at least $126 billion that he characterized as too costly or no longer relevant for current operations, while increasing funding for others that he assessed as higher priorities. Congress supported several of the recommended terminations (see table 1). Second, DOD plans to replace several of the canceled programs in fiscal years 2010 and 2011, hopefully with new, knowledge-based acquisition strategies, because the warfighter need remains. The most significant of these new programs will be the effort to restructure the Army’s Future Combat System program into several smaller, integrated programs. Third, DOD’s portfolio of major defense acquisition programs grew to 102 programs in 2009—a net increase of 6 since December 2007. Observations from Our Assessment of Knowledge Attained by Key Junctures in the Acquisition Process At the program level, our recent observations present a mixed picture of DOD’s adherence to a knowledge-based acquisition approach, which is key for improving acquisition outcomes. While program knowledge is increasing, as in the past, none of the 42 programs we assessed have attained or are on track to attain all of the requisite amounts of technology, design, and production knowledge by each of the key junctures in the acquisition process. However, if DOD consistently implements its December 2008 policy revisions on new and ongoing programs, then DOD’s performance in these areas, as well as its cost and schedule outcomes, should improve. Since 2006, there has been a significant increase in the percentage of technologies demonstrated in a relevant or realistic environment by the start of system development. This increase coincided with a change in statute. However, most designs are still not stable at this point. The Weapon Systems Acquisition Reform Act of 2009 requires that DOD policy ensure that the acquisition strategy for each major defense acquisition program provides for competitive prototypes before milestone B approval, unless a waiver is properly granted. Observations on Other Factors That Can Affect Program Execution Our 2010 assessment of weapon programs also included three observations on other areas related to DOD’s management of its weapons programs, including requirements, software management, and program office staffing. We have also reported that workforce challenges can hinder program execution and negatively affect program management and oversight. Many programs are at risk for cost growth and schedule delays because of software development issues. Observations about DOD’s Implementation of Acquisition Reforms DOD has begun to incorporate acquisition reforms into the acquisition strategies for new programs. Both DOD’s December 2008 acquisition policy revisions and the Weapon Systems Acquisition Reform Act of 2009 require programs to invest more time and resources in the front end of the acquisition process—refining concepts through early systems engineering, developing technologies, and building prototypes before starting system development. These steps could provide a foundation for establishing sound, knowledge-based business cases for individual weapon programs and are consistent with many of our past recommendations; however, if reform is to succeed and weapon program outcomes are to improve, they must continue to be reinforced in practice through decisions on individual programs. Our analysis of the programs in our 2010 assessment allowed us to make two observations about the extent to which DOD is implementing recent acquisition reforms: Most of the ten programs in our 2010 assessment that had not yet entered system development reported having acquisitions strategies consistent with both DOD’s revised acquisition policy and the provisions of the Weapon Systems Acquisition Reform Act of 2009. Seen in this light, it will take considerable and sustained effort to change the incentives and inertia that reinforce the status quo.

Why GAO Did This Study The past two years have seen the Congress and DOD take meaningful steps towards addressing long-standing weapon acquisition issues--an area that has been on GAO's high risk list since 1990. This testimony focuses on the progress DOD has made in improving the planning and execution of its weapon acquisition programs and the potential for recent acquisition reforms to improve program outcomes. The testimony includes observations about (1) DOD's efforts to manage its portfolio of major defense acquisition programs, (2) the knowledge attained at key junctures of a subset of 42 weapon programs from the 2009 portfolio, (3) other factors that can affect program execution, and (4) DOD's implementation of recent acquisition reforms. The testimony is based on the results of our annual assessment of weapon programs. To conduct the assessment, GAO analyzed data on the composition of DOD's portfolio of major defense acquisition programs. GAO also collected data from program offices on technology, design, and manufacturing knowledge, as well as on other factors that can affect program execution. GAO has made numerous recommendations on weapon system acquisition in prior work but is not making any new recommendations in this testimony. What GAO Found While DOD still faces significant challenges in managing its weapon system programs, the current acquisition reform environment provides an opportunity to leverage the lessons of the past and manage risks differently. This environment is shaped by significant acquisition reform legislation, constructive changes in DOD's acquisition policy, and initiatives by the administration, including making difficult decisions to terminate or trim numerous weapon systems. To sustain momentum and make the most of this opportunity, it will be essential that decisions to approve and fund acquisitions be consistent with the reforms and policies aimed at getting better outcomes. DOD has started to reprioritize and rebalance its weapon system investments. In 2009, the Secretary of Defense proposed canceling or significantly curtailing weapon programs with a projected cost of at least $126 billion that he characterized as too costly or no longer relevant for current operations, while increasing funding for others that he assessed as higher priorities. Congress supported several of the recommended terminations. DOD plans to replace several of the canceled programs in fiscal years 2010 and 2011, hopefully with new, knowledge-based acquisition strategies, because the warfighter need remains. The most significant of these will be the effort to restructure the Army's terminated Future Combat System program. At the same time, however, DOD's portfolio of major defense acquisition programs continues to grow. Between December 2007 and July 2009, the number of major defense acquisition programs grew from 96 to 102 programs. GAO has previously reported that DOD should continue to work to balance its weapon system portfolio with available funding, which includes reducing the number or size of weapon system programs, or both, and assessing the affordability of new programs and capabilities in the context of overall defense spending. At the program level, our recent observations present a mixed picture of DOD's adherence to a knowledge-based acquisition approach, which is a key for improving acquisition outcomes. For 42 programs GAO assessed in depth in 2010, there has been continued improvement in the technology, design, and manufacturing knowledge programs had at key points in the acquisition process. However, most programs are still proceeding with less knowledge than best practices suggest, putting them at higher risk for cost growth and schedule delays. A majority of programs have also experienced requirements changes, software development challenges, or workforce issues, or a combination, which can affect program stability and execution. DOD has begun to implement a revised acquisition policy and congressional reforms that address many of these areas. For example, eight programs we examined in the technology development phase plan to test competitive prototypes before starting system development and seven programs plan to hold early systems engineering reviews. If DOD consistently applies this policy, the number of programs adhering to a knowledge-based acquisition should increase and the outcomes for DOD programs should improve.

gao_AIMD-96-101

gao_AIMD-96-101_0

Significant Matters The overriding problem in providing an opinion on IRS’ financial statements, reporting on its internal controls, and reporting on its compliance with laws and regulations is that IRS has not yet been able to provide support for major portions of the information presented in its financial statements and, in some cases where it was able to do so, the information was found to be in error. The following discusses the five material weaknesses we found. However, IRS has not been able to make these amounts agree to the amounts included in its financial management systems and Treasury records. IRS’ accounting records were in total disarray, and it could not substantiate large portions of the reported amounts. For fiscal year 1995, IRS had a core accounting system in place that tracked its financial management activity. In our assessment this year, we determined that IRS had completed 17 of these recommendations. (continued) Financial Audit: Examination of IRS’ Fiscal Year 1993 Financial Statements (GAO/AIMD-94-120, June 15,1994) Ensure that system development efforts provide reliable, complete, timely, and comprehensive information with which to evaluate the effectiveness of its enforcement and collection programs; Establish and implement procedures to analyze the impact of abatements on the effectiveness of assessments from IRS’ various collection programs; and Reconcile detailed revenue transactions for individual taxpayers to the master file and general ledger. Comments From the Internal Revenue Service The first copy of each GAO report and testimony is free.

Why GAO Did This Study Pursuant to a legislative requirement, GAO reviewed the Internal Revenue Service's (IRS) financial statements for fiscal years 1995 and 1994. What GAO Found GAO found that: (1) it could not express an opinion of the 1995 IRS financial statement due to limitations in the scope of its work; (2) the information in the 1995 statement may be unreliable; (3) ongoing financial management problems include IRS inability to verify or reconcile taxpayer revenue and refunds to accounting records, substantiate amounts reported for various types of taxes collected, verify nonpayroll operating expenses, and reconcile reported appropriations with Department of the Treasury records, and determine the unreliability of estimated accounts receivable balances; (4) IRS has not resolved many of its financial management problems, but it has developed software to capture detailed revenue and refund transactions and is completing documentation of its financial management systems to aid in system improvements; (5) significant material weaknesses in IRS controls over recordkeeping exist, including lax computer security; (6) it could not test IRS compliance with applicable laws and regulations; and (7) IRS has completed 17 of 59 recommendations for improving its financial management systems.

gao_GAO-07-620

gao_GAO-07-620_0

SOCOM’s Acquisition Programs Are Consistent with the Command’s Mission SOCOM has undertaken a diverse set of acquisition programs since January 2001 that are consistent with the command’s mission to address unique SOF needs and those needs for which there are no service-common requirement. SOCOM has committed about $6 billion to date on these programs. The vast majority of SOCOM’s acquisition programs are ACAT III level in size, have short acquisition cycles, and use modified commercial off-the-shelf and nondevelopmental items or modify existing service equipment and assets. Several key examples of the types of programs SOCOM has undertaken are described below. SOCOM’s acquisition plan for the future—as reflected in its current Future Year Defense Program—continues to maintain a focus on providing SOF-peculiar equipment. SOCOM’S Acquisition Program Performance Has Been Mixed Fifty-one (about 60 percent) of the 86 acquisition programs SOCOM has undertaken since 2001 have progressed as planned, either staying within original cost and schedule estimates or experiencing cost increases unrelated to progress, such as for adding quantities to support ongoing combat operations . The other 35 (40 percent) of SOCOM’s 86 programs have experienced or are likely to experience modest to, in a number of cases, significant cost increases and schedule delays due to a range of technical, programmatic, or funding issues. Although fewer in number, these programs make up about 50 percent of SOCOM’s total funding for its acquisition programs. The programs that have not progressed as planned tend to be the larger, more complex platform-based programs SOCOM is developing and programs where SOCOM is dependent on the military departments for the basic platform or for equipment and/or other resources, such as program management support. SOCOM Faces Management and Workforce Challenges in Its Acquisition Programs SOCOM faces management and workforce challenges in ensuring its acquisition programs are completed on time and within budget. Urgent requirements arising from SOCOM’s role in Iraq and Afghanistan, and its new role in the GWOT have and will continue to challenge SOCOM’s ability to balance near- and long-term needs against available funding resources. SOCOM also has difficulty tracking progress on programs for which it has delegated management authority to the military departments and addressing problems earlier in these programs. SOCOM employs elements of a knowledge-based acquisition approach, but it is not consistently applied. In addition, some of the acquisition positions at SOCOM require unique special operations experience. To assess and determine the management and workforce challenges facing SOCOM, we (1) reviewed and analyzed the current impact that unfunded near-term requirements had on the regular approved acquisition programs; (2) we reviewed and analyzed the command’s key acquisition program management tool—the Special Operations Acquisition and Logistics Information System—for managing its acquisition programs; and (3) to assess the workforce challenges that SOCOM faces, we interviewed key SOCOM acquisition officials from SOCOM’s Special Operations Acquisition and Logistics Center and key civilian and military personnel management officials at Tampa, Florida.

Why GAO Did This Study Special Operations Command's (SOCOM) duties have greatly increased since the attacks of September 11, 2001. Today, Special Operations Forces are at work in Afghanistan and Iraq, and SOCOM has been assigned to lead U.S. efforts in the Global War on Terrorism. SOCOM's acquisitions budget has also greatly increased in this period--more than doubling from $788 million in 2001 to approximately $1.91 billion in 2006. In light of SOCOM's expanded duties, Congress requested that GAO review SOCOM's management of its acquisition programs. GAO's evaluation includes an assessment of: the types of acquisition programs SOCOM has undertaken since 2001 and whether the programs are consistent with its mission; the extent to which SOCOM's programs have progressed as planned; and the challenges SOCOM faces in managing its acquisition programs. What GAO Found SOCOM has undertaken a diverse set of acquisition programs that are consistent with the command's mission to provide equipment that addresses the unique needs of the Special Operations Forces. SOCOM has committed to spend about $6 billion on these programs. About 88 percent of the programs are relatively small, have short acquisition cycles, and use modified commercial off-the-shelf and nondevelopmental items or modify existing service equipment and assets. SOCOM's acquisition plans--as reflected in its current 5-year plan--continue to focus on relatively small-scale, short-cycle programs with modest development efforts. Overall, SOCOM's acquisition program performance has been mixed. About 60 percent of the acquisition programs SOCOM has undertaken since 2001 have progressed as planned, staying within the original cost and schedule estimates. Included in this grouping are programs that had cost increases because of the need to buy additional quantities of equipment for ongoing combat operations. The other 40 percent of SOCOM's acquisition programs have not progressed as planned and experienced modest to, in a small number of cases, significant cost increases and schedule delays because of a range of technical and programmatic issues. Although fewer in number, the programs that experienced problems comprise about 50 percent of acquisition funding because they tend to be the larger and costlier, platform-based programs that SOCOM is acquiring and those where SOCOM depends on one of the military departments for equipment and program management support. SOCOM faces management and workforce challenges to ensure its acquisition programs are consistently completed on time and within budget. Urgent requirements to support SOCOM's ongoing combat missions have and will continue to challenge SOCOM's ability to balance near- and long- term needs against available funding resources. In addition, SOCOM has difficulty tracking progress on programs where it has delegated management authority to one of the military departments and has not consistently applied a knowledge-based acquisition approach in executing programs, particularly the larger and more complex programs. Furthermore, SOCOM has encountered challenges ensuring it has the workforce size and composition to carry out its acquisition work.

gao_GGD-98-154

gao_GGD-98-154_0

We also reviewed 21 OCC examination reports for 6 banks identified as actively involved in offshore private banking activities. Regulatory Efforts to Oversee Offshore Private Banking Activities Federal banking regulators may review banks’ efforts to prevent or detect money laundering in their offshore private banking activities during overall compliance or BSA examinations; safety and soundness examinations; or, more recently, during targeted examinations of their private banking activities. Offshore Private Banking Accounts Recognizing that offshore entities, such as PICs, that maintain U.S. private banking accounts tend to obscure account holders’ true identities, examiners are to look for specific KYC procedures that enable banks to identify and profile the beneficial owners of these offshore entities and their private banking accounts. Deficiencies Related to Offshore Private Banking Activities and Corrective Actions Taken by Banks Our review of 1996 and 1997 examinations conducted under the FRBNY’s private banking initiative found that the most prevalent deficiency related to offshore private banking activities was a lack of documentation on the beneficial owners of PICs and other offshore entities that maintained U.S. accounts. Our review of FRBNY’s and OCC’s 1996 and 1997 examinations and our discussions with examiners and bank officials indicated that banks had started to take corrective actions to address deficiencies related to offshore private banking activities, but further improvements were needed. Secrecy laws to protect the privacy of individual accounts were in effect in all nine jurisdictions, and five of them impose criminal penalties on bank employees found to be in violation of the law (see table 1). Federal Banking Regulators’ Efforts to Work Around Secrecy Barriers Have Limitations U.S. banking regulators are attempting to work around barriers related to offshore secrecy laws, but they remain hampered by limitations associated with these efforts. Impact of Offshore Jurisdictions’ Activities to Combat Money Laundering Remains Uncertain We found that all nine offshore jurisdictions selected for review were engaged in some type of anti-money-laundering activities. The efforts of individual jurisdictions may contribute to the international fight against money laundering. However, it remains uncertain what impact these efforts may have on how the offshore jurisdictions’ own banking sectors operate or on the extent to which their secrecy laws will continue to represent barriers to U.S. and other foreign regulators. Banks Changing Procedures to Provide FRBNY With Access to Beneficial Owner Documentation In spite of their concerns, officials from 11 of the 15 banks surveyed indicated that their banks had changed the way they maintain documentation on the beneficial owners of offshore entities that have U.S. accounts. Alternative Approaches to Regulatory Access to Beneficial Owner Documentation As part of our survey of 15 banks that had been examined by FRBNY during its private banking initiative, we sought the views of bank officials on two approaches that were being considered by the Federal Reserve to regulatory access to documentation on the beneficial owners of PICs and other offshore entities that maintain U.S. accounts.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed U.S. regulatory oversight of private banking activities involving offshore jurisdictions, focusing on: (1) regulatory oversight procedures to ensure that offshore private banking activities are covered by banks' anti-money-laundering efforts; (2) deficiencies identified by banking regulators regarding offshore private banking activities and corrective actions taken by banks; (3) barriers hindering regulatory oversight of offshore private banking activities and efforts to overcome them; and (4) banking industry views regarding regulatory access to documentation pertaining to offshore private banking activities. What GAO Found GAO noted that: (1) federal banking regulators may review banks' efforts to prevent or detect money laundering in their offshore private banking activities during compliance or Bank Secrecy Act examinations; safety and soundness examinations; or during targeted examinations of their private banking activities; (2) to guard against offshore entities that maintain U.S. private banking accounts from being used for money laundering or other illicit purposes, examiners are to look for "know your customer" procedures that enable banks to identify and profile the beneficial owners of private banking accounts; (3) GAO's review of bank examination reports prepared under the Federal Reserve Bank of New York's (FRBNY) private banking initiative showed that the most common deficiency relating to offshore private banking was a lack of documentation on the beneficial owners of private investment companies (PIC) and other offshore entities that maintain U.S. accounts; (4) FRBNY and Office of the Comptroller of the Currency examiners noted other deficiencies during their respective examinations; (5) the bank examinations GAO reviewed, along with discussions with examiners and bank officials, indicated that most banks had started to take corrective actions to address deficiencies related to offshore private banking activities, but improvements were needed; (6) the nine offshore jurisdictions GAO identified for review have secrecy laws that protect the privacy of individual account owners, and five of them impose criminal sanctions for breaches of privacy; (7) moreover, federal banking regulators' attempts to work around restrictions associated with these secrecy laws are sometimes hampered; (8) GAO also found that all nine offshore jurisdictions selected for review were engaged in some type of anti-money-laundering activities; (9) although the efforts of individual jurisdictions may contribute to the international fight against money laundering, it is too early to ascertain their impact on money laundering or the extent to which the offshore jurisdictions' secrecy laws will continue to represent barriers to U.S. and other foreign regulators; (10) GAO surveyed officials from 15 banks that were asked by FRBNY to provide documentation on the beneficial owners of PICs and other offshore entities that maintained U.S. accounts; (11) GAO found that the officials had a number of concerns; and (12) in spite of these concerns, most officials indicated that their banks changed how they maintain documentation on offshore private banking activities in response to FRBNY's request for beneficial owner documentation.

gao_GAO-09-670T

gao_GAO-09-670T_0

The Air Force is responsible for GPS acquisition and is in the process of modernizing GPS to enhance its performance, accuracy, and integrity. Air Force Faces Significant Challenges in Acquiring GPS Satellites In recent years under the IIF program, the Air Force has struggled to successfully build GPS satellites within cost and schedule goals. It encountered significant technical problems that still threaten its delivery schedule and it struggled with a different contractor for the IIF program. As a result of these problems, the cost to complete GPS IIF will be about $1.6 billion—about $870 million over the original cost estimate of $729 million. The launch of the first IIF satellite has been delayed until November 2009—almost 3 years late. First, it is aiming to deploy the GPS IIIA satellites 3 years faster than the IIF satellites. If the Air Force does not meet its schedule goals for development of GPS IIIA satellites, there will be an increased likelihood that in 2010, as old satellites begin to fail, the overall GPS constellation will fall below the number of satellites required to provide the level of GPS service that the U.S. government is committing to providing. Such a gap in capability could have wide-ranging impacts on GPS users, though the exact impact is hard to precisely define, as it would depend on which satellites stop operating. There are measures the Air Force and others can take to plan for and minimize these impacts, which are detailed in our report. New Satellite Capabilities Will Not Be Leveraged Because of Delayed Delivery of Ground and User Equipment Capabilities To maximize the benefit of GPS, the delivery of its ground control and user equipment capabilities must be synchronized with the delivery of the satellites so that the full spectrum of military assets and individual users can take advantage of new capabilities. Our review found that because of funding shifts and diffuse leadership, the Air Force has not been successful in synchronizing satellite, ground control, and user equipment segments. The Air Force used funding set aside for the ground control and user equipment segment to resolve GPS satellite development problems, causing a delay in the delivery of new GPS capabilities. Because leadership for acquisitions across the space community is fragmented, there is no single authority responsible for synchronizing all segments related to GPS. On the other hand, there are clearly other enhancements that could be made to GPS satellites that could serve a variety of vital missions—particularly because of the coverage GPS satellites provide—and there is an expressed desire for GPS to serve as the world’s preeminent positioning, navigation, and timing system. While there is a consensus that DOD and other federal organizations involved with GPS have taken prudent steps to manage requirements and optimize GPS use, we also identified challenges in the areas of ensuring civilian requirements can be met and ensuring that GPS is compatible with other new, potentially competing global space-based positioning, navigation, and timing systems. We also reviewed and analyzed program plans and documentation related to cost, schedule, requirements, program direction, and satellite constellation sustainment, and compared programmatic data to GAO’s criteria compiled over the last 12 years for best practices in system development. To assess coordination among federal agencies and the broader GPS community, we interviewed OSD and DOD officials from offices that manage and oversee the GPS program, officials from the military services, officials from civil departments and agencies, and officials at the U.S. Department of State and at various European space organizations.

Why GAO Did This Study The Global Positioning System (GPS), which provides position, navigation, and timing data to users worldwide, has become essential to U.S. national security and a key tool in an expanding array of public service and commercial applications at home and abroad. The United States provides GPS data free of charge. The Air Force, which is responsible for GPS acquisition, is in the process of modernizing GPS. In light of the importance of GPS, the modernization effort, and international efforts to develop new systems, GAO was asked to undertake a broad review of GPS. Specifically, GAO assessed progress in (1) acquiring GPS satellites, (2) acquiring the ground control and user equipment necessary to leverage GPS satellite capabilities, and evaluated (3) coordination among federal agencies and other organizations to ensure GPS missions can be accomplished. To carry out this assessment, GAO's efforts included reviewing and analyzing program documentation, conducting its own analysis of Air Force satellite data, and interviewing key officials. What GAO Found It is uncertain whether the Air Force will be able to acquire new satellites in time to maintain current GPS service without interruption. If not, some military operations and some civilian users could be adversely affected. (1) In recent years, the Air Force has struggled to successfully build GPS satellites within cost and schedule goals; it encountered significant technical problems that still threaten its delivery schedule; and it struggled with a different contractor. As a result, the current IIF satellite program has overrun its original cost estimate by about $870 million and the launch of its first satellite has been delayed to November 2009--almost 3 years late. (2) Further, while the Air Force is structuring the new GPS IIIA program to prevent mistakes made on the IIF program, the Air Force is aiming to deploy the next generation of GPS satellites 3 years faster than the IIF satellites. GAO's analysis found that this schedule is optimistic, given the program's late start, past trends in space acquisitions, and challenges facing the new contractor. Of particular concern is leadership for GPS acquisition, as GAO and other studies have found the lack of a single point of authority for space programs and frequent turnover in program managers have hampered requirements setting, funding stability, and resource allocation. (3) If the Air Force does not meet its schedule goals for development of GPS IIIA satellites, there will be an increased likelihood that in 2010, as old satellites begin to fail, the overall GPS constellation will fall below the number of satellites required to provide the level of GPS service that the U.S. government commits to. Such a gap in capability could have wide-ranging impacts on all GPS users, though there are measures the Air Force and others can take to plan for and minimize these impacts. In addition to risks facing the acquisition of new GPS satellites, the Air Force has not been fully successful in synchronizing the acquisition and development of the next generation of GPS satellites with the ground control and user equipment, thereby delaying the ability of military users to fully utilize new GPS satellite capabilities. Diffuse leadership has been a contributing factor, given that there is no single authority responsible for synchronizing all procurements and fielding related to GPS, and funding has been diverted from ground programs to pay for problems in the space segment. DOD and others involved in ensuring GPS can serve communities beyond the military have taken prudent steps to manage requirements and coordinate among the many organizations involved with GPS. However, GAO identified challenges in the areas of ensuring civilian requirements can be met and ensuring GPS compatibility with other new, potentially competing global space-based positioning, navigation, and timing systems.

gao_GAO-11-144

gao_GAO-11-144_0

A Wide Variety of Illegal Activities Occurs on Federal Lands, Damaging Natural and Cultural Resources and Threatening Public and Employee Safety As in America’s cities, suburbs, and rural areas, a wide variety of illegal activities occurs on federal lands around the nation, damaging natural and cultural resources and threatening the safety of the public and agency employees. But it is unknown how often these illegal activities occur because agency data do not fully capture the occurrence and magnitude of such activities; similarly, the extent of resource damage and threats to public and agency employee safety is also unknown. These activities may have overlapping effects on natural, cultural, and historical resources; public access and safety; and the safety of agency employees. These officials also identified a variety of impacts that these activities can have on natural and cultural resources and public and employee safety. In addition, theft or vandalism of archaeological and paleontological resources can lead to the loss or destruction of irreplaceable artifacts and deprive scientists of important sources of knowledge. They have generally increased the number of law enforcement officers, directed officers to respond to marijuana cultivation and illegal border activities, assigned officers temporarily to areas needing a greater law enforcement presence, and increased the training required for new law enforcement officers. For example, the Bureau of Land Management has increased the number of its permanent law enforcement officers by about 40 percent since fiscal year 2000, and the Forest Service increased the number of its officers by almost 18 percent over the same period. Similarly, since fiscal year 2006, the Fish and Wildlife Service increased by about 26 percent the number of its permanent officers performing law enforcement duties on a full-time basis. Agencies’ Determination of Law Enforcement Resource Needs and Distribution Does Not Systematically Assess the Risks Posed by Illegal Activities Although land management agencies consider varied information on the occurrence and effects of illegal activities on federal lands, the agencies do not systematically assess the risks posed by such activities when determining their needs for resources and where to distribute them. As a result, when making decisions about needed law enforcement resources and how to distribute those resources, the agencies cannot systematically assess the relative risks faced by the hundreds of individual land management units across the country. Applying the federal risk assessment standard to illegal activities occurring on federal lands therefore suggests that—to respond effectively to these activities and reduce their effect on natural and cultural resources, the public, and agency employees—land management agencies should, at a minimum, (1) comprehensively identify the risks posed by illegal activities on their lands, (2) assess identified risks to determine their magnitude and the likelihood of their occurrence, and (3) use information from these assessments in determining the law enforcement resources they need and how to distribute those resources. Without a more systematic method to assess the risks posed by illegal activities and a stronger framework for managing them, the agencies cannot be assured that they are allocating scarce resources in a manner that effectively addresses the risk of illegal activities on our nation’s federal lands. Recommendation for Executive Action To help the agencies identify the law enforcement resources they need and how to distribute these resources effectively, we recommend that the Secretaries of Agriculture and the Interior direct the Chief of the Forest Service and the Directors of the Bureau of Land Management, Fish and Wildlife Service, and National Park Service, respectively, to each take the following action: Adopt a risk management approach to systematically assess and address threats and vulnerabilities presented by illegal activities on federal lands. Appendix I: Objectives, Scope, and Methodology The objectives of our review were to determine (1) the types of illegal activities occurring on federal lands and the effects of those activities on natural and cultural resources, the public, and agency staff; (2) how the agencies have used their law enforcement resources to respond to these illegal activities; and (3) how the agencies determine their law enforcement resource needs and distribute these resources.

Why GAO Did This Study Four federal agencies--the Forest Service in the Department of Agriculture and the Bureau of Land Management, Fish and Wildlife Service, and National Park Service in the Department of the Interior--are responsible for managing federal lands, enforcing federal laws governing the lands and their resources, and ensuring visitor safety. Illegal activities occurring on these lands have raised concerns that the four agencies are becoming less able to protect our natural and cultural resources and ensure public safety. GAO examined (1) the types of illegal activities occurring on federal lands and the effects of those activities on natural and cultural resources, the public, and agency employees; (2) how the agencies have used their law enforcement resources to respond to these illegal activities; and (3) how the agencies determine their law enforcement resource needs and distribute these resources. GAO reviewed agency documents, interviewed agency officials, and visited or contacted 26 selected agency units. What GAO Found A wide variety of illegal activities occurs on federal lands, damaging natural and cultural resources and threatening the safety of the public and agency employees. These activities can range from traffic violations to theft of natural and cultural resources to violent crimes. The frequency with which these illegal activities occur is unknown, as agency data do not fully capture the occurrence of such activities; similarly, the extent of resource damage and threats to public and agency employee safety is also unknown. These activities can have overlapping effects on natural, cultural, and historical resources; public access and safety; and the safety of agency employees. For example, illegal hunting results in the loss of wildlife and may also reduce opportunities for legal hunting. Also, cultivation of marijuana not only increases the availability of illegal drugs but fouls ecosystems and can endanger public and agency employee safety. And theft or vandalism of archaeological and paleontological resources can result in the loss or destruction of irreplaceable artifacts, diminishing sites for future visitors and depriving scientists of important sources of knowledge. In response to illegal activities occurring on federal lands, agencies have taken a number of actions. For example, three of the four agencies have increased their number of permanent law enforcement officers in recent years. The Bureau of Land Management increased its number of law enforcement officers by about 40 percent since fiscal year 2000, the Forest Service by almost 18 percent during the same period, and the Fish and Wildlife Service by about 26 percent since fiscal year 2006. The agencies have also directed officers to respond specifically to marijuana cultivation and illegal border activities, assigned officers temporarily to areas needing a greater law enforcement presence during certain events and law enforcement operations, and increased the training required for new officers. Although land management agencies consider varied information on the occurrence and effects of illegal activities on federal lands, the agencies do not systematically assess the risks posed by such activities when determining their needs for resources and where to distribute them. While available information helps the agencies to identify many of the risks that illegal activities pose to natural and cultural resources, the public, and agency employees, limitations in this information do not allow officials to fully assess either the magnitude of those risks or the likelihood of their occurrence. As a result, the agencies cannot systematically assess the relative risks faced by the hundreds of individual land management units across the country when making decisions about needed law enforcement resources and how to distribute those resources. Without systematic approaches to assess the risks they face, the agencies may have limited assurance that they are allocating scarce resources in a manner that effectively addresses the risk of illegal activities on our nation's federal lands. What GAO Recommends GAO recommends that the agencies adopt a risk management approach to systematically assess and address threats and vulnerabilities presented by illegal activities on federal lands. In commenting on a draft of this report, the Forest Service and Interior concurred with GAO's recommendation.

gao_GAO-09-460T

gao_GAO-09-460T_0

Lack of training also affects the ability of contract oversight personnel to perform their duties. In a report we issued in July 2008, however, we identified a serious noncompliance with generally accepted government auditing standards at three field audit offices responsible for billions of dollars of contracting. As a result, DCAA cannot assure that these audits provided reliable information to support sound contract management business decisions or that contract payments are not vulnerable to significant amounts of fraud, waste, abuse, and mismanagement. Congress is also emphasizing the need to address government-wide contracting related challenges. While DOD has taken a number of positive steps toward improving its supply chain management, such as consolidating certain inventories in regional hubs and improving transportation management of military freight, it has continued to experience weaknesses in its ability to provide efficient and effective supply support to the warfighter. DOD Has Made Progress in Establishing Key Management Positions for Business Transformation, but Critical Actions Are Still Needed Without sustained leadership and comprehensive strategic planning, DOD’s ability to achieve and sustain measurable progress in addressing high-risk areas and thereby improving its business operations is at risk. DOD’s senior leadership has shown a commitment to transforming business operations and taken many steps to strengthen its management approach, both in response to congressional requirements and on its own accord. The National Defense Authorization Act for Fiscal Year 2008 subsequently codified the position, created a Deputy CMO, directed that CMO duties be assigned to the Under Secretary of each military department, and required DOD to develop a strategic management plan for business operations. These positions include the Deputy CMO and military department CMOs. As DOD continues to develop its approach and carries out planned additional actions, we remain open to the possibility of further progress and that these efforts will have a positive impact. However, because of the current statutory requirements and the roles and responsibilities currently assigned to key positions, it is still unclear whether DOD will provide the long-term sustained leadership needed to address these significant challenges in its business operations. As DOD and DOE compete for resources in a constrained fiscal environment, they can no longer afford to miss opportunities to achieve greater efficiencies and free up resources for higher priority needs. It will be important within the first year of this administration, that the Deputy Secretary of Defense clearly articulate the department’s expectations for this position, clarify the roles, responsibilities, and relationships among all individuals and entities that share responsibility for transforming DOD’s business operations, and establish a strategic planning process to guide efforts and assess progress across the department.

Why GAO Did This Study The Department of Defense (DOD) spends billions of dollars to sustain key business operations intended to support the warfighter. In January, GAO released its 2009 high-risk series update report for the 111th Congress. This series emphasizes federal programs and operations that are at high risk because of vulnerabilities to fraud, waste, abuse, and mismanagement and has also evolved to draw attention to areas associated with broad-based transformation needed to achieve greater efficiency, effectiveness, and sustainability. Of the 30 high-risk areas identified by GAO across government, DOD bears sole responsibility for eight defense specific high-risk areas and shares responsibility for seven other high-risk areas--all of which are related to its major business operations. The Committee asked GAO to provide its views on (1) actions needed to achieve measurable outcomes in DOD's high-risk areas and (2) DOD's progress in strengthening its management approach for business transformation, including establishing the Chief Management Officer (CMO) position. GAO was additionally asked to highlight information regarding the high-risk area related to contract management at the Department of Energy's (DOE) National Nuclear Security Administration. What GAO Found Longstanding weaknesses in DOD's business operations adversely affect the department's economy, efficiency, and effectiveness, and have resulted in a lack of adequate accountability. As a result, DOD continues to experience cost growth in many of these areas and wastes billions of dollars annually that could be freed up for higher priority needs. DOD's senior leadership has shown a commitment to transforming business operations, and taken many steps to address weaknesses. However, additional actions are needed to achieve and sustain progress. DOD has taken some steps to establish the CMO and other key positions, but still lacks some critical elements to strengthen its management approach. The National Defense Authorization Act for Fiscal Year 2008 codified the CMO position, created a Deputy CMO, directed that CMO duties be assigned to the Under Secretary of each military department, and required a strategic plan for business operations. DOD has yet to clearly define the roles, responsibilities, and relationships among key positions, including the Deputy CMO and military department CMOs. Also, its first plan, issued in July 2008, lacks clear goals, objectives, and performance measures. As DOD's approach continues to evolve, GAO remains open to the possibility of further progress. However, because of the roles and responsibilities currently assigned to key positions, it is still unclear whether DOD will provide the long-term sustained leadership needed to address significant challenges in its business operations.

gao_GAO-11-11

gao_GAO-11-11_0

As a result, FCC initiated two programs to make telephone service affordable for low-income households: Lifeline, which discounts monthly service, and Link Up, which discounts the connection charges associated with telephone service installation. Program Participation and Support Payments Have Increased Primarily Due to the Addition of Prepaid Wireless as an Eligible Service, but Barriers to Participation Remain While Program Participation and Payments Were Relatively Stable from 2005 to 2008, both Increased in 2009 Both participation in Lifeline (which we used as an indicator of overall participation in the Low-Income Program), and support payments to ETCs increased in 2009. As shown in figure 1, from calendar years 2005 through 2008, the total number of Lifeline participants was relatively stable—between 6.9 and 7.1 million annually—but increased to 8.6 million in 2009. Likewise, Low-Income support payments to ETCs were relatively stable from 2005 to 2008—between approximately $802 and $823 million annually. However, due to increased program participation, support payments in 2009 increased to approximately $1.025 billion, or 25 percent more than 2008 (see fig.1). FCC Lacks Performance Data to Manage the Program, but Pilot Programs, if Properly Implemented, Could Provide Improved Data to Make Critical Program and Policy Decisions in the Future FCC Has Taken Limited Steps to Develop Performance Goals and Measures for the Low- Income Program FCC’s overarching goal for the Low-Income Program is to increase telephone subscribership among low-income consumers, but it has not quantified this goal. Such performance goals and measures would be very beneficial to FCC in that they would enable FCC to assess changes, such as the addition of prepaid wireless, and more effectively manage the current and future direction of the program. Furthermore, table 4 demonstrates that, to date, FCC’s efforts generally do not align with useful practices we have identified for developing successful performance goals and measures. In the plan, the FCC task force acknowledged that “there is a lack of adequate data to make critical policy decisions regarding how to better utilize funding to promote universal service objectives…as it moves forward on reforms in the plan, it should enhance its data collection and reporting to ensure that the nation’s funds are being used effectively to advance defined programmatic goals.” Further, FCC has acknowledged that as changes such as expanding the Low-Income Program to include broadband service are made to the USF, it may be necessary to develop new metrics for measuring the success of universal service policies. The broadband pilot programs, if conducted, provide FCC with an opportunity to improve its information on the telecommunication needs of and data collection for low-income households. The Low-Income Program Has Established Some Mechanisms to Identify and Evaluate Risks and Monitor Compliance; However the Program Lacks Two Key Features of Effective Internal Controls The Low-Income Program Has Some Mechanisms to Identify and Evaluate Risks and Monitor Compliance USAC has assessed some of the risks and monitors compliance with some of the internal controls of the USF’s four programs, including the Low- Income Program. The Low-Income Program Lacks a Risk Assessment that Considers All Program Vulnerabilities and a Systematic Process for Considering Audit Results When Assessing Internal Controls Although the assessments and activities described above provided mechanisms to identify some risks related to the Low-Income Program, FCC and USAC have not conducted a risk assessment specific to the Low- Income Program that includes consideration of all program vulnerabilities and associated consequences that could help identify opportunities to mitigate those risks. According to USAC officials, each audit report is reviewed and the extent and causes of audit findings are analyzed. Without a systematic process to analyze findings from audits that are of sufficient quantity and scope and appropriately targeted based on risk, FCC and USAC may not have information that could be leveraged to adequately assess compliance with program rules and strengthen the program’s internal controls. A needs assessment and implementation and evaluation plans are critical elements for the proper development of pilot programs. Recommendations for Executive Action To improve the management and oversight of the we recommend that the Chairman of the FCC take the following three actions: clearly define specific performance goals of the program and subsequen develop qua determining the program’s success in meeting its goals, ntifiable measures that can be used by Congress and FCC in conduct a robust risk assessment of the Low-Income Program, and implement a systematic process for considering the results of ETC audits and improper payment assessments in evaluating internal controls of the Low-Income Program. To determine the extent to which program participation and expenditures have changed in the last 5 years and what factors may have affected program participation and support payments, we analyzed participation and disbursement data from USAC and identified key trends including projections for 2010. To identify the mechanisms FCC and USAC used to identify and evaluate risk and monitor compliance with program rules, we reviewed relevant FCC and USAC documents, including comments for the record, fraud risk assessments, and audit reports, and interviewed officials from both entities.

Why GAO Did This Study The Federal Communications Commission's (FCC) Low-Income Program, administered by the Universal Service Administrative Company (USAC) and supported by the Universal Service Fund (USF), provides low-income households with discounts on installation costs for new telephone service and monthly charges for basic telephone service. In this requested report, GAO examined (1) how program participation and support payments have changed over the last 5 years (2005-2009), and factors that may have affected participation; (2) the extent to which goals and measures are used to manage the program; and (3) the extent to which mechanisms are in place to evaluate program risks and monitor controls over compliance with program rules. GAO surveyed state public utility commissions; reviewed key policies, procedures, and rules; and interviewed agency officials and stakeholders. What GAO Found Low-Income Program participation and support payments have increased since 2005 due to many factors. Program participation was stable from 2005 to 2008, from 6.9 million to 7.1 million participants, but increased to 8.6 million in 2009. Likewise, support payments were relatively stable from 2005 to 2008, from $802 million to $823 million annually, before increasing to approximately $1 billion in 2009. The increases in 2009 were primarily due to the addition of a prepaid wireless service option in certain states, which allows program participants to obtain a free wireless handset and an allotment of free minutes each month. The Low-Income Program has no funding cap and USAC officials project its support payments to reach $1.4 billion in 2010. They said participation and payments will likely continue to increase beyond 2010 as prepaid wireless service options become available in additional states. FCC has taken limited steps to develop performance goals and measures for the Low-Income Program, however, these steps do not fully align with useful practices for developing successful goals and measures. While performance goals and measures specific to the Low-Income Program would enable FCC to more effectively manage the program and determine its success, FCC has not made developing such measures a priority and, as a result, has limited insight on the intent of the program and what it is accomplishing. FCC might conduct pilot programs as it considers expanding the Low-Income Program to include broadband service (high-speed Internet access), as proposed by the National Broadband Plan. For the broadband pilot programs, if conducted, it is important that FCC develop a needs assessment and implementation and evaluation plans to increase confidence in the results. If implemented properly, the pilot programs would enable FCC to improve its data collection for low-income households and could help facilitate program and policy decisions for the Low-Income Program in the future. Although FCC and USAC have some mechanisms in place to identify and evaluate risks and monitor compliance with program rules, the Low-Income Program lacks key features of effective internal controls. FCC and USAC primarily use audit findings to monitor compliance with program rules. However, the number and scope of USAC's audits have been limited and there is no systematic process in place to review the findings of those audits that are conducted. Further, FCC and USAC have not conducted a risk assessment specific to the Low-Income Program that includes consideration of all program vulnerabilities, such as the possibility that multiple carriers may claim support for the same telephone line and that households may receive more than one discount, contrary to program rules. According to GAO standards, FCC should identify all risks to meeting the program's goals and objectives and have a process to systematically consider audit findings when assessing the effectiveness of its internal controls. Without these mechanisms, FCC and USAC may not be capturing and addressing programmatic risks and collecting information that could be leveraged to assess compliance with program rules and strengthen internal controls. FCC should (1) clearly define performance goals and develop quantifiable measures that can be used to determine the program's success, (2) conduct a needs assessment and develop implementation and evaluation plans for the proposed low-income pilot programs, (3) conduct a robust risk assessment, and (4) implement a systematic process to consider audit results. FCC agreed with GAO's recommendations.

gao_GAO-15-380T

gao_GAO-15-380T_0

Background The 2012 act established numerous responsibilities for FirstNet, most of which relate directly to developing the public safety network. The 2012 act also required FirstNet to establish a standing public safety advisory committee to assist it in carrying out FirstNet’s responsibilities and consult with federal, regional, state, local, and tribal jurisdictions on developing the network. The 2012 act provides $7 billion from these proceeds to FirstNet for buildout of the network, and requires FirstNet to become self-funding beyond this initial $7 billion by generating revenue through user fees and other sources. networks will be incorporated into its nationwide network, and has noted that various factors could affect this determination. FirstNet Is Making Progress Meeting Responsibilities but Lacks Certain Elements of Effective Internal Controls FirstNet Is Making Progress Carrying Out Statutory Responsibilities Our ongoing work indicates that FirstNet has made progress carrying out its statutory responsibilities in three areas—(1) establishing its organizational structure, (2) planning the public safety network, and (3) consulting with stakeholders—but could face challenges in each of these areas. Stakeholders we spoke with and surveyed for our ongoing work expressed concern that organizational issues have slowed FirstNet’s progress, and could continue to do so. However, numerous stakeholders we interviewed cited upcoming difficulties. For example, they noted that deciding the level of network coverage and security, working out agreements for use of existing infrastructure, and navigating state regulations will be difficult issues to address moving forward. An internal control system that is not based on complete risk assessments (that is, assessments that incorporate these elements) could lead to FirstNet responding to risks in a reactive manner and could hinder FirstNet’s ability to achieve its objectives while maximizing use of its available resources. Nonetheless, absent Standards of Conduct, we are concerned that FirstNet may not be able to address deviations in conduct and performance and take corrective actions in a timely manner. FirstNet Faces Difficult Decisions in Determining How to Pay for a Nationwide Public Safety Network Estimated to Cost Billions Cost of a Public Safety Network Estimated to Be at Least $12 Billion over the First 10 Years Various entities have estimated the cost to construct and operate a nationwide network for public safety from a low of $12 billion to a high of between $34 and $47 billion, over the first 10 years. Various Factors Will Influence Cost of FirstNet’s Public Safety Network Our preliminary analysis indicates that cost estimates notwithstanding, various factors will influence the cost of constructing and operating FirstNet’s public safety network, including (1) the business model used, especially the extent of commercial partnerships; (2) use of existing infrastructure; (3) efforts to ensure network reliability; and (4) network coverage. FirstNet Faces Difficult Decisions about User Fees and Commercial Partnerships in Determining How to Become Self-Funding Our preliminary analysis suggests that, although FirstNet has various revenue options that it is authorized to use to become self-funding, it is unclear how FirstNet will use those authorities. As the cost estimates above illustrate, FirstNet’s network will likely cost tens of billions of dollars to construct and initially operate. To meet the costs of building and maintaining the network, the 2012 act authorizes FirstNet to generate revenue through user fees and commercial partnerships, the latter of which can involve secondary use of the network for non-public safety services. Widespread network coverage can attract more users, and thus user fee revenue, but is expensive to construct and maintain. Under the 2012 act, FirstNet can receive payment for the use of the public safety network’s capacity by non-public safety users as well as use of the network’s infrastructure. FirstNet Has Processes in Place to Identify Early Builder Project Lessons but Has Not Developed a Written Evaluation Plan Our preliminary results indicate that FirstNet has taken steps to collect and evaluate information and lessons learned from the early builder projects, but could do more to ensure that the information and lessons are properly evaluated. Additionally, FirstNet intends to gain knowledge from the projects through contractors who have been assigned to each project to collect and log formal and informal lessons, and through weekly meetings FirstNet officials told us they hold. We have previously found that a well-developed evaluation plan for projects like the early builder projects can help ensure that agencies obtain the information necessary to make effective program and policy decisions. Given that the early builder projects are doing on a regional and local level what FirstNet must eventually do on a national level, a complete evaluation plan that includes a detailed data-analysis plan could play a key role in FirstNet’s strategic planning and program management, providing feedback on both program design and execution.

Why GAO Did This Study Public safety officials rely on thousands of separate radio systems to communicate during emergencies, which often lack interoperability, or the ability to communicate across agencies and jurisdictions. The 2012 act created FirstNet to establish a nationwide, interoperable, wireless broadband network for public safety use. In doing so, the act established numerous responsibilities for FirstNet, provided $7 billion from spectrum auctions proceeds for the network's construction, and required FirstNet to be self-funding beyond this initial allocation. As part of the effort, FirstNet is working with five “early builder projects” that have permission to build local and regional interoperable public-safety broadband networks. This statement is based on preliminary information from GAO's ongoing review of FirstNet. This statement addresses (1) FirstNet's progress carrying out its responsibilities and establishing internal controls, (2) how much the network is estimated to cost and how FirstNet plans to become self-funding, and (3) what lessons can be learned from the early builder projects. GAO reviewed relevant FirstNet documentation and public-safety network cost estimates recommended by agency officials and experts; surveyed the state-designated FirstNet contact in 50 states, 5 territories, and the District of Columbia; and interviewed FirstNet officials and public safety and wireless industry stakeholders selected for their telecommunications and public safety experience, among other things. What GAO Found GAO's ongoing work has found that the First Responder Network Authority (FirstNet) has made progress carrying out the responsibilities established in the 2012 Middle Class Tax Relief and Job Creation Act (the 2012 act) but lacks certain elements of effective internal controls. FirstNet has made progress establishing an organizational structure, planning the nationwide public-safety broadband network, and consulting with stakeholders. Nevertheless, stakeholders GAO contacted cited upcoming issues, such as deciding the level of network coverage, which will be difficult for FirstNet to address as it continues to carry out its responsibilities. With respect to internal controls, FirstNet has begun establishing policies and practices consistent with federal standards, but it has not fully assessed its risks or established Standards of Conduct . Given that FirstNet faces a multitude of risks to achieve its complex objectives, fully assessing risks would help FirstNet respond to risks in a proactive way. Developing standards of conduct would help FirstNet address conduct and performance issues in a timely manner. A nationwide public-safety broadband network is estimated to cost billions of dollars, and FirstNet faces difficult decisions determining how to fund the network's construction and ongoing operations. Various entities have estimated the cost to construct and operate such a network from $12 to $47 billion over the first 10 years. The actual cost of FirstNet's network will be influenced by FirstNet's (1) business model, especially the extent of commercial partnerships; (2) use of existing infrastructure; (3) efforts to ensure network reliability; and (4) network coverage. For example, the cost of the network will likely increase if FirstNet does not utilize commercial partnerships and at least some existing infrastructure. The 2012 act provides FirstNet $7 billion to establish the network. To become self-funding, FirstNet is authorized to generate revenue through user fees and commercial partnerships, the latter of which can involve secondary use of the network for non-public safety services. However, GAO's ongoing work suggests that FirstNet faces difficult decisions in determining how to best utilize these revenue sources. For instance, widespread network coverage can attract more users, and thus user fee revenue, but is expensive to construct and maintain, especially in rural areas. FirstNet has taken steps to collect and evaluate information and lessons from the five “early builder projects” that are developing local and regional public-safety networks, but could do more to ensure that it properly evaluates and incorporates these lessons. For example, FirstNet has asked the projects to report on the experiences of their networks' users and has assigned contractors to collect and log lessons. However, preliminary results indicate that FirstNet does not have a plan that clearly articulates how it will evaluate those experiences and lessons. GAO has previously found that a well-developed evaluation plan for projects like these can help ensure that agencies obtain the information necessary to make effective program and policy decisions. Given that the early builder projects are doing on a local and regional level what FirstNet must eventually do nationally, an evaluation plan can play a key role in FirstNet's strategic planning and program management, providing feedback on both program design and execution and ensuring FirstNet has not missed opportunities to incorporate lessons the projects have identified.

gao_GAO-13-189

gao_GAO-13-189_0

Geothermal energy. BLM Has Received Hundreds of Permit Applications since EPAct 2005 and Authorized 25 Projects Since 2005, BLM has received hundreds of permit applications for utility- scale renewable energy projects. For geothermal projects, 29 applications were submitted, and construction was approved for 8 projects, with the permit-processing time frames ranging from 1 to 4 years. In all, since EPAct 2005, BLM has authorized projects sited on federal lands with the capacity to generate a total of about 5,450 megawatts of electricity, a substantial increase over the number of megawatts the agencies had authorized before passage of the act, contributing to the act’s goal of approving 10,000 megawatts of renewable energy on federal lands by 2015. Of the 416 applications submitted to BLM, rights-of-way were issued for 20 applications covering 17 projects (7 wind and 10 solar). About 60 percent of the applications were ultimately withdrawn by the applicant or denied by BLM. Average permitting time frames differed depending on the type of project application; it took about 3.5 years to complete the permitting process for solar projects and about 2.5 years for wind projects. Agencies Have Taken Several Steps to Foster Renewable Energy Development on Federal Lands since EPAct 2005 Since EPAct 2005, the federal land management agencies—primarily BLM but also other Interior agencies and the Forest Service—have developed and revised policies to address renewable energy development on federal lands, formalized collaboration within and across their respective agencies and with state and local governments, and devoted increased resources to process renewable energy permit applications. One of BLM’s most comprehensive actions taken with respect to renewable energy was the completion of programmatic environmental impact statements for wind, geothermal, and solar energy development, made final in 2005, 2008, and 2012, respectively (see fig. 4). Agencies Have Taken Steps Intended to Improve Coordination Within and Across Agencies Since EPAct 2005, the federal land management agencies have taken steps intended to improve coordination as a way to streamline the permitting process and promote renewable energy development on federal lands in general. In addition to these funds, BLM uses cost- recovery fees, which it is authorized to recover from applicants to pay for processing applications for wind and solar energy development. BLM Plans to Review Its Renewable Energy Activities To help ensure the efficiency and effectiveness of its renewable energy activities, BLM issued a new instruction memorandum in December 2012 aimed at providing BLM offices involved in renewable energy activities with a better understanding of renewable energy policies and regulations and to provide clarity and consistency in the goals of the agency’s renewable energy activities. Factors Related to Permitting, as Well as Market and Other Forces, Affect the Pace of Renewable Energy Development on Federal Lands According to BLM officials’ responses to our questionnaire and interviews we conducted with others, including industry representatives, many factors can affect the pace of renewable energy development on federal lands. Some of these factors relate to the land management agencies’ approval and permitting processes, primarily BLM’s, with BLM respondents and others identifying some factors that facilitate and others that hinder the permitting process. Factors facilitating the permitting process include coordination among the involved parties and resources the agency can devote to permitting; factors that may hinder or slow permitting include the quality of submitted applications and managing for the presence of natural and cultural resources on proposed development locations. BLM questionnaire respondents also identified requirements for state or local laws as factors that can hinder the permitting process. Often, however, renewable energy sources are abundant in areas where transmission lines are scarce—increasing the overall difficulty and cost of supplying renewable energy. Agency Comments and Our Evaluation We provided a draft of this report for review and comment to the Departments of Agriculture, Energy, and the Interior. III), the Department of Agriculture concurred with our findings, while the Departments of Energy and the Interior had no comments. Appendix I: Objectives, Scope, and Methodology This report examines (1) the status of renewable energy permitting on federal land, including time frames for processing permits applied for since the Energy Policy Act of 2005 (EPAct 2005); (2) actions the agencies have taken to facilitate renewable energy development on federal lands, particularly since the passage of EPAct 2005; and (3) factors affecting renewable energy development on federal land.

Why GAO Did This Study Concerns over reliance on imported oil and greenhouse gas emissions from fossil fuel use have led to increased interest in producing electricity from renewable sources, including wind, solar, and geothermal energy. Because federal lands, including those managed by the Departments of Agriculture and the Interior, encompass areas with high renewable energy potential, interest has increased in permitting such activity on those lands. EPAct 2005 includes several provisions intended to increase renewable energy development on federal lands, including goals for approving renewable energy projects. GAO was asked to look at (1) the status of renewable energy permitting on federal land, including time frames for processing permits applied for since EPAct 2005; (2) actions federal land management agencies have taken to facilitate renewable energy development on federal land, particularly since the passage of EPAct 2005; and (3) factors affecting renewable energy development on federal land. To conduct this work, GAO reviewed laws, regulations, and policies; interviewed agency and industry officials; and surveyed BLM staff responsible for processing applications for renewable energy permits on federal lands. GAO is not making any recommendations in this report. In commenting on a draft of this report, the Department of Agriculture concurred with its findings, while the Departments of Energy and the Interior had no comments. What GAO Found Since passage of the Energy Policy Act of 2005 (EPAct 2005), federal land management agencies--primarily the Department of the Interior's Bureau of Land Management (BLM)--have received hundreds of applications for utilityscale renewable energy projects and authorized 25 projects: 7 wind, 10 solar, and 8 geothermal projects. Applications for the majority of projects were withdrawn by the applicants or denied by BLM because of insufficient information. Applications for about one-fourth of the projects are still pending with the agencies. Time frames for permitting wind and solar projects ranged from 1.5 to 4 years from receipt of the initial application to approval of the project, with time frames decreasing for applications submitted in later years. For geothermal projects, permitting time frames ranged from 1 to 4 years from receipt of the initial application to approval for construction. In all, for projects applied for since EPAct 2005, BLM has authorized projects with the capacity to generate a total of about 5,450 megawatts of electricity, contributing to the act's goal of approving projects capable of generating 10,000 megawatts of electricity on public lands by 2015. Federal land management agencies have taken several steps to foster renewable energy development on federal lands since EPAct 2005. Specifically, these agencies have developed or revised policies aimed at, among other things, improving the renewable energy permitting process, formalized coordination within and across agencies and with state and local governments, and devoted increased resources to processing applications for renewable energy permits. One of BLM's most comprehensive actions was the completion of programmatic environmental impact statements for renewable energy development, intended to streamline the permitting process. The agencies also took steps to improve coordination through regularly established meetings and development of memorandums of understanding between federal and state agencies. They also added staff and increased funding for this development. For example, BLM tripled its staff devoted to processing wind and solar energy applications. To help ensure that its actions are achieving their intended purposes, BLM issued an instruction memorandum in December 2012 aimed at increasing the efficiency and effectiveness of its renewable energy permitting process. According to BLM respondents to a GAO questionnaire, industry representatives, and others GAO interviewed, many factors affect the pace of renewable energy development on federal lands. Some of these factors are specifically tied to the agencies' permitting processes, primarily BLM's. For example, respondents cited effective coordination among the involved parties and the amount of resources the agency can devote to permitting as factors that facilitated the permitting process. On the other hand, they often cited problems with the quality of applications received as a factor that may hinder or slow the permitting process. Respondents also cited a number of factors outside of permitting agencies' control that can affect the pace of renewable energy development, such as access to transmission lines (which are often scarce in areas where renewable energy is abundant) and competition from electricity generated using conventional energy sources, such as natural gas.

gao_GAO-13-245

gao_GAO-13-245_0

To accumulate comparative information on budget and staffing resources, we obtained the total budgetary resources and staffing levels for the USDA OIG and for all other OIGs in the cabinet-level departments from the Office of Management and Budget (OMB) for the same 3-year period from fiscal year 2009 through 2011. We then compared the accomplishments, including the number of audits, reported by the USDA OIG in semiannual reports over the 3-year period to USDA’s mission areas, high-risk areas, and management challenges to provide perspective on the extent and nature of the OIG’s oversight coverage. To provide information on the reported quality of the OIG’s oversight, we obtained the results of the most recent external peer reviews of audit and investigative quality, and the results of the internal quality assessment reviews performed by the USDA OIG of its own operations for audits, investigations, and administrative activities for fiscal years 2009 through 2011. We also obtained information on the results of the OIG’s audit of USDA’s compliance with reporting requirements under The Improper Payments Elimination and Recovery Act of 2010 (IPERA 2010), including requirements for reporting on the causes of the agency’s improper payments. The other cabinet-level OIGs combined had an increase of about 6 percent in total budgetary resources during the same period. The USDA OIG had budget authority for 608 full-time equivalent staff (FTE) during fiscal year 2011. The USDA OIG had an 11 percent increase in the number of FTEs from fiscal year 2009 to fiscal year 2011, compared to an overall increase of 14 percent for all other cabinet-level OIGs during the same 3-year period. USDA OIG’s Reported Monetary Accomplishments Compared to Other Cabinet-Level OIGs The USDA OIG reported total monetary accomplishments from audits and investigations of approximately $4.9 billion over fiscal years 2009 through 2011. As a ratio of the OIG’s total budgetary resources over the same 3-year period, the USDA OIG’s estimated average return-on- investment for each budget dollar is about $13.96. By comparison, the estimated 3-year average return-on-investment for all other cabinet-level OIGs combined was $12.63. The USDA OIG’s audit reports show that coverage was provided of high- risk areas identified by GAO, and management challenges identified by the OIG for the 3-year period. USDA OIG Audit and Investigative Quality as Reported by External Peer Reviews and Quality Assurance Reviews The USDA OIG received peer reviews of its audit and investigative quality during the 3-year period. The OIG’s 2012 audit report on USDA’s fiscal year 2011 compliance with improper payment reporting requirements concluded, among other things, that USDA’s component agencies did not consistently assign the appropriate error category when reporting the causes of improper payments and that as a result, USDA’s reported amount of improper payments caused by documentation errors was not accurate. They also concurred with the OIG’s report recommendations to (1) implement a second-party quality review process to ensure that improper payment information reported in the PAR is properly supported, (2) implement controls to ensure that the USDA agencies consistently and accurately categorize improper payment errors, and (3) update USDA guidance for determining the cause of an error to include specific examples related to USDA programs. Agency Comments In written comments on a draft of this report, which are reprinted in appendix II, the USDA Inspector General stated that the report provides an objective and comprehensive view of the office’s oversight of USDA’s programs. We are sending copies of this report to the U.S. Department of Agriculture’s Inspector General and interested congressional committees.

Why GAO Did This Study The USDA OIG plays a critical role in addressing issues of economy, efficiency, and potential fraud involving scarce taxpayer dollars allocated to USDA. GAO was asked to review a number of issues related to the OIG's operations in comparison to other cabinet-level OIGs. The objectives of this report were to provide information on the USDA OIG's (1) budget and staffing levels, (2) reported accomplishments, (3) reported oversight coverage, (4) reported quality of work, and (5) oversight of USDA's reported causes of estimated improper payments. To address these objectives, GAO obtained information over the 3-year period covering fiscal years 2009 through 2011 on the OIG's budget and staff levels and the reported monetary and nonmonetary accomplishments from this work. GAO obtained similar information reported by the OIGs in all cabinet-level departments. In addition, GAO summarized information on the USDA OIG's oversight coverage reported by audits and investigations, and the quality of the OIG's work as reported by peer reviews performed by other OIGs. Also, GAO obtained information on the OIG's audit of USDA's reporting on improper payments. What GAO Found During the 3-year period from fiscal year 2009 through 2011, the U.S. Department of Agriculture (USDA) Office of Inspector General's (OIG) total budgetary resources decreased by about 8 percent. In contrast, the total budgetary resources for all other cabinet-level OIGs increased by approximately 6 percent over the 3-year period. The USDA OIG's authorized full-time equivalent staff (FTE) increased by 11 percent, from 550 to 608, while all other cabinet-level OIGs had a combined increase in authorized FTEs of about 14 percent during the same 3-year period. The USDA OIG had an estimated average return on investment for each budgetary resource dollar received of $13.96 during the 3-year period compared to the other cabinet-level OIGs' average return of $12.63, based on the potential savings from monetary accomplishments reported by audits and investigations. Most of the USDA OIG's return was the result of approximately $4 billion in potential savings resulting from a fiscal year 2011 audit of funds from the American Recovery and Reinvestment Act of 2009 for USDA programs. During the 3-year period the USDA OIG issued 212 audit reports and completed 878 investigations that provided oversight coverage for each of USDA's seven mission areas, high-risk areas identified by GAO, and the management challenges identified by the OIG. With respect to quality, the OIG received peer reviews of its audit and investigative quality from external OIGs, which concluded that the OIG had controls in place to ensure that its audits were performed in accordance with professional auditing standards, and that the OIG's investigations followed applicable professional standards. The OIG's audit of USDA's compliance with reporting requirements for improper payments included a review of the reported root causes. The audit concluded that because of the lack of clear instructions, USDA's component agencies did not consistently categorize the root causes of improper payments. As a result, the OIG concluded that USDA's reporting of the causes of the improper payments was not accurate. The OIG made recommendations, and USDA agreed to implement a second-party review process to help ensure accuracy, implement controls to ensure consistent categorizing of causes, and update guidance for determining the causes. What GAO Recommends GAO is not making specific recommendations in this report. The USDA Inspector General commented that the draft of this report provided an objective and comprehensive review of the OIG.

gao_GAO-08-536

gao_GAO-08-536_0

Privacy is also addressed in the legal framework for the emerging information sharing environment. Issues have largely centered on the Privacy Act’s definition of a “system of records” (any grouping of records containing personal information retrieved by individual identifier), which triggers the act’s protections. In addition, mechanisms to limit use to a specified purpose may be weak. Use Limitation Require agencies to justify the use of key elements of personally identifiable information. Specifically, concerns were raised that the content of these notices and their publication in the Federal Register may not fully inform the public about planned government uses of personal information, for the following reasons: System of record notices may be difficult to understand. Alternatives for Improving Notice to the Public Based on discussions with privacy experts, agency officials, and analysis of laws and related guidance, a number of options exist for addressing the issues associated with improving public notice regarding federal collection and use of personal information. Layering involves providing only the most important summary facts up front—often in a graphically oriented format—followed by one or more lengthier, more narrative versions. Conclusions Current laws and guidance governing the federal government’s collection, use, and disclosure of personal information have gaps and other potential shortcomings in three broad categories: (1) the Privacy Act and E-Government Act do not always provide protections for federal uses of personal information, (2) laws and guidance may not effectively limit agency collection and use of personal information to specific purposes, and (3) the Privacy Act may not include effective mechanisms for informing the public. Matter for Congressional Consideration In assessing the appropriate balance between the needs of the federal government to collect personally identifiable information for programmatic purposes and the assurances that individuals should have that their information is being sufficiently protected and properly used, Congress should consider amending applicable laws, such as the Privacy Act and the E-Government Act, according to the alternatives outlined in this report, including: revising the scope of the laws to cover all personally identifiable information collected, used, and maintained by the federal government; setting requirements to ensure that the collection and use of personally identifiable information is limited to a stated purpose; and establishing additional mechanisms for informing the public about privacy protections by revising requirements for the structure and publication of public notices. We believe that, given the Privacy Act’s controls on the collection, use, and disclosure of personally identifiable information do not consistently protect such information in all circumstances of its collection and use throughout the federal government, amending the act’s definition of a system of records is an important alternative for Congress to consider. Appendix I: Objective, Scope, and Methodology Our objective was to identify major issues regarding whether the Privacy Act of 1974, the E-Government Act of 2002, and related guidance consistently cover the federal government’s collection and use of personal information and incorporate key privacy principles, and in doing so, to identify options for addressing these issues. Additionally, our colleagues at the National Academy of Sciences (NAS) agreed that this selection was appropriate for obtaining an operational perspective on these issues. Privacy: Key Challenges Facing Federal Agencies. Personal Information: Agency and Reseller Adherence to Key Privacy Principles.

Why GAO Did This Study The centerpiece of the federal government's legal framework for privacy protection, the Privacy Act of 1974, provides safeguards for information maintained by federal agencies. In addition, the E-Government Act of 2002 requires federal agencies to conduct privacy impact assessments for systems or collections containing personal information. GAO was asked to determine whether laws and guidance consistently cover the federal government's collection and use of personal information and incorporate key privacy principles. GAO was also asked, in doing so, to identify options for addressing these issues. To achieve these objectives, GAO analyzed the laws and related guidance, obtained an operational perspective from federal agencies, and consulted an expert panel convened by the National Academy of Sciences. What GAO Found Increasingly sophisticated ways of obtaining and using personally identifiable information have raised concerns about the adequacy of the legal framework for privacy protection. Although the Privacy Act, the E-Government Act, and related guidance from the Office of Management and Budget set minimum privacy requirements for agencies, they may not consistently protect personally identifiable information in all circumstances of its collection and use throughout the federal government and may not fully adhere to key privacy principles. Based on discussions with privacy experts, agency officials, and analysis of laws and related guidance, GAO identified issues in three major areas: Applying privacy protections consistently to all federal collection and use of personal information. The Privacy Act's definition of a "system of records" (any grouping of records containing personal information retrieved by individual identifier), which sets the scope of the act's protections, does not always apply whenever personal information is obtained and processed by federal agencies. One alternative to address this concern would be revising the system-of-records definition to cover all personally identifiable information collected, used, and maintained systematically by the federal government. Ensuring that collection and use of personally identifiable information is limited to a stated purpose. According to generally accepted privacy principles of purpose specification, collection limitation, and use limitation, the collection of personal information should be limited, and its use should be limited to a specified purpose. Yet, current laws and guidance impose only the modest requirements in these areas. While, in the post-9/11 environment, the federal government needs better analysis and sharing of certain personal information, there is general agreement that this need must be balanced with individual privacy rights. Alternatives to address this area of concern include requiring agencies to justify the collection and use of key elements of personally identifiable information and to establish agreements before sharing such information with other agencies. Establishing effective mechanisms for informing the public about privacy protections. Another key privacy principle, the principle of openness, suggests that the public should be informed about privacy policies and practices. Yet, Privacy Act notices may not effectively inform the public about government uses of personal information. For example, system-of-records notices published in the Federal Register (the government's official vehicle for issuing public notices) may be difficult for the general public to fully understand. Layered notices, which provide only the most important summary facts up front, have been used as a solution in the private sector. In addition, publishing such notices at a central location on the Web would help make them more accessible.

gao_GAO-05-368

gao_GAO-05-368_0

For the 2003 contract, the current supplier was the only company to submit a proposal. Requirement for U.S. ownership. Two of the barriers to competition that paper manufacturers identified are within BEP’s control, but these barriers—the security requirements for the manufacturing facility and the technology required to insert anticounterfeiting features, such as the security thread—remain because they are essential for currency paper. We agree with BEP that some of the remaining barriers are outside its control; however, we found that BEP’s outreach to paper manufacturers is limited and is generally done in conjunction with its other procurements. For example, BEP does not conduct industry briefings for its potential suppliers. BEP Took Several Steps, Consistent with the FAR, to Determine Fair and Reasonable Prices for Currency Paper The FAR states that an agency’s contracting officer is responsible for evaluating the reasonableness of the offered prices to ensure that the final price is fair and reasonable. Consequently, BEP used price analysis—a comparison of the two proposals—as a basis for determining that the 1999 contract prices, which totaled $207 million, were fair and reasonable. For the 2003 contract, BEP determined that adequate price competition did not exist because, although several companies requested copies of the solicitation, only the current supplier submitted a proposal. Establishing a technical analysis team to examine various aspects of the current supplier’s manufacturing process that affect price. BEP Has Taken Some Action to Address Uneconomical Contracting Practices Identified in 1998 In 1998 we reported that two BEP procurement practices contributed, or could contribute, to higher-than-necessary currency paper costs. This thread is inserted into all U.S. currency denominations greater than $2. These increased costs would result from, among other things, high capital equipment costs for a new supplier, according to BEP. Analyzing the advantages and disadvantages of obtaining a second supplier would help BEP determine if a second supplier would be cost effective over the long term, weigh the benefits of obtaining a second supplier against the potential security and quality concerns associated with a second supplier, and ensure that BEP can maintain an adequate supply of currency paper. Finding itself relying on a single supplier in the early 1990s for the clad metal it uses to make coins, the U.S. Mint weighed the advantages and disadvantages of obtaining a second supplier and decided that the advantages outweighed the disadvantages. Although BEP concluded in its August 1996 currency paper study that competition was not immediately feasible because the current supplier was the only domestic source of currency paper that could meet its requirements, BEP has not weighed the advantages and disadvantages of obtaining a second supplier—including the impact on the cost, security, quality, and adequacy of the currency paper supply—since 1996. Recommendations for Executive Action To obtain the views of paper manufacturers on barriers to competition and to determine if there is a need for a second supplier of currency paper, we are recommending that the Secretary of the Treasury direct the Director of BEP to take the following two actions: Before issuing solicitations for currency paper contracts in the future, increase outreach activities with paper manufacturers to allow them to provide their views on the barriers to competition, identify the steps BEP should take to address these barriers, and comment on the solicitations. Arrange for postaward audits of the current supplier’s costs. Objectives, Scope and Methodology To determine the steps the Bureau of Engraving and Printing (BEP) took to encourage competition for the 1999 and 2003 currency paper contracts, we interviewed BEP officials and reviewed the changes BEP made to the contract solicitations. To determine the steps BEP took to determine that the prices it paid for currency paper under the 1999 and 2003 contracts were fair and reasonable, we reviewed documents in BEP’s contract files for the 1999 and 2003 contracts.

Why GAO Did This Study For over 125 years, the Bureau of Engraving and Printing (BEP), within the Department of the Treasury, has relied on a single contractor to supply the paper for U.S. currency. Such a long-term contracting relationship could contribute to higher costs and other risks. Another federal agency that relied on a single contractor, the U.S. Mint, decided to obtain a second supplier for coin metal. In solicitations for currency paper contracts in 1999 and 2003, BEP took steps to address barriers to competition that GAO had identified in 1998 through a survey of paper manufacturers. This report updates GAO's 1998 report using data from a second survey. It addresses (1) the changes BEP made to encourage competition and the results of its efforts, (2) the steps BEP took to ensure that it paid fair and reasonable prices, and (3) the analysis BEP has done of the advantages and disadvantages of obtaining a second supplier. What GAO Found To encourage competition for the 1999 and 2003 contracts, BEP modified its solicitations to, among other things, indicate that it would provide bidders with the security thread that is inserted into most currency paper and extend the time for initial deliveries. For the 1999 contract, one additional supplier submitted an initial proposal but later withdrew it, and for the 2003 contract, only the current supplier submitted a proposal. This company remains the sole supplier of U.S. currency paper. According to paper manufacturers, several barriers to competition remain, including the high capital costs of and technological requirements for producing currency paper. BEP said it has not addressed these barriers because the requirements are either essential to preserve the security of currency paper or they are outside BEP's control (e.g., anticounterfeiting features are recommended by a federal committee). While some of the remaining barriers are outside BEP's control, BEP's outreach to paper manufacturers has been limited. For example, BEP does not meet regularly with them, as the Departments of Defense and Homeland Security meet with potential suppliers of their procurements, to identify additional steps that could be taken to encourage competition. To the extent that BEP has reached out to paper manufacturers, it has generally done so in conjunction with other BEP procurements. For the contracts awarded in 1999 and 2003, BEP took several steps, consistent with the Federal Acquisition Regulation's requirements, to determine that the prices it paid under these contracts were fair and reasonable. For the 1999 contract, it used price analysis (a comparison of two proposals) to determine that the two proposals it initially received were fair and reasonable. This analysis was sufficient because BEP had determined that adequate price competition existed. For the 2003 contract, BEP performed several cost analysis activities to ensure that the final agreed-to price was fair and reasonable, since the current supplier was the only company that submitted a proposal. For example, BEP obtained certified cost and pricing data from the current supplier, requested an audit review of the current supplier's price proposal, and established a technical analysis team to examine steps in the current supplier's manufacturing process that affect price. BEP also arranged for postaward audits of the current supplier. BEP has not analyzed the advantages and disadvantages of obtaining a second supplier of currency paper since 1996. At that time, it concluded that the costs would outweigh the benefits, but it did not analyze the long-term effects. As a result, it does not know how a second supplier would affect the costs, quality, security, and supply of currency paper over time. Analyzing the advantages and disadvantages of obtaining a second supplier would help BEP determine the need for one.

gao_GAO-07-626T

gao_GAO-07-626T_0

Under the NIPP, the sector-specific agencies, in coordination with their respective government and private sector councils, are responsible for developing individual protection plans for their sectors that, among other things, (1) define the security roles and responsibilities of members of the sector, (2) establish the methods that members will use to interact and share information related to protection of critical infrastructure, (3) describe how the sector will identify its critical assets, and (4) identify the approaches the sector will take to assess risks and develop programs to protect these assets. Sectors Have Established Government and Sector Councils, Which are Generally Representative of their Sectors; Council Activities Have Varied Depending on Their Maturity and Other Characteristics All of the sectors have established government councils, and voluntary private sector councils under the NIPP model have been formed for all sectors except transportation systems. Because some of the councils are newer than others, council activities vary based on the council’s maturity and other characteristics, with some younger councils focusing on establishing council charters, while more mature councils focused on developing protection strategies. For example, prior to the development of the NIPP, DHS and the Department of Agriculture had (1) established a government coordinating council for the agriculture and food sector to coordinate efforts to protect against agroterrorism, and (2) helped the agriculture and food sector establish a private sector council to facilitate the flow of alerts, plans, and other information. This provides the councils opportunities to build the relationships needed to help ensure critical infrastructure protection efforts are comprehensive. However, these representatives also most commonly identified several key factors that posed challenges to forming some of the councils, including (1) difficulty establishing partnerships with DHS because of issues including high turnover of its staff and DHS staff who lacked knowledge about the sector to which they were assigned, (2) hesitancy to provide sensitive information or industry vulnerabilities to the government due to concerns that the information might be publicly disclosed, and (3) lack of long-standing working relationships within the sector or with federal agencies. In addition, according to government and sector council representatives, sectors in which the industries have been highly regulated by the federal government—such as the banking and finance sector as well as the commercial nuclear sector—were already used to dealing with the federal government on many issues. Continuity of government staff is a key ingredient in developing trusted relationships with the private sector. In this report, we assessed the status of DHS efforts to implement the protected critical infrastructure information (PCII) program created pursuant to the Homeland Security Act. To date, the level of collaboration between sector-specific agencies and the sector councils in developing the sector-specific plans has varied—ranging from soliciting stakeholder comments on a draft to jointly developing the plan. Despite these differences, according to DHS Infrastructure Protection officials, all the sectors submitted their plans to DHS by the December 2006 deadline and DHS and other stakeholders are in the process of reviewing them. DHS Needs to Fulfill Key Cybersecurity Responsibilities and Address Challenges and GAO Recommendations To some extent, all sectors depend on cyber infrastructure to operate, such as using computers to control access at nuclear facilities. Moreover, in 2006, we reported that DHS had begun a variety of initiatives to fulfill its responsibility to develop an integrated public/private plan for Internet recovery, but that these efforts were not complete or comprehensive. The Assistant Secretary has set priorities that include (1) preparing for and deterring attacks by encouraging entities, through implementation of the sector specific plans, to systematically assess their network vulnerabilities and take steps to fix them, (2) responding to cyber attacks of potentially national significance by leveraging operational expertise and building situational awareness and incident response capabilities of the government and private sector; and (3) building awareness about the responsibilities for securing networks across the public and private sectors. While DHS has made progress in addressing some of these recommendations many things remain to be done. Concluding Observations Critical infrastructure protection is vital to our national security, economic vitality, and public health. Yet a decade after focusing on improving our ability to protect our key assets and resources, progress has been mixed, as Katrina demonstrated. DHS has moved out by issuing the National Infrastructure Protection Plan as a guiding framework for a national effort, and is providing contractor, technical, and analytical support to sectors, among other things, to encourage progress. Thus, fulfilling its statutory responsibilities for ensuring the nation’s critical infrastructure is protected will be a long-term commitment for DHS.

Why GAO Did This Study As Hurricane Katrina so forcefully demonstrated, the nation's critical infrastructures--both physical and cyber--have been vulnerable to a wide variety of threats. Because about 85 percent of the nation's critical infrastructure is owned by the private sector, it is vital that the public and private sectors work together to protect these assets. The Department of Homeland Security (DHS) is responsible for coordinating a national protection strategy including formation of government and private sector councils as a collaborating tool. The councils, among other things, are to identify their most critical assets, assess the risks they face, and identify protective measures, in sector-specific plans that comply with DHS's National Infrastructure Protection Plan (NIPP). This testimony is based primarily on GAO's October 2006 sector council report and a body of work on cyber critical infrastructure protection. Specifically, it addresses (1) the extent to which these councils have been established, (2) key facilitating factors and challenges affecting the formation of the council, (3) key facilitating factors and challenges encountered in developing sector plans, and (4) the status of DHS's efforts to fulfill key cybersecurity responsibilities. GAO has made previous recommendations, particularly in the area of cybersecurity that have not been fully implemented. Continued monitoring will determine whether further recommendations are warranted. What GAO Found To better coordinate infrastructure protection efforts as called for in the NIPP, all 17 critical infrastructure sectors have established their respective government councils, and nearly all sectors have initiated their voluntary private sector councils. But council progress has varied due to their characteristics and level of maturity. For example, the public health and healthcare sector is quite diverse and collaboration has been difficult as a result; on the other hand, the nuclear sector is quite homogenous and has a long history of collaboration. As a result, council activities have ranged from getting organized to refining infrastructure protection strategies. Ten sectors, such as banking and finance, had formed councils prior to development of the NIPP and had collaborated on plans for economic reasons, while others had formed councils more recently. As a result, the more mature councils could focus on strategic issues, such as recovering after disasters, while the newer councils were focusing on getting organized. Council members reported mixed views on what factors facilitated or challenged their actions. For example, long-standing working relationships with regulatory agencies and within sectors were frequently cited as the most helpful factor. Challenges most frequently cited included the lack of an effective relationship with DHS as well as private sector hesitancy to share information on vulnerabilities with the government or within the sector for fear the information would be released and open to competitors. GAO's past work has shown that a lack of trust in DHS and fear that sensitive information would be released are recurring barriers to the private sector's sharing information with the federal government, and GAO has made recommendations to help address these barriers. DHS has generally concurred with these recommendations and is in the process of implementing them. All the sectors met the December 2006 deadline to submit their sector-specific plans to DHS, although the level of collaboration between the sector and government councils on the plans, which the NIPP recognizes as critical to establishing relationships between the government and private sectors, varied by sector. Issuing the NIPP and completing sector plans are only first steps to ensure critical infrastructure is protected. Moving forward to implement sector plans and make progress will require continued commitment and oversight. While DHS has initiatives under way to fulfill its many cybersecurity responsibilities, major tasks remain to be done. These include assessing and reducing cyber threats and vulnerabilities and coordinating incident response and recovery planning efforts. Effective leadership by the Assistant Secretary for Cyber Security and Telecommunications is essential to DHS fulfilling its key responsibilities, addressing the challenges, and implementing recommendations.

gao_HEHS-98-79

gao_HEHS-98-79_0

However, Medicare pays physicians by procedure, such as a skin biopsy. The key aspects of HCFA’s approach were the use of (1) expert panels to estimate direct costs, (2) a series of HCFA’s own methods to adjust the direct cost estimates, and (3) another HCFA method to allocate indirect expenses to procedures. After considering this option and the limitations of survey data already gathered by other organizations, HCFA decided to use expert panels to estimate the relative resources associated with medical procedures. Various medical specialty and physician groups, however, have criticized this methodology. Other Methods for Estimating Direct Expenses Have Limitations Several medical specialty groups have recommended that HCFA use actual practice expense data, rather than the CPEP process, as the basis for estimating direct expenses and calculating RVUs. Given HCFA’s time and resource constraints, using surveys and on-site data gathering methodologies as the primary means to estimate the direct expenses associated with procedures is not practicable. Gathering some direct expense data through either surveys or on-site reviews would enable HCFA to identify any egregious problems with the direct expense relative rankings and help focus its efforts on correcting those problems. CPEP Estimates Need Adjustment, but One of HCFA’s Adjustments Raises Questions HCFA staff believed that each of the CPEPs developed reasonable relative rankings of its assigned procedures but found that for some procedures the labor estimates often varied considerably across CPEPs for the same procedures. III provides more detailed information regarding HCFA’s linking methodology and its limitations.) While beneficiary access to care has remained very good since implementation of the fee schedule in 1992, the cumulative effect of prior and proposed changes to the fee schedule will need to be monitored to ensure that Medicare beneficiaries are not denied access to needed care because of lower payment levels. Not only is this method supported by medical researchers and PPRC, but other options for developing these estimates have practical limitations that preclude their use as reasonable alternatives. Collecting actual data on key procedures from a limited number of physician practices through surveys or on-site reviews during the 3-year phase-in period would enable HCFA to check the reliability of the CPEP data and test the assumptions HCFA used for its adjustments. Information supplied by some physician groups indicates, however, that there may have been a shift in hospital and physician practices that Medicare has not recognized in its methods for reimbursing nonphysician clinical labor expenses. HCFA’s use of physician work, direct practice expense, and malpractice expense RVUs is an acceptable option for assigning indirect expenses to procedures since these factors likely reflect the drivers of indirect expenses. For example, HCFA could use specialty-specific indirect expense ratios, based on the SMS survey data. The potential impact of the proposed new fee schedule allowances for physician practice expenses on beneficiary access to care is unknown at this time. Since these three aspects of HCFA’s methodology are interrelated, HCFA should determine how changes in one aspect of the methodology, such as reclassifying some labor from direct to indirect expenses, affect other aspects of the methodology, such as the specification of the regression model to link the panels’ estimates of administrative labor and the method used to allocate indirect expenses. The Practice Expense Coalition said that the fee schedule revisions may cause other changes in medical practice. 2. HCFA found that the panel estimates for a redundant code often differed. 1.

Why GAO Did This Study Pursuant to a legislative requirement, GAO reviewed the Health Care Financing Administration's (HCFA) proposed practice expense revisions and its ongoing efforts to refine its data and methodologies, focusing on: (1) HCFA's approach for estimating the practice expenses directly associated with each medical service or procedure; (2) two methodologies HCFA used to adjust the direct expense estimates; (3) practice expenses excluded or limited by HCFA; (4) HCFA's method for assigning indirect practice expenses to each medical service or procedure; and (5) the potential impact of the new fee schedule allowances on beneficiary access to care. What GAO Found GAO noted that: (1) HCFA used expert panels--consisting of physicians, administrators, and nonphysician clinicians--to estimate the direct labor and other direct practice expenses associated with medical service or procedures; (2) GAO explored alternative primary data gathering methods, such as mailing out surveys, using existing survey data, and gathering data on-site; (3) GAO concluded that each of those methods has practical limitations that preclude its use as a reasonable alternative to HCFA's use of expert panels; (4) gathering data directly from a limited number of physician practices would, however, be a useful external validity check on HCFA's practice expense rankings and would also help HCFA identify refinements needed during phase-in of the fee schedule revision; (5) the panels' estimates of direct practice expenses needed several types of adjustment; (6) GAO found problems, however, with one of HCFA's adjustment methods, which substantially altered the practice expense rankings; (7) specifically, HCFA used a statistical model to reconcile significant differences among various panels' estimates for the same procedure; (8) GAO identified technical weaknesses in the model that may have biased the estimates; (9) HCFA excluded some physician practice expenses from the panels' estimates because it believes that Medicare pays for those expenses through other mechanisms; (10) physician groups, however, argue that shifts in medical practices have resulted in physicians absorbing these expenses; (11) HCFA also placed upper limits on the panels' administrative and clinical labor estimates, and although these limits seem reasonable to HCFA, they are not supported by any data or analysis; (12) HCFA's method for assessing indirect expenses to medical procedures is acceptable--there is no single best way on the basis of each procedure's total relative value units (RVU) for physician work, direct practice expenses, and malpractice expenses, factors that likely reflect some of the variation on the ratio between direct and indirect expenses among physician specialties; (13) however, the survey data collected by a physician organization might provide more straightforward estimates of specialty--specific indirect cost ratios, and that organization is willing to expand its survey for HCFA's use; and (14) the 1992 implementation of the fee schedule resulted in lower Medicare payments to some medical specialties, but subsequent studies found that Medicare beneficiaries' access to care remained very good.

gao_GAO-14-381

gao_GAO-14-381_0

American Samoa’s real gross domestic product (GDP) and population have both declined in recent years. Earnings. Earnings analysis based on American Samoa tax, GAO questionnaire, and consumer price data show that, from 2011 to 2012, average inflation-adjusted earnings of those employed in American Samoa fell by 2 percent. The two employers attributed all of these plans to a moderate or large extent to the minimum wage increases, but also to increased utility and material costs and business factors. CNMI Earnings, Employment, and Status of Key Industries The minimum wage in the CNMI has increased five times since 2007, with the most recent increase on September 30, 2012, bringing the minimum wage to $5.55 per hour. Hotels representing the majority of all workers employed by questionnaire respondents took cost-cutting actions and raised prices from 2010 to 2013. Although employers attributed a number of actions to the minimum wage increases, they also attributed them to other factors, such as increased costs and changes to U.S. immigration law. Hotels representing 90 percent or more of all workers employed by questionnaire respondents stated that they planned to introduce labor or cost-saving strategies and raise prices in the next 18 months, with hotels representing all or almost all workers employed by questionnaire respondents attributing that plan to minimum wage increases to a moderate or large extent. While acknowledging the recent upturn in tourism, industry representatives characterized the growth as an opportunity to recover from several down years and reinvest in their properties. Appendix I: Objectives, Scope, and Methodology This report updates our previous reports on the impact of minimum wage increases in American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI) and discusses for each territory (1) changes in employment and earnings and (2) changes in key industries since the most recent federal minimum wage increase and since the increases began. Application of Federal Minimum Wage Law to American Samoa and CNMI In 2007, the United States enacted legislation that incrementally applies the U.S. minimum wage to American Samoa and the CNMI. The most recent minimum wage increase in American Samoa was on May 25, 2009. In 2010, the U.S. enacted a law delaying the scheduled American Samoa minimum wage increases for 2 Further changes to the years, providing for no increase in 2010 or 2011. law in 2012 provided for no increases in 2012, 2013, and 2014 and changed the interval of the increases from every year to every 3 years.Under current law, therefore, the next minimum wage increase will occur on September 30, 2015, and the minimum wage in the American Samoa tuna canning industry will reach the current U.S. minimum wage of $7.25 on September 30, 2027. 1). 3). The inflation-adjusted earnings of minimum wage cannery workers who retained their jobs and work hours fell by about 4 percent from 2011 to 2012 (a period that did not include a minimum wage increase) and also decreased by about 5 percent overall from 2007 to 2012. Tuna Canning Employers Cut Costs Due to Minimum Wage Increases and Other Factors Two employers in the tuna canning industry in American Samoa reported in our questionnaire that they had taken cost-cutting actions from June 2010 to June 2013 including labor- and cost-saving strategies and reduced overtime. After 4 years of consistent decline, the CNMI real GDP has remained relatively flat since 2009 (see fig. CNMI Employment Fell from 2011 to 2012 and Has Decreased Substantially Since 2006; Average Inflation-Adjusted Earnings Have Declined CNMI Employment Decreased Substantially from 2006-2012 Overall CNMI employment dropped every year from 2006 to 2012, according to CNMI tax data. Hotels representing nearly all workers employed by questionnaire respondents also attributed their cost-cutting actions to a moderate or large extent to increased utility, material, and transportation costs. As occupancy has increased in recent years, room rates have also risen.

Why GAO Did This Study In 2007, the United States enacted a law incrementally raising the minimum wages in American Samoa and the CNMI until they equal the U.S. minimum wage. American Samoa's minimum wage increased by $.50 per hour three times, and the CNMI's four times before legislation delayed the increases amid concerns that they would have a detrimental effect on the American Samoa and CNMI economies. The most recent increase in American Samoa occurred on May 25, 2009. The next is scheduled for September 30, 2015, with additional increases every 3 years thereafter. Under current law, the minimum wage in American Samoa's tuna canning industry will equal the current U.S. minimum wage of $7.25 in 2027. The CNMI's most recent increase occurred on September 30, 2012. The next increase is scheduled for September 30, 2014, with additional increases in 2016 and annually thereafter until it reaches the U.S. minimum wage. GAO is mandated to report in 2014, and every 3 years thereafter, on the impact of the minimum wage increases. This report updates our previous reports and discusses for each territory (1) changes in employment and earnings and (2) changes in key industries since the most recent federal minimum wage increase and since the increases began. GAO reviewed local and federal earnings information; collected data from employers in key industries through a questionnaire and from employers and workers through discussion groups and interviews during visits to each area. American Samoa's government said GAO captured the consensus to postpone a 2015 minimum wage increase. CNMI's government said GAO captured the general economic condition of the CNMI. What GAO Found American Samoa employment and earnings have decreased since 2007, but employment increased slightly from 2011 to 2012. Since 2005, the American Samoa economy has had a flat or declining real gross domestic product (GDP). Average inflation-adjusted earnings of those employed fell by 5 percent overall from 2007 to 2012 and by 2 percent from 2011 to 2012. One of American Samoa's two tuna canneries closed in 2009. However, a new company is renovating the closed cannery and plans to re-open it in 2015. Two employers in the tuna canning industry took cost-cutting actions from 2010 to 2013, including labor-saving strategies and reduced overtime. The employers attributed to a moderate or large extent all but one of their actions to minimum wage increases, but also to increased utility and material costs. Two of the three employers planned more cost-cutting actions and attributed those plans to a moderate or large extent to minimum wage increases, but also to other increased costs and business factors. Commonwealth of the Northern Mariana Islands (CNMI) employment and earnings have decreased overall since 2006, but earnings increased slightly from 2011 to 2012. After falling rapidly from 2005 to 2009, CNMI real GDP remained relatively stagnant from 2009 to 2012. Average inflation-adjusted earnings of those employed fell by about 2 percent overall from 2006 to 2012 but rose by 1 percent from 2011 to 2012. CNMI hotel occupancy and room rates have risen in recent years, but industry representatives we spoke with characterized the recent growth as an opportunity to recover and reinvest in their properties. Hotels representing the majority of all workers employed by respondents to GAO's questionnaire attributed past cost-saving strategies and price increases to minimum wage increases. Hotels also attributed their actions to other increased costs and changes to U.S. immigration law, which reduce the number of available permits for foreign workers in the CNMI. Hotels representing 90 percent or more of all workers employed by questionnaire respondents attributed plans for further cost-cutting to minimum wage increases, but also to increasing utility, material, and transportation costs.

gao_GGD-96-128

gao_GGD-96-128_0

The growth in Federal Reserve expenses was caused by significant increases that occurred in expenses for bank supervision and regulation, personnel compensation, and extensive automation modernization and consolidation. The Increase in the Cost of the Federal Reserve Outpaced Inflation and Total Federal Discretionary Spending From 1988 to 1994, as shown in figure 2.1, Federal Reserve operating expenses increased from $1.36 billion to $2.00 billion. During 1988 to 1994, the total of the surplus accounts systemwide increased 79 percent, from $2.1 billion in 1988 to $3.7 billion in 1994. Recommendations to the Board of Governors of the Federal Reserve We recommend that the Board of Governors review pay and benefits levels at the Board and the Federal Reserve Banks to determine if current levels can continue to be justified in today’s environment of increased governmental and private-sector cost containment; assess whether managing the Federal Reserve’s health care coverage on a systemwide basis could reduce health care costs; review travel policies at the 12 Reserve Banks and change those policies review contracting and procurement practices at the 12 Reserve Banks to ensure that these practices are in compliance with the system acquisition guidelines and result in cost-effective contracts; ensure that the “best practices” in contracting and procurement at the 12 Reserve Banks are regularly identified, disseminated, and adopted by the Reserve Banks; and review policies regarding the size of the surplus account and determine if opportunities exist to decrease the amount held in the account. The Federal Reserve has raised strong objections to a new regulatory system in which its role in direct bank supervision would be eliminated or substantially reduced. In chapter 5, we focus on strategic planning and how the Federal Reserve can take steps to proactively manage for these current and future challenges.

Why GAO Did This Study Pursuant to a congressional request, GAO reviewed the operations of the Federal Reserve System, focusing on: (1) its finances and levels of spending; (2) areas where spending could be reduced; and (3) actions the Federal Reserve could take to meet future challenges in systemwide management. What GAO Found GAO found that: (1) Federal Reserve operating expenses increased from $1.36 billion in 1988 to $2 billion in 1994; (2) the most significant operating cost increases were for bank supervision and regulation, personnel pay and benefits, and extensive modernization and consolidation of information systems; (3) operating costs vary among reserve banks because the Federal Reserve has not established consistent policies; (4) the Federal Reserve could reduce its personnel benefits and travel-related reimbursements, and realign its contracting and procurement practices; (5) a reduction or elimination of the Federal Reserve surplus account, which increased from $2.1 billion in 1988 to $3.7 billion in 1994, would increase federal budgetary receipts in the year that the reduction or elimination occurs; (6) major developments such as increased competition from private-sector suppliers, use of electronic banking, and consolidation of the banking industry, are likely to affect the Federal Reserve's operations, future role, and management structures; and (7) the Federal Reserve must eliminate the weaknesses in its planning, budgeting, oversight, and audit processes that impede its cost control efforts.

gao_GAO-08-826

gao_GAO-08-826_0

Serious Medical Conditions and Commercial Driver Licenses Commercial drivers with serious medical conditions can still meet DOT medical fitness requirements to safely operate a commercial vehicle and thus hold CDLs. However, there is general agreement that careful medical evaluations are necessary to ensure that serious medical conditions do not preclude the safe operation of a commercial vehicle. Our analysis of DOT data and disability data from the four selected federal agencies, SSA, VA, OPM, and DOL, found that about 563,000 individuals had been issued CDLs and were receiving full medical disability benefits. This represented over 4 percent of all CDLs in the DOT database. About 114,000 of these 135,000 individuals, or about 85 percent, had an active CDL according to CDL data provided by the 12 selected states. Further, our analysis of the state CDL data indicates that most of the licenses were issued after the commercial driver was found to be eligible for full disability benefits. As such our analysis provides a starting point for exploring the effectiveness of the current CDL medical certification process. Examples of Commercial Drivers with Serious Medical Conditions Our investigations detail examples of 15 cases where careful medical evaluations did not occur on commercial drivers who were receiving full medical disability benefits. In general, a medical diagnosis alone is not adequate to determine medical fitness to operate a commercial vehicle safely. Further, our report acknowledged that because medical determinations rely in large part on subjective factors that are not captured in databases, it is impossible to determine from data mining and matching the extent to which commercial drivers have a medical condition that precludes them from safely driving a commercial vehicle and therefore if the certification process is effective. Appendix I: Scope and Methodology To determine to the extent possible the number of individuals holding a current commercial driver license (CDL) who have serious medical conditions, we presumed that individuals receiving full federal disability benefits were eligible for these benefits because of the seriousness of their medical conditions. For the Social Security Administration (SSA) and the Department of Veterans Affairs (VA) we provided the CDLIS commercial driver information to those agencies. The 12 states were selected primarily based on the size of the CDL population. To provide case-study examples of commercial drivers who hold active CDLs while also receiving federal disability payments for a disqualifying medical condition, we focused on four states—Florida, Maryland, Minnesota, and Virginia. For each case, we interviewed, as appropriate, the commercial driver, the driver’s employer, and the driver’s physician to determine whether the medical condition should have precluded the driver from holding a valid CDL. Table 3 below provides details by each selected state on the number of (1) commercial drivers with active CDLs, (2) commercial drivers with an active CDL even though they had a medical condition from which they received full federal disability benefits, and (3) commercial drivers that were issued a CDL after the driver was approved for full federal disability benefit payments.

Why GAO Did This Study Millions of drivers hold commercial driver licenses (CDL), allowing them to operate commercial vehicles. The Department of Transportation (DOT) established regulations requiring medical examiners to certify that these drivers are medically fit to operate their vehicles and provides oversight of their implementation. Little is known on the extent to which individuals with serious medical conditions hold CDLs. GAO was asked to (1) examine the extent to which individuals holding a current CDL have serious medical conditions and (2) provide examples of commercial drivers with medical conditions that should disqualify them from receiving a CDL. To examine the extent to which individuals holding CDLs have serious medical conditions, GAO identified those who were in both DOT's CDL database and selected federal disability databases of the Social Security Administration, Office of Personnel Management, and Departments of Veterans Affairs and Labor and have been identified as 100 percent disabled according to the program's criteria. Because DOT's data also include inactive licenses, GAO obtained current CDL data from 12 selected states based primarily on the size of CDL population. To provide case study examples, GAO focused on four states--Florida, Maryland, Minnesota, and Virginia. For 15 drivers identified from data mining, GAO interviewed, as appropriate, the driver, driver's employer, and driver's physician. GAO is not making any recommendations. What GAO Found Commercial drivers with serious medical conditions can still meet DOT medical fitness requirements to safely operate a commercial vehicle and thus hold CDLs. However, there is general agreement that careful medical evaluations are necessary to ensure that serious medical conditions do not preclude the safe operation of a commercial vehicle. Because medical determinations rely in large part on subjective factors that are not captured in databases, it is impossible to determine from data matching and mining alone the extent to which commercial drivers have medical conditions that preclude them from safely driving a commercial vehicle and therefore if the certification process is effective. GAO's analysis provides a starting point for exploring the effectiveness of the current CDL medical certification process. Our analysis of commercial license data from DOT and medical disability data from the Social Security Administration, Office of Personnel Management, and Departments of Veterans Affairs and Labor found that about 563,000 of such individuals had commercial driver licenses and were determined by the federal government to be eligible for full disability benefits. This represented over 4 percent of all commercial driver licenses in the DOT database. Our analysis of 12 selected states indicates that most of these commercial drivers still have active licenses. Specifically, for these 12 selected states, about 85 percent had a current CDL even though they had a medical condition from which they received full federal disability benefits. The majority of these drivers were issued a CDL after the driver was approved for full federal disability benefit. Our investigations detail examples of 15 cases where careful medical evaluations did not occur on commercial drivers who were receiving full disability benefits for serious medical conditions.

gao_GAO-06-761T

gao_GAO-06-761T_0

The Long-term Fiscal Challenge The nation’s long-term fiscal outlook is daunting under any realistic policy scenarios and assumptions. These simulations show that over the long term we face large and growing structural deficits due primarily to known demographic trends and rising health care costs. Continuing on this imprudent and unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. Our current path will also increasingly constrain our ability to address emerging and unexpected budgetary needs and increase the burdens that will be faced by our children, grandchildren, and future generations of Americans. What Can Be Done? If citizens and government officials come to better understand our nation’s various fiscal exposures and their implications for the future, they are more likely to insist on prudent policy choices today and sensible levels of fiscal risk in the future. Today you are focusing on budget process improvements. While the process itself cannot solve the problem, it is important. It can help policymakers make tough but necessary choices today rather than defer them until tomorrow. Among the characteristics a budget process needs for that to happen are increased transparency and better incentives, signals, triggers and default mechanisms to address the fiscal exposures/commitments the federal government has already made and better transparency for and controls over the long-term fiscal exposures/commitments that the federal government is considering. I endorse the restoration of realistic discretionary caps and PAYGO discipline applied to both mandatory spending and revenue legislation. Concluding Observations We cannot grow our way out of our long-term fiscal challenge. We have to make tough choices and the sooner the better. A multi-pronged approach is necessary: (1) revise existing budget processes and financial reporting requirements, (2) restructure existing entitlement programs, (3) reexamine the base of discretionary and other spending, and (4) review and revise tax policy and enforcement programs. Everything must be on the table. Fundamentally, we need to undertake a top-to-bottom review of government activities to ensure their relevance and fit for the 21st century and their relative priority.

Why GAO Did This Study The nation's long-term fiscal outlook is daunting. While the budget process has not caused the problems we face, the absence of meaningful budget controls and other mechanisms has served to compound our fiscal challenge. Conversely, a process that illuminates the looming fiscal pressures and provides appropriate incentives can at least help decision makers focus on the right questions. Meaningful budget controls and other mechanisms can also help to assure that difficult but necessary choices are made. The budget process needs to provide incentives and signals to address commitments the government has already made and better transparency for and controls on the long-term fiscal exposures being considered. Improvements would include the restoration of realistic discretionary caps; application of pay-as-you-go (PAYGO) discipline to both mandatory spending and revenue legislation; the use of "triggers" for some mandatory programs; and better reporting of fiscal exposures. What GAO Found Over the long term we face a large and growing structural deficit due primarily to known demographic trends and rising health care costs. Continuing on this imprudent and unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security. Our current path will also increasingly constrain our ability to address emerging and unexpected budgetary needs and increase the burdens that will be faced by our children, grandchildren, and future generations. The budget process itself cannot solve this problem, but it can help policymakers make tough but necessary choices. If citizens and government officials come to better understand various fiscal exposures and their implications for the future, they are more likely to insist on prudent policy choices today and sensible levels of fiscal risk in the future. We cannot grow our way out of our long-term fiscal challenge. We must make tough choices and the sooner the better. A multi-pronged approach is needed: (1) revise existing budget processes and financial reporting requirements, (2) restructure existing entitlement programs, (3) reexamine the base of discretionary and other spending, and (4) review and revise tax policy and enforcement programs--including tax expenditures. Everything must be on the table and a credible and effective Entitlement and Tax Reform Commission may be necessary. Fundamentally we need a top-to-bottom review of government activities to ensure their relevance and fit for the 21st century and their relative priority.

gao_GAO-16-90T

gao_GAO-16-90T_0

We also found that, while federal departments have identified emergency response capability gaps through national- level exercises, real-world incidents, such as Hurricane Sandy and other assessments, the status of federal interagency implementation of these actions is not comprehensively collected by or reported to DHS or FEMA and, as a result, DHS’s and FEMA’s ability to assess and report on the nation’s overall preparedness is hampered. Further, we found that FEMA’s plan to lead interagency actions to identify and address capability gaps in the nation’s preparedness to respond to improvised nuclear device (IND) attacks did not contain detailed program management information—such as specific timeframes, milestones, and estimated resources required to close any given capability gap—which is needed to better enable ongoing management oversight of gap closure efforts. In our December 2014 report, we recommended that FEMA—in collaboration with other federal agencies—(1) issue supplemental guidance to ESF coordinators detailing minimum standards for activities and product deliverables necessary to demonstrate ESF preparedness, develop and (2) issue detailed program management information to better enable management oversight of the DHS IND Strategy’s recommended actions, and (3) regularly report on the status of corrective actions identified through prior national-level exercises and real-world disasters. DHS concurred with our recommendations and FEMA has taken actions in response. FEMA officials also collected information on the status of National Level Exercise Corrective Actions from 2007-2014, an important step to respond to our other recommendation and we are continuing to monitor FEMA’s efforts in this area, however it has not provided a timeframe for its completion. DHS concurred with the recommendations and is taking actions to address them. Disaster Response and Recovery Disaster Declarations In September 2012, we reported on FEMA’s processes for determining whether to recommend major disaster declarations. However in December 2014, we identified continued challenges in the agency’s response to Hurricane Sandy, including weaknesses in the agency’s validation of Social Security numbers, among other things. FEMA concurred with the report’s five recommendations and has taken actions to address them. Disaster Recovery and Resilience In July 2015 we reported that during the Hurricane Sandy Recovery, five federal programs—the FEMA’s Public Assistance (PA) and Hazard Mitigation Grant Program (HMGP), the Federal Transit Administration’s Public Transportation Emergency Relief Program, the Department of Housing and Urban Development’s Community Development Block Grant-Disaster Recovery, and the U.S. Army Corps of Engineers’ Hurricane Sandy program—helped enhance disaster resilience—the ability to prepare and plan for, absorb, recover from, and more successfully adapt to disasters. State and local officials from all 12 states, the District of Columbia, and New York City in the Sandy affected-region reported that they were able to effectively leverage federal programs to enhance disaster resilience, but also experienced challenges. We found there was no comprehensive, strategic approach to identifying, prioritizing and implementing investments for disaster resilience, which increased the risk that the federal government and nonfederal partners will experience lower returns on investments or lost opportunities to strengthen key critical infrastructure and lifelines. DHS agreed with both recommendations. FEMA’s Management Efforts Administrative Costs for Managing Disaster Assistance In December 2014, we reported on FEMA’s progress in taking steps to reduce and better control administrative costs—the costs of providing and managing disaster assistance. For example, FEMA issued guidelines intended to better control its administrative costs in November 2010. However, FEMA does not require these targets be met, and we found that had FEMA met its targets, administrative costs could have been reduced by hundreds of millions of dollars. We found that FEMA continued to face challenges in tracking and reducing these costs. In our December 2014 report, we recommended that FEMA (1) develop an integrated plan to better control and reduce its administrative costs for major disasters, (2) assess the costs versus the benefits of tracking FEMA administrative costs by the Disaster Relief Fund program, and (3) clarify the agency’s guidance and minimum documentation requirements for direct administrative costs. FEMA agreed with the report and its recommendations. Workforce Management Efforts In July 2015, we reported on FEMA’s progress in taking steps to address various long-standing workforce management challenges in completing and integrating its strategic workforce planning efforts we have identified since 2007. We currently have work underway for this committee assessing additional FEMA management areas, including assessing FEMA’s management of information technology systems that support disaster response and recovery programs. GAO Related Products Emergency Management: FEMA Collaborates Effectively with Logistics Partners but Could Strengthen Implementation of Its Capabilities Assessment Tool. National Preparedness: Actions Taken by FEMA to Implement Select Provisions of the Post-Katrina Emergency Management Reform Act of 2006. National Preparedness: FEMA Has Made Progress in Improving Grant Management and Assessing Capabilities, but Challenges Remain. Disaster Resilience: Actions Are Underway, but Federal Fiscal Exposure Highlights the Need for Continued Attention to Longstanding Challenges. GAO-10-404. Federal Emergency Management Agency: Opportunities to Achieve Efficiencies and Strengthen Operations. FEMA Has Made Progress in Managing Regionalization of Preparedness Grants. Government Operations: Actions Taken to Implement the Post-Katrina Emergency Management Reform Act of 2006.

Why GAO Did This Study A little more than 10 years ago, Hurricane Katrina caused an estimated $108 billion in damage, making it the largest, most destructive natural disaster in our nation's history. Following the federal response to Hurricane Katrina in 2005, Congress passed the Post-Katrina Emergency Management Reform Act of 2006 (Post-Katrina Act). The act contained over 300 provisions that are intended to enhance national preparedness, emergency response and recovery, and the management of select disaster programs. In October 2012, another catastrophic hurricane—Hurricane Sandy—caused $65 billion in damage and once again tested the nation's preparedness and emergency response and recovery functions. GAO has issued multiple reports that discuss a wide variety of emergency management issues reflecting the federal government and FEMA's efforts to implement provisions of the Post-Katrina Act and address various aspects of emergency management. This statement discusses GAO's work on the progress FEMA has made and challenges that it still faces in three areas: (1) national preparedness, (2) disaster response and recovery, and (3) selected FEMA management areas. This statement is based on previously issued GAO reports from 2012 to 2015. What GAO Found GAO's recent work highlights both the progress and challenges in the Federal Emergency Management Agency's (FEMA) efforts to lead national preparedness efforts, particularly efforts to assess emergency support capabilities and enhance logistics capabilities. Assessing capabilities is critical to ensure that they will be available when needed in emergencies. For example, GAO found in December 2014 that federal departments have identified emergency response capability gaps through national-level exercises and real-world incidents, but the status of agency actions to address these gaps is not collected by or reported to Department of Homeland Security or FEMA. GAO recommended that FEMA—in collaboration with other federal agencies—regularly report on the status of corrective actions. FEMA agreed with GAO's recommendation and is taking action to address it but has not established a timeframe for completion. GAO's recent work on disaster response and recovery programs also identified progress and challenges in a number of areas. From fiscal years 2004 through 2013, FEMA obligated over $95 billion in federal disaster assistance for 650 major disasters declared during this timeframe. With the growing cost of disasters it is vital for the federal government to address its fiscal exposure and ensure that response and recovery programs are as efficient and effective as possible. For example, in December 2014, GAO found that FEMA demonstrated progress controlling for potentially fraudulent payments to individuals during Hurricane Sandy as compared to Hurricanes Katrina and Rita. However, GAO reported continued challenges, including weaknesses in validation of Social Security numbers and made recommendations to strengthen these processes. Further, in July 2015, GAO reported that states and localities affected by Hurricane Sandy were able to effectively leverage federal programs to enhance resilience during their recovery. However, states experienced continued challenges in implementing certain FEMA recovery programs, such as Public Assistance. GAO also found that there was no comprehensive, strategic approach to identifying, prioritizing, and implementing investments for disaster resilience. GAO made recommendations to address these continued challenges and FEMA is taking a range of actions to address them. FEMA has also taken steps to strengthen a number of its management areas, but GAO reported that additional progress is needed in several areas. Specifically, In December 2014, GAO found that FEMA had taken steps to control its administrative costs—the costs of providing and managing disaster assistance—by issuing guidelines and reduction targets. However, GAO reported that FEMA does not require the targets to be met and continued to face challenges tracking the costs. Among other things, GAO recommended that FEMA develop an integrated plan to better control and reduce its administrative costs for major disasters. Further, in July 2015 GAO reported that FEMA had taken action to address various long-standing workforce management challenges, but faced multiple challenges, including implementing and managing its temporary workforces and completing strategic workforce planning efforts. FEMA agreed with GAO's recommendations and is taking action to address them. What GAO Recommends GAO has made numerous recommendations in its prior reports to FEMA designed to address the challenges discussed in this statement. FEMA has taken actions to address many of these recommendations.

gao_GAO-11-469

gao_GAO-11-469_0

1). DOD Created Requirements to Document Long-Term Technical-Data Needs DOD updated its acquisition and procurement policies, in a manner that reflects a 2007 legislative provision and our 2006 recommendations, to require that acquisition program managers document their long-term technical-data needs. According to DOD officials, these policy updates do not change the requirements program managers must follow that to decide what technical data or technical-data rights to acquire for their systems. Together these policy changes required that strategies and plans for major acquisition programs: 1. assess the data required to design, manufacture, and sustain the system as well as to support re-competition for production, sustainment, or upgrade; 2. address the merits of including a priced contract option for future delivery of data not initially acquired; 3. consider the contractor’s responsibility to verify any assertion of restricted use and release of data; and 4. address the potential for changes in the sustainment plan over the life cycle of the weapon system or subsystem. These policies require programs to document (1) an assessment of technical-data requirements, (2) the merits of a priced-contract option, (3) the contractor’s responsibility to verify assertions of limited data rights, and (4) the potential for changes in the system’s sustainment plan. However, none of the programs addressed all four of the requirements in its documentation, and two did not address any of the requirements. The strategy for the Navy Multiband Terminal stated that the program manager had “assessed the long-term technical-data needs” of the system and “established acquisition strategies that provide for technical data” and “associated license rights needed to sustain [the systems] over their life cycle and allow for competitive procurement of future terminals.” The three strategies that did not address the requirement did not identify any required data. Each of the three strategies noted that the program planned to include a clause in its contracts that identifies the contractor’s responsibility to provide sufficient information to the government’s contracting officers to enable them to evaluate the contractor’s assertions. DOD Issued Guides to Improve Technical- Data Decision Making, but Technical-Data Policy Requirements Remain Unclear DOD and Military Departments Issued Guides to Improve Program Managers’ Technical-Data-Related Decisions OSD and each military department have issued several guides for program managers that elaborate on the requirements in DOD policy for conducting and documenting assessments of long-term technical-data needs. Revised Technical-Data Policy Requirements Are Unclear We found that the revisions to DOD’s acquisition and procurement policies, which require acquisition program managers to document their long-term technical-data needs, are unclear. 2). Ambiguity in the revised policies results in limits to department decision makers’ ability to exercise effective internal control in their reviews of acquisition documentation. OSD Requires a Business-Case Analysis for Technical-Data Decisions, but Has Not Issued Instructions on How to Conduct the Analysis OSD recently added a requirement that program managers conduct a business-case analysis as part of their assessment to determine the long- term technical-data needs for their systems; however, DOD has not issued policy or other internal controls that describe how to conduct this analysis. Previous GAO Review Found Business-Case Analyses Were Inconsistently Completed We have previously reported that the military services inconsistently completed similar business-case analyses when DOD had not issued instructions on how to conduct them. DOD partially agreed with our recommendation. In addition, because OSD has not issued policy instructing program managers on how to report on the results of these analyses, program managers may not provide the information that senior leaders in DOD and the military departments need in order to decide whether to approve the acquisition programs at major milestones in the acquisition process. Technical-data decisions can be costly, with some prime contractors quoting a price in excess of $1 billion for technical-data packages. Recommendations for Executive Action To establish effective internal controls over technical-data policies that improve DOD’s ability to efficiently and cost-effectively acquire and sustain weapon systems over their life cycles, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Acquisition, Technology and Logistics to take the following two actions: Issue updates to the acquisition and procurement policies that clarify requirements for documenting long-term technical-data requirements in program acquisition strategies and acquisition plans. To evaluate the extent to which selected defense acquisition programs adhered to the updated requirements in DOD policy to document their systems’ long-term technical-data needs, we selected a non-generalizable sample of 12 acquisition programs from a population of about 50 programs.

Why GAO Did This Study Some of the Department of Defense's (DOD) weapon systems remain in the inventory for decades. Therefore, decisions that program officials make during the acquisition process to acquire or not acquire rights to technical data, which may cost $1 billion, can have far-reaching implications for DOD's ability to sustain and competitively procure parts and services for those systems. DOD needs access to technical data to control costs, maintain flexibility in acquisition and sustainment, and maintain and operate systems. In response to a congressional request, GAO reviewed the extent to which: (1) DOD has updated its acquisition and procurement policies to reflect a 2007 law and 2006 GAO recommendations; (2) selected acquisition programs adhered to requirements to document technical-data needs; and (3) DOD took actions to improve technical-data decisions by program managers. GAO interviewed DOD officials, reviewed acquisition strategies and acquisition plans from 12 programs, and compared those documents to relevant DOD policies. What GAO Found DOD updated its acquisition and procurement policies to require that acquisition program managers document their long-term technical-data needs in a manner that reflects a 2007 law and GAO's 2006 recommendations. Together these policies require documentation of: (1) an assessment of technical-data requirements, (2) the merits of a "priced-contract option" that enables DOD to obtain additional technical data that it did not acquire in its initial contract, (3) the contractor's responsibility to verify its assertions of limits to DOD's ability to use the technical data, and (4) the potential for changes in the system's sustainment plan. According to DOD officials, these policy updates do not require changes to the way program managers assess technical-data needs. Sampled acquisition programs partially addressed the four updated technical-data-documentation requirements. Ten of the 12 programs GAO reviewed addressed at least 1 of the 4 requirements in their acquisition strategies and acquisition plans; however, none of the programs addressed all 4 of the requirements. Specifically, 9 of the 12 strategies documented an assessment of their technical-data requirements. For example, the strategy for a Navy communications system stated that the program planned to obtain technical data and associated rights to sustain the system over its life cycle and allow for competitive procurement of future systems. In contrast, 3 of the 12 strategies documented the contractor's responsibility to verify its assertions of limits to DOD's ability to use the technical data. Each of the three strategies noted that the program planned to include a clause in its contracts that identifies the contractor's responsibilities. DOD has issued guides--that are voluntary for the program managers to use--to improve technical-data decision-making. These guides may help program managers with decisions and documentation on technical data. However, DOD technical-data policies remain unclear. Effective internal controls help organizations implement their directives. GAO found that, because DOD has not issued clarifications to its policy, DOD policies that require documentation of long-term technical-data needs are unclear. As a result, acquisition strategies have not always documented required information on technical data--a point the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics recently emphasized. Because of the ambiguity in the policies, DOD's ability to implement effective internal control over those policies is limited. Moreover, DOD recently added a requirement that program managers conduct a business-case analysis for systems' long-term technical-data needs. However, DOD has not issued policy or other internal controls that describe how to conduct this analysis. GAO has previously reported that the military services inconsistently completed similar business-case analyses because DOD had not issued instructions on how to conduct them. Without instructions that describe how to conduct the business-case analysis, senior acquisition decision makers may not receive the information they need to decide whether to approve programs at major milestones in the acquisition process. What GAO Recommends GAO recommends that DOD (1) update policies to clarify its technical-data documentation requirements and (2) instruct program managers on the elements to include and the information to report for technical-data business-case analyses. DOD concurred with GAO's recommendations.

gao_GAO-10-352

gao_GAO-10-352_0

USDA. In response to our data collection instrument, the agencies providing monetary assistance for global food security reported directing at least $5 billion in fiscal year 2008 to programs and activities that we define as addressing global food insecurity, with food aid accounting for about half of this funding. However, the actual total level of funding is likely greater. The estimate does not account for all U.S. government funds targeting global hunger and food insecurity. The agencies did not provide us with comprehensive funding data because they lack (1) a commonly accepted governmentwide operational definition of global food security programs and activities as well as reporting requirements to routinely capture data on all relevant funds, and (2) data management systems to track and report food security funding comprehensively and consistently. The Administration Is Developing a Governmentwide Global Food Security Strategy, but Efforts Are Vulnerable to Data Weaknesses and Risks Associated with the Host Country-Led Approach Consistent with our 2008 recommendation, the current administration has taken a number of steps toward developing a U.S. governmentwide strategy for global food security, including improving interagency coordination at the headquarters level in Washington, D.C.; finalizing the main elements of the strategy; and identifying potential countries for assistance. The lack of comprehensive data on current programs and funding levels may impair the success of the new strategy because it deprives decision makers of information on all available resources, actual costs, and a firm baseline against which to plan. The strategy is expected to be released shortly, according to senior U.S. officials. 3. Furthermore, the GHFSI working team is developing an implementation document and a results framework for this initiative under development. These include (1) the weak capacity of host governments, which can limit their ability to absorb increased donor funding and sustain these levels of assistance; (2) a shortage of expertise in agriculture and food security at relevant U.S. agencies that could constrain efforts to help strengthen host governments’ capacity as well as review host governments’ efforts and guide in-country activities; and (3) difficulties in aligning donor assistance, including that of the United States, with host governments’ own strategies. Recommendations for Executive Action To enhance U.S. efforts to address global food insecurity, we recommend that the Secretary of State take the following two actions: 1. work with the existing NSC/IPC to develop an operational definition of food security that is accepted by all U.S. agencies; establish a methodology for consistently reporting comprehensive data across agencies; and periodically inventory the food security-related programs and associated funding for each of these agencies; and 2. work in collaboration with the USAID Administrator, the Secretary of Agriculture, the Chief Executive Officer of the Millennium Challenge Corporation, the Secretary of the Treasury, and other agency heads, as appropriate, to delineate measures to mitigate the risks associated with the host country-led approach on the successful implementation of the forthcoming governmentwide global food security strategy. Appendix I: Scope and Methodology We examined (1) the types and funding levels of food security programs and activities of relevant U.S. government agencies and (2) progress in developing an integrated U.S. governmentwide strategy to address global food insecurity, as well as potential vulnerabilities of that strategy. USAID reported providing the broadest array of programs and activities and the largest amount of funding. 3. 5. 7. 10. .S.

Why GAO Did This Study Global hunger continues to worsen despite world leaders' 1996 pledge--reaffirmed in 2000 and 2009--to halve hunger by 2015. To reverse this trend, in 2009 major donor countries pledged $22 billion in a 3-year commitment to agriculture and food security in developing countries, of which $3.5 billion is the U.S. share. Through analysis of agency documents, interviews with agency officials and their development partners, and fieldwork in five recipient countries, GAO examined (1) the types and funding of food security programs and activities of relevant U.S. government agencies; and (2) progress in developing an integrated U.S. governmentwide strategy to address global food insecurity as well as potential vulnerabilities of that strategy. What GAO Found The U.S. government supports a wide variety of programs and activities for global food security, but lacks readily available comprehensive data on funding. In response to GAO's data collection instrument to 10 agencies, 7 agencies reported funding for global food security in fiscal year 2008 based on the working definition GAO developed for this purpose with agency input. USAID and USDA reported the broadest array of programs and activities, while USAID, the Millennium Challenge Corporation, Treasury, USDA, and State reported providing the highest levels of funding for food security. The 7 agencies together directed at least $5 billion in fiscal year 2008 to global food security, with food aid accounting for about half of that funding. However, the actual total level of funding is likely greater. GAO's estimate does not account for all U.S. government funds targeting global food insecurity because the agencies lack (1) a commonly accepted governmentwide operational definition of global food security programs and activities as well as reporting requirements to routinely capture data on all relevant funds; and (2) data management systems to track and report food security funding comprehensively and consistently. The administration is making progress toward finalizing a governmentwide global food security strategy--expected to be released shortly--but its efforts are vulnerable to data weaknesses and risks associated with the strategy's host country-led approach. The administration has established interagency coordination mechanisms at headquarters in Washington, D.C., and is finalizing an implementation document and a results framework. However, the lack of readily available comprehensive data on current programs and funding levels may deprive decision makers of information on available resources and a firm baseline against which to plan. Furthermore, the host country-led approach, although promising, is vulnerable to (1) the weak capacity of host governments, which can limit their ability to sustain donor-funded efforts; (2) a shortage of expertise in agriculture and food security at U.S. agencies that could constrain efforts to help strengthen host government capacity; and (3) policy differences between host governments and donors, including the United States, which may complicate efforts to align donor assistance with host government strategies.

gao_GAO-01-610

gao_GAO-01-610_0

The regional loan centers we visited also had procedures in place to ensure that loan servicing representatives comply with VA’s policies and procedures. During this engagement, we requested that VA provide us with basic data on its supplemental servicing program. VA’s ability to effectively manage its supplemental servicing program has been affected by two issues. First, VA does not have meaningful performance measures that allow it to accurately assess the effectiveness of its program. Second, VA’s computer system has not been able to generate useful and timely management reports that regional loan center managers and headquarters staff can use in managing their supplemental loan servicing program. Appendix I: Objectives, Scope, and Methodology The objectives of this report are to (1) describe the Department of Veterans Affair’s (VA) policies and procedures for servicing troubled home loans, (2) assess VA’s implementation of its policies and procedures for servicing troubled home loans, and (3) analyze VA’s measures for assessing the effectiveness of its program for servicing troubled loans and ability to generate meaningful data for overseeing and improving loan servicing.

Why GAO Did This Study The Department of Veterans' Affairs (VA) Loan Guaranty Program, which guarantees mortgage loans for qualified lenders, provides additional assistance to those who face financial hardship and possible foreclosure. This report discusses VA's supplemental loan servicing program. GAO (1) assesses VA's implementation of its policies and procedures for servicing troubled loans and (2) analyzes VA's measures for assessing the effectiveness of its supplemental servicing program and ability to generate meaningful data for overseeing and improving loan servicing. What GAO Found GAO found that the three regional loan centers it visited generally conformed with VA policies and procedures and had procedures in place to ensure that VA's loan servicing representatives complied with VA policies and procedures. Two issues affect VA's ability to effectively manage its supplemental servicing program. First, VA lacks meaningful performance measures that would allow it to accurately assess the effectiveness of its program. Second, VA's computer system has been unable to generate useful and timely management reports that regional loan center managers and headquarters staff could use to manage their supplemental loan servicing program.

gao_GAO-05-261

gao_GAO-05-261_0

These changes include: changes in the marketplace and the role of industry that have resulted in declines in mail volume and changes in mail mix; the evolution of the Service’s processing and distribution infrastructure, and the advent of processing automation, that has led to an infrastructure consisting of processing and distribution plants that differ markedly from one another; and changes in demographics and modes of transportation that affect the optimal location of the Service’s plants. The Service Is Pursuing Several Initiatives in Response to Changes but Challenges Remain To achieve a more efficient and flexible infrastructure in response to changes in the marketplace, the evolution of the mail processing infrastructure, and shifts in demographics, the Service is exploring broad infrastructure realignment, while at the same time pursuing several initiatives to address inefficiencies in its current infrastructure. It is expanding automation, improving material handling operations, creating a comprehensive transportation network, and introducing standardization programs in an effort to reduce workhours and increase productivity. The Service also faces challenges in reducing excess capacity while maintaining service standards, including workforce rules, and stakeholder resistance to plant closings. However, increased automation contributes to excess capacity and it is not clear how the Service intends to reduce this excess capacity as its operations become more automated. This has raised concerns among mailers. Third, the Service’s strategy excludes stakeholder input, is not sufficiently transparent and accountable, and lacks performance measures for results of decisions. The Service’s Strategy for Realigning Its Mail Processing and Distribution Infrastructure Is Not Clear The Service’s strategy for realigning its mail processing and distribution infrastructure has not been clear because the Service has outlined several seemingly different strategies over the past 3 years. These changes were to include consolidation of plants, redefined roles for plants, reduced transportation costs, and a streamlined network. “Why? 2. The Service has stated that one way to increase efficiency is to realign its processing and distribution infrastructure. In addition, we discussed the cause and effect of mail volume declines with Service officials. First-Class Mail is a Postal Service trademark. Comments from the U.S.

Why GAO Did This Study With declining mail volumes, increasing compensation costs, and a more competitive marketplace, the need for the U.S. Postal Service (Service) to increase efficiency and reduce expenses is a matter of increasing importance and concern. According to the Service, one area where it can become more efficient is in its mail processing and distribution infrastructure. The objectives of this report are to (1) describe major business and demographic changes and their effect on the Service's mail processing and distribution infrastructure; (2) describe what actions the Service is taking in response to these changes, and what challenges exist; and (3) discuss the Service's strategy for realigning its infrastructure. What GAO Found Several major changes have affected mail processing and distribution operations including marketplace changes, such as declines in First-Class Mail and increased competition; increased automation and mail processing by mailers; and shifts in population demographics. Effects of these changes include excess capacity in the mail processing and distribution infrastructure and variations in productivity among plants. The Service is exploring ways to realign its infrastructure by closing annexes, consolidating operations, and employing tools to model its infrastructure needs, while at the same time attempting to increase efficiencies in its current operations by expanding automation, improving material handling operations, creating a comprehensive transportation network, and introducing standardization programs. Also, there is a large range in productivity among plants. Reducing this range is difficult due to the complexity of operations and differences in plant layout. In addition, the Service faces challenges in eliminating excess capacity, while maintaining service standards, due to workforce rules and resistance to plant closings. Questions remain about how the Service intends to realign its processing and distribution infrastructure and workforce. The Service's strategy for realigning has not been clear because the Service has outlined several seemingly different strategies over the past 3 years. None of these strategies include criteria and processes for eliminating excess capacity, which may prolong inefficiencies. Also, the strategy lacks sufficient transparency and accountability, excludes stakeholder input, and lacks performance measures for results.

gao_GAO-01-582

gao_GAO-01-582_0

By early 1992, the United States and other countries were concerned that senior weapons scientists struggling to support their families could be tempted to sell their expertise to terrorists or countries of concern such as Iraq, Iran, and North Korea. 1). As figures 2 and 3 show, the United States has provided about 45 percent of the funding for projects at the science center in Russia and about 72 percent of the funding for projects at the science center in Ukraine since 1994. The State Department’s selection is limited to those projects approved by the national government where the scientists work and, in some instances, the State Department has not been granted access to scientists at critical biological research institutes. Since 1994, the State Department has selected for funding 590 projects that employed about 9,700 senior scientists. For example, four biological weapons institutes under the Russian Ministry of Defense have not submitted project proposals to the science center in Russia. According to the science centers, funding from all sources, including the United States, has employed about 21,000 senior scientists to date. For the 35 projects we reviewed at nine institutes in Russia and Ukraine, the science centers were following their monitoring procedure. Science Center Staff Conduct Routine Monitoring of Projects The State Department first relies on the mostly Russian and Ukrainian staff at the science centers to ensure that scientists are working on the research they are paid to produce. When possible, the science centers also participate in meetings between the scientists and collaborators.

Why GAO Did This Study Since 1994, the United States has appropriated $227 million to support two multilateral science centers in Russia and Ukraine. The science centers pay scientists who once developed nuclear, chemical, and biological weapons and missile systems for the Soviet Union to conduct peaceful research. By employing scientists at the science centers, the United States seeks to reduce the risks that these scientists could be tempted to sell their expertise to terrorists. This report examines the (1) selection procedures the State Department uses to fund projects that meet program objectives and (2) monitoring procedures the State Department uses to verify that scientists are working on the peaceful research they are paid to produce. What GAO Found GAO found that State lacks complete information on the total number and locations of senior scientists and has not been granted access to senior scientists at critical research institutes under the Russian Ministry of Defense. GAO also found that State has designed an interagency review process to select and fund research proposals submitted by weapons scientists to the science centers in Russia and Ukraine. The overall goal is to select projects that reduce proliferation risks to the United States and employ as many senior scientists as possible. The science centers were following their monitoring processes and were taking steps to address audit deficiencies.

gao_GAO-04-384

gao_GAO-04-384_0

Human Capital Considerations Are Relevant to Continuity Planning and Implementation Efforts The current literature indicates, and experts that we consulted confirmed, that the immediate response to a crisis should give priority to securing the safety of all employees and addressing the needs of employees who perform or directly support essential operations. Consequently, the experts said that these priorities have received most of the human capital attention in continuity efforts for both the private and public sectors, including federal agencies. Such employees would be associated with efforts to fully resume all other operations and represent the majority of an organization. The experts identified two principles that should guide actions to more fully address human capital considerations applicable to all continuity planning and implementation efforts. Federal employees may have additional opportunities to contribute to not only their own agencies’ operations but also other agencies’ operations in serving the American people. FEMA and OPM Have Exhibited Leadership in Addressing Human Capital Considerations Relevant to COOP As we stated earlier, the human capital considerations related to life safety and the needs of personnel performing essential operations have largely been addressed in continuity efforts. While not specifically tasked with coordinating COOP efforts, FEBs are generally responsible for improving coordination among federal activities and programs in major metropolitan areas outside of Washington, D.C. However, the context in which FEBs currently operate, including the lack of a clearly defined role in emergency preparedness efforts, including COOP, and varying capacities among FEBs, could lead to inconsistent levels of preparedness across the nation. Objectives, Scope, and Methodology The objectives of this report were to identify the human capital considerations that are relevant to federal agencies’ continuity planning and implementation efforts; describe the continuity of operations (COOP) guidance provided by the Federal Emergency Management Agency (FEMA) and emergency preparedness guidance and activities of the Office of Personnel Management (OPM) to address human capital considerations relevant to COOP; and describe the role Federal Executive Boards (FEB) play, relevant to COOP, in coordinating efforts outside of the Washington, D.C., area.

Why GAO Did This Study Federal agencies must have the capacity to serve the public during disruptions to normal operations. This depends, in part, on continuity efforts that help agencies marshal, manage, and maintain their most important asset--their people, or human capital. GAO identified the human capital considerations relevant to federal continuity efforts; described efforts by the Federal Emergency Management Agency (FEMA) and the Office of Personnel Management (OPM) to address these considerations relevant to continuity of operations (COOP); and described the role Federal Executive Boards (FEB) play in coordinating such efforts outside Washington, D.C. What GAO Found According to recognized experts from the private and public sectors, continuity efforts should give priority to the immediate aftermath of a crisis--securing the safety of all employees and addressing the needs of employees who perform essential operations. However, experts noted that additional human capital considerations, especially those associated with the majority of an organization's employees who would be needed to resume all other operations, are also crucial and have not been well developed by many public and private sector organizations. To more fully address human capital considerations, experts identified two human capital principles that should guide all continuity efforts--demonstrating sensitivity to individual employee needs and maximizing the contributions of all employees--and six key organizational actions designed to enhance continuity efforts. FEMA and OPM have exhibited leadership in addressing human capital considerations relevant to COOP, but opportunities to improve exist. For example, while both agencies have issued guidance that addresses securing the safety of all employees and responding to the needs of personnel performing essential operations, neither agency's guidance addresses human capital considerations related to resuming broader agency operations. Although not specifically tasked with coordinating emergency preparedness efforts, including COOP, FEBs are uniquely positioned to do so, given their general responsibility for improving coordination among federal activities in areas outside of Washington, D.C. While some FEBs already play an active role in coordinating such efforts, the current context in which FEBs operate, including the lack of a clearly defined role and varying capacities among FEBs, could lead to inconsistent levels of preparedness across the nation.

gao_NSIAD-95-39

gao_NSIAD-95-39_0

Further, the continuing U.S. military presence at Soto Cano appears inconsistent with the current goal of the U.S. Embassy in Honduras—which is to reduce the overall size and scope of U.S. activities in Honduras in recognition of declining U.S. funding and increased political stability in the region. While the U.S. military presence at Soto Cano is useful and convenient, it is not essential to support military training activities in the region. U.S. military personnel are routinely deployed throughout Latin America for training missions without a dedicated, semipermanent U.S. logistics and support base like Soto Cano. Officials from the U.S. Army Reserve and National Guard said that the support they receive from U.S. military forces at Soto Cano makes training more convenient but that the training can be accomplished without a U.S. military presence. Two Navy P-3 counterdrug planes based in Panama sometimes use Soto Cano for refueling or as a temporary base for their operations. Therefore, we recommend that the Secretary of Defense reduce U.S. military personnel at Soto Cano to the level necessary to support counterdrug activities, pending the development of other arrangements to support those counterdrug activities; the Commissioner of the U.S. Customs Service, the Administrator of DEA, the Secretaries of State and Defense, in conjunction with the Director of the Office of National Drug Control Policy, develop a plan to conduct their operations without U.S. military units at Soto Cano; and the Secretary of Defense withdraw the remaining U.S. military personnel at Soto Cano once the interagency plan is developed and implemented. We obtained additional information related to the costs of maintaining the presence at the base from Air Force Air Combat Command Headquarters in Langley, Virginia, and the Army Forces Command Headquarters in Atlanta, Georgia.

Why GAO Did This Study GAO reviewed whether the U.S. military presence at Soto Cano Air Base in Honduras is critical to current U.S. activities and objectives in the region, focusing on: (1) the cost of maintaining U.S. forces at the base; (2) U.S. objectives for regional economic growth and democratic reform; (3) drug interdiction activities; and (4) the withdrawal of U.S. forces from an air base in Panama. What GAO Found GAO found that: (1) the U.S. military presence at Soto Cano provides useful but minimal support to some U.S. government activities in the region, but there is not sufficient justification for maintaining the presence; (2) U.S. forces are to support military training exercises, humanitarian and civic assistance exercises, and U.S. counterdrug activities in Honduras; (3) the Army acknowledges that training can be conducted in the region without a semipermanent logistics support base; (4) federal agency officials believe that they can continue their regional operations without support from the U.S. military at Soto Cano; (5) Soto Cano provides minimal support to U.S. counterdrug activities; (6) Soto Cano's potential as a support facility for military operations in Latin America is limited by the lack of a base rights agreement with Honduras, its limited capacity, and political issues; and (7) eliminating the U.S. military presence at Soto Cano would have a minimal impact on current U.S. missions and would potentially result in budgetary savings.

gao_GAO-09-630

gao_GAO-09-630_0

Guidance a Agencies Does Not Consistently Reflect OMB Guidance DOE, HHS, and DHS varied in the extent to which they had existing guidance specific to award fees and the extent to which that guidance was consistent acquisition officers and senior procurement executives in December 2007, with OMB guidance. At DOE, DHS, and HHS, individual contracting offices have developed their own approaches to implementing award fee contracts which are not always consistent with the principles in the OMB guidance or between offices within these departments. For example, an HHS contract for call center services awarded fees based on 19 performance categories which included results based criteria, such as response times, but also included criteria based more on efforts, such as requiring the contractor to ensure that staffing levels were appropriate for forecasted volumes during hours of operation, rather than measuring results. However, not all DOD programs have followed its guidance. DOD’s own analysis of its use of award fees in 2007 also showed that it pays a median of 93 percent of available award fees. However, while the median award fee scores indicate satisfaction with the results of the contracts, programs across the agencies we reviewed continue to use evaluation tools that could allow for contractors to earn award fees without performing at a level that is acceptable to the government under the terms of the contract. While the evaluation tool used by NNSA does not allow for payment of award fees for unsatisfactory performance, the evaluation method used by the Office of Science allows a contractor to earn up to 84 percent of the award fee for performance that is defined as not meeting expectations. Agencies Are Not Collecting, Analyzing, and Sharing Information on Award Fees to Evaluate the Effectiveness of Their Use. While DOD has collected information on award fee contracts in 2007 and 2008 in accordance with legislative requirements, these data are not being used to evaluate the effectiveness of award fee contracts. Within DOD, we found that information sharing on best practices and lessons learned is inconsistent between contracting commands. NASA officials stated that the use of award fees and the criteria being used to measure contractor performance are frequent topics in these meetings. Limiting the opportunity for contractors to have a second chance at earning previously unearned fee maximizes the incentive during an award fee period. We recommend that the Secretaries of Energy, Health and Human Services, and Homeland Security update or develop implementing guidance on: developing criteria to link award fees to acquisition outcomes such as cost, schedule, and performance; using an award fee in combination with incentive fees to maximize the effectiveness of subjective and objective criteria; determining when rolling over unearned fees to subsequent periods establishing evaluation factors, including definitions of performance, associated fees, and evaluation scales, that motivate contractors toward excellent performance; and prohibiting payments of award fees for performance that is judged to be unsatisfactory or does not meet contract requirements. Appendix I: Scope and Methodology To identify the actions agencies have taken to revise or develop policies or guidance on the use of award fees, we assessed procurement policies at the departments of Defense (DOD), Energy (DOE), Health and Human Services (HHS), and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA). These five agencies provided over 95 percent of the total dollars obligated against contracts with an award fee in fiscal year 2008, according to the Federal Procurement Data System (FPDS). We reviewed our prior work on the use of award fees at DOD and NASA to identify policies and guidance in place and examined these agencies in regards to changes that were implemented based on our recommendations, legislative requirements, internal guidance, and governmentwide guidance from the Office of Management and Budget (OMB). To determine whether current practices for using award fee contracts are consistent with OMB guidance, we reviewed data from 645 evaluation periods in 100 contracts at the five agencies from fiscal year 2004 through fiscal year 2008, allowing for a comparison of practices before and after OMB’s guidance.

Why GAO Did This Study In prior work, GAO found that contractors were paid billions of dollars in award fees regardless of acquisition outcomes. In December 2007, the Office of Management and Budget (OMB) issued guidance aimed at improving the use of award fee contracts. GAO was asked to (1) identify agencies' actions to revise or develop award fee policies and guidance to reflect OMB guidance, (2) assess the consistency of current practices with the new guidance, and (3) determine the extent agencies are collecting, analyzing, and sharing information on award fees. GAO reviewed the Departments of defense (DOD), Energy (DOE), Health and Human Services (HHS), and Homeland Security (DHS) and the National Aeronautics and Space Administration (NASA)--agencies that constituted over 95 percent of the dollars spent on award fee contracts in fiscal year 2008. What GAO Found From fiscal year 2004 through fiscal year 2008, agencies have spent over $300 billion on contracts that include monetary incentives, or award fees, for performance that is evaluated against subjective criteria. OMB's guidance on using award fees includes principles such as limiting the opportunities for earning unearned fees in subsequent periods, linking award fees to acquisition outcomes, designing evaluation criteria to motivate excellent performance, and not paying for performance that is unsatisfactory. These principles are largely reflected in DOD's and NASA's updated guidance on the use of award fees. For example, DOD now prohibits payment of award fees for unsatisfactory performance, and NASA requires a documented cost-benefit analysis to support the use of an award fee contract. However, DOE, DHS, and HHS vary in the extent to which their agency-wide guidance reflects the OMB guidance. These departments generally rely on operational divisions to develop award fee guidance; however, many acquisition professionals at these agencies were unaware of the contents of the OMB guidance. Current practices for using award fee contracts at agencies GAO reviewed often are inconsistent with the new guidance. However, where the revised policies have been applied, the results have been hundreds of millions of dollars in cost savings and better use of government funds. For example, by limiting second chances at unearned fees in eight programs, GAO estimates that DOD will save over $450 million through fiscal year 2010. These practices, however, are not being implemented across DOD. NASA programs now document cost benefit analyses to justify using award fee contracts. Without clear guidance, agencies within DOE, HHS, and DHS have developed various approaches to using award fees. For example, while DOE's median award fee paid indicates satisfaction with the results of its contracts, its Office of Science uses a scoring system that could allow for payment of up to 84 percent of an award for performance that does not meet expectations. Most of the agencies we reviewed continue to allow contractors second chances at unearned fees. For example, at DHS, a contractor was able to earn 100 percent of its unearned fee in a subsequent period. Agencies do not always use criteria that are based on measuring results. For example, one HHS contract for a call center included criteria that focused more on efforts, such as maintaining proper staffing levels during hours of operation, rather than on measuring results. Only DOD collects data on the use of award fees. However, the data are largely used to respond to legislative requirements for award fee information. Agencies generally do not have methods to evaluate the effectiveness of award fees. While individual programs and some offices have taken steps to evaluate award fee criteria, officials stated that identifying metrics to compare performance across programs would be difficult. Further, while GAO found effective practices within some agencies, the lack of a governmentwide or, with the exception of DOD, agencywide forum to share information allows these to remain isolated examples of potential best practices.

gao_T-HEHS-98-146

gao_T-HEHS-98-146_0

Inattention to Verifying Recipients’ Initial and Continuing Eligibility Has Had Negative Effects nursing home residents continued to receive full SSI benefits. program weakness. SSA’s failure to use this information while waiting for the implementation of an alternative system has left the SSI program open to continued abuse and millions of dollars in potential overpayments. SSA Overpayment Collections Have Received Inadequate Agency Attention In addition to problems associated with SSA’s verification of important SSI eligibility information, SSA has not placed adequate priority on recovering overpayments, which reached $2.6 billion by 1997. Between 1989 and 1997, SSI debt carried on SSA’s books more than doubled to about $2.6 billion. Although annual overpayment recoveries also increased during this period, the gap between what is owed SSA and what is actually collected each year has continued to widen. Another reason SSI overpayment debt has increased is that SSA does not have and has not adequately pursued the authority to use more aggressive debt collection tools, including the ability to administratively intercept other federal benefit payments recipients may receive, notify credit bureaus of an individual’s indebtedness, use private collection agencies, and charge interest on outstanding SSI debt. Although the agency lacks statutory authority to use these tools to pursue SSI overpayments, in a recent testimony, SSA management acknowledged that such tools are valuable in collecting program overpayments. SSI Program Remains Vulnerable to Fraud and Abuse In prior work, we identified several SSI program areas subject to fraud and abuse. Since becoming an independent agency in 1995, SSA has begun to take more decisive action to address SSI program fraud and abuse. According to SSA, this new emphasis on early prevention represents a major shift away from how it has traditionally dealt with SSI fraud and abuse. It is too early to tell what immediate and long-term effects SSA’s activities will have on detecting and preventing SSI fraud and abuse. When these write-offs are combined with the SSI debt currently owed the agency, the actual amount of SSI overpayments exceeds $4.4 billion. To a great extent, SSI program problems are attributable to an ingrained organizational culture that has historically placed a greater value on quickly processing and paying SSI claims than on controlling program expenditures. As noted throughout this testimony, SSA is also taking steps to address some of the weaknesses in the SSI program. Supplemental Security Income: Long-standing Problems Put Program at Risk for Fraud, Waste, and Abuse (GAO/T-HEHS-97-88, Mar.

Why GAO Did This Study GAO discussed the needed changes in the Social Security Administration's (SSA) Supplemental Security Income (SSI) program, focusing on SSA's efforts to: (1) verify recipients' initial and continuing eligibility for benefits; (2) deter and collect SSI overpayments; and (3) address SSI program fraud and abuse. What GAO Found GAO noted that: (1) the SSI program is at considerable risk of waste, fraud, and mismanagement because of an agency culture that has tended to view the SSI program in much the same way as SSA's title II programs--which place emphasis on making payments to an entitled population--rather than as a welfare program that requires stronger income and asset verification policies; (2) because of this culture, SSA has often relied heavily on applicants to self-report important eligibility information, which it has tried to validate with untimely and incomplete verification processes; (3) SSA also continues to lack essential collection tools to pursue SSI overpayments once they are identified and has not made fraud detection and prevention an agencywide workload priority; (4) thus, annual SSI overpayments have increased steadily, program abuses continue to occur, and the gap between overpayments recovered by SSA each year and what is owed the program continues to grow; (5) as outstanding SSI overpayment debt has mounted, annual SSI write-offs have increased; (6) since 1989, SSA has written off more than $1.8 billion in SSI overpayments; (7) these write-offs represent overpaid taxpayer dollars that SSA will probably not recover; (8) more recently, SSA management has focused increasing attention on addressing some of its long-standing SSI program problems and intends to develop a SSI action plan in accordance with the Government Performance and Results Act of 1993, which provides agencies with a new uniform framework with which to develop their plans and monitor progress; (9) however, many of SSA's initiatives are still in the planning or early implementation stages, and SSA still lacks a comprehensive long-term strategy for improving SSI program performance; and (10) thus, GAO's concerns about underlying SSI program vulnerabilities remain.

gao_GAO-01-483

gao_GAO-01-483_0

Also, figure 1 shows that the number of offenders reincarcerated for violating parole or other release conditions increased more than sevenfold, from 28,817 in 1980 to 209,782 in 1998. Nonetheless, the reincarcerations shown in figure 1 represent an increasing proportion of all prison admissions. Further, regarding past criminal history, table 4 shows that 61 percent of federal inmates and 76 percent of state inmates who were in prison in 1997 had been sentenced before, and 40 percent of federal inmates and 55 percent of state inmates in prison in 1997 had served prior prison sentences. More than 7 in 10 (73 percent) of the federal inmates and 8 in 10 (83 percent) of the state inmates reported having used illegal drugs before their current admission. About one of every four federal and state inmates—25 percent and 24 percent, respectively—had participated in a drug treatment program since their admission. Reintegration Addressed in Three Phases of Federal Correctional System Generally, in the federal correctional system, an inmate’s preparation for reintegration is to encompass all three phases of the system. For example: Drug treatment. Work training. The goal of the interagency initiative is to help states and communities work together to improve offender supervision and accountability and essential support services in order to enhance community safety through the successful reintegration to the community of high-risk or special-need offenders released from state prisons, juvenile correctional facilities, and local facilities housing state prisoners. Applicants may apply for awards under both solicitations. Trends in Prisoner Releases and Recidivism To determine trends in the number of inmates released from federal and state prisons and the extent of recidivism, we used data collected or published by two agencies—the Bureau of Justice Statistics (BJS) and the Bureau of Prisons (BOP). No grant funding would be provided to establish state and local reentry courts under S. 304.

What GAO Found The number of federal and state inmates released to communities increased more than threefold from 1980 to 1998. Since 1980, recidivism rates have been about 40 percent. Within the group of recidivists, the number of offenders reincarcerated for violating parole or other release conditions rose more than sevenfold from 1980 to 1998. Furthermore, such reincarcerations represent an increasing proportion of all prison admissions. The Bureau of Justice Statistics' (BJS) 1997 survey found that most federal offenders (62 percent) were imprisoned for drug offense convictions, and almost half (47 percent) of all state offenders were incarcerated for violent offense convictions. Also, the majority of inmates in both correctional systems--federal inmates (73 percent) and state inmates (83 percent)--had some history of illegal drug use. BJS' survey also showed that 27 percent of both federal and state exit cohort inmates participated in vocational training programs, and 11 percent of federal and 2 percent of state exit cohort inmates worked in prison industry jobs. In addition, 33 percent of the federal inmates and 36 percent of the state inmates participated in residential in-patient treatment programs for alcohol and drug abuse. In the federal correctional system, an inmate's preparation for reintegration generally encompasses three phases--the prerelease, halfway house, and community supervision. Under the Offender Reentry Initiative, federal discretionary grants would be provided to help states and communities work together to improve offender supervision and accountability--and essential support services--to minimize public safety issues posed by high-risk or special-needs offenders released from state prisons, juvenile correctional facilities, and local facilities housing state prisoners. A solicitation for grants is expected by the end of May 2001, and awards are expected to be made by the end of September 2001.

gao_GAO-03-529T

gao_GAO-03-529T_0

Most Tanks Have Been Upgraded, but Many Are Not Properly Operated and Maintained Based on state responses to our survey, we estimated that nearly 617,000, or about 89 percent of the approximately 693,000 regulated tanks states manage, had been upgraded with the federally required equipment by the end of fiscal year 2000. Even though most tanks have been upgraded, we estimated from our survey data that more than 200,000 of them, or about 29 percent, were not being properly operated and maintained, increasing the risk of leaks. Some upgraded tanks also continue to leak, in part because of operational and maintenance problems. For example, in fiscal year 2000, EPA and the states confirmed a total of more than 14,500 leaks or releases from regulated tanks, with some portion coming from upgraded tanks. The states reported a variety of operational and maintenance problems, such as operators turning off leak detection equipment. The states attributed these problems to a lack of training for tank owners, installers, operators, removers, and inspectors. Most States Do Not Meet EPA’s Recommendation to Inspect All Tanks Every 3 Years or Have the Enforcement Tools Needed to Identify and Correct Problems According to EPA’s program managers, only physical inspections can confirm whether tanks have been upgraded and are being properly operated and maintained. Officials in 40 states said that they would support a federal mandate requiring states to periodically inspect all tanks, in part because they expect that such a mandate would provide them needed leverage to obtain the requisite inspection staff and funding from their legislatures. As figure 3 illustrates, at the time of our survey, 27 states reported that they did not have the authority to prohibit suppliers from delivering fuel to stations with problem tanks, one of the most effective tools to ensure compliance. States Have Made Progress in Cleaning Up Leaks but Still Face a Potentially Large Workload; Some May Need Federal Funds to Help Address It At the end of fiscal year 2002, EPA and states had completed cleanups of about 67 percent (284,602) of the 427,307 known releases at tank sites. However, states still have to ensure that ongoing cleanups are completed for another 23 percent (99,427) and that cleanups are initiated at a backlog of 43,278 sites. However, in addition to their known workload, states may likely face a potentially large but unknown future cleanup workload for several reasons: (1) as many as 200,000 tanks may be unregistered or abandoned and not assessed for leaks, according to an EPA estimate; (2) tens of thousands of empty and inactive tanks have not been permanently closed or had leaks identified; and (3) some states are reopening completed cleanups in locations where MTBE was subsequently detected. In the June 2002 Vermont survey of state funding programs, nine states said they did not have adequate funding to cover their current program costs, let alone unanticipated future costs. In addition, MTBE is being detected nationwide and its cleanup is costly.

Why GAO Did This Study Nationwide, underground storage tanks (UST) containing petroleum and other hazardous substances are leaking, thereby contaminating the soil and water, and posing health risks. The Environmental Protection Agency (EPA), which implements the UST program with the states, required tank owners to install leak detection and prevention equipment by the end of 1993 and 1998 respectively. The Congress asked GAO to determine to what extent (1) tanks comply with the requirements, (2) EPA and the states are inspecting tanks and enforcing requirements, (3) upgraded tanks still leak, and (4) EPA and states are cleaning up these leaks. In response, GAO conducted a survey of all states in 2000 and issued a report on its findings in May 2001. This testimony is based on that report, as well as updated information on program performance since that time. What GAO Found GAO estimated in its May 2001 report that 89 percent of the 693,107 tanks subject to UST rules had the leak prevention and detection equipment installed, but that more than 200,000 tanks were not being operated and maintained properly, increasing the chance of leaks. States responding to our survey also reported that because of such problems, even tanks with the new equipment continued to leak. EPA and the states attributed these problems primarily to poorly trained staff. While EPA is working with states to identify additional training options, in December 2002, EPA reported that at least 19 to 26 percent of tanks still have problems. EPA and states do not know how many upgraded tanks still leak because they do not physically inspect all tanks. EPA recommends that tanks be inspected once every 3 years, but more than half of the states do not do this. In addition, more than half of the states lack the authority to prohibit fuel deliveries to problem tanks--one of the most effective ways to enforce compliance. States said they did not have the funds, staff, or authority to inspect more tanks or more strongly enforce compliance. As of September 2002, EPA and states still had to ensure completion of cleanups for about 99,427 leaks, and initiation of cleanups at about another 43,278. States also face potentially large, but unknown, future workloads in addressing leaks from abandoned and unidentified tanks. Some states said that their current program costs exceed available funds, so states may seek additional federal support to help address this future workload.

gao_GAO-08-654

gao_GAO-08-654_0

According to IRS SOI estimates, only 10 percent of those eligible contributed in 2004. Myriad of Rules Govern IRA Transactions, and IRS Provides Services to Educate Taxpayers Individuals face a myriad of tax rules in using tax-advantaged traditional and Roth IRAs, and noncompliance can trigger taxes and penalties that may reduce their retirement savings. Contribution Rules Both traditional and Roth IRAs have rules governing eligibility to contribute, and all IRA contributions are subject to an annual limit. For a traditional IRA in tax year 2008, eligibility for a full or partial deduction from taxable income depends on whether a taxpayer or spouse is covered by an employer-sponsored retirement plan as well as limits on modified adjusted gross income (AGI) and filing status, as shown in table 2. Distribution Rules Whereas both IRA types share a combined contribution limit and have rules limiting eligibility, tax rules for distributions diverge for traditional and Roth IRAs. Rollover and Conversion Rules Rollovers, where a taxpayer moves money from a pension plan or an IRA into another IRA, are also subject to rules specifying that a tax-free rollover must be completed within 60 days of the taxpayer receiving the money and that only one IRA-to-IRA rollover is allowed per traditional IRA during a 1-year period. The NRP examination study of tax year 2001 returns, the most recent research results available, showed that nearly 15 percent of those who made traditional IRA contribution deductions misreported their deductions on their tax returns, and nearly 15 percent of taxpayers who took taxable distributions from traditional IRAs misreported this information. IRS relies primarily on automated enforcement to detect misreported IRA contribution deductions and taxable distributions. Complexity Underlies the Challenges That Taxpayers Face in Complying with IRA Rules, and Some Options Could Bolster IRS Service While Other Options Would Require Legislative Change In using traditional and Roth IRAs to save for their own retirement, taxpayers face challenges in figuring how much they can contribute, navigating the various distribution rules, and moving their IRAs between custodians. Representatives of financial firms and advisors we interviewed identified some options for IRS to clarify IRA guidance or offer additional IRA service activities. For example, for tax year 2004, IRS’s AUR program assessed $23.2 million in additional tax on nearly 24,000 taxpayers who overdeducted or ineligibly deducted traditional IRA contributions. Challenges with IRA Distribution Rules On the distribution end, some taxpayers may be confused about which IRA distributions are taxable or subject to penalty, and older taxpayers in particular may not understand when they must begin required minimum distributions from traditional IRAs. Financial industry organization and advisor representatives generally agreed that the required minimum distribution rule for traditional IRAs was particularly challenging for older taxpayers in terms of both determining the timing of the first distribution and calculating the correct amount. IRS also could explore developing new tools to aid taxpayers in complying with complex IRA rules. Options requiring additional reporting by IRA custodians could improve information available to help taxpayers comply with IRA rules and to help IRS detect noncompliance, but such options pose trade-offs in terms of the added reporting burden for those parties and costs for IRS to use the information. Broad IRA legislative options, such as eliminating limits on income eligibility for traditional IRA contribution deductions or Roth IRA contributions or eliminating the required minimum distribution rule, could greatly simplify the rules for some taxpayers, such as older taxpayers who do not need to draw down their IRAs to pay for retirement needs. IRS’s service efforts, such as Publication 590, have been a positive step toward strengthening taxpayer compliance. Appendix I: Scope and Methodology The objectives of this report are to (1) provide an overview of key individual retirement account (IRA) contribution, distribution, and other rules and describe how the Internal Revenue Service (IRS) educates taxpayers on these rules; (2) describe what IRS knows about the extent of noncompliance for IRA transactions reported on tax returns; and (3) describe the challenges taxpayers face with key IRA rules and some options to strengthen taxpayer compliance. Annual contributions are subject to a total limit. Roth Contribution An after-tax contribution to a Roth IRA by eligible taxpayers. Excess accumulations are subject to a 50 percent penalty.

Why GAO Did This Study Individual retirement accounts (IRA) allow individuals to save for retirement in a tax-preferred way. Traditional IRA contributions, subject to certain limitations, can be deducted from taxable earnings and taxes on earnings are deferred until distribution. In contrast, Roth IRA contributions are made after tax and distributions are tax-free. Faced with a myriad of rules covering IRA contributions and distributions, taxpayers may fail to comply with the rules. GAO was asked to (1) provide an overview of key rules and describe how the Internal Revenue Service (IRS) educates taxpayers about these rules, (2) describe what IRS knows about the extent of noncompliance with IRA transactions reported on taxpayer returns, and (3) describe challenges taxpayers face with key rules and some options for strengthening compliance. GAO reviewed IRS documents and compliance data. To identify challenges, GAO interviewed officials from the financial industry and advisor representatives. What GAO Found Taxpayers face a myriad of tax rules governing contributions to, distributions from, and rollovers between accounts for traditional and Roth IRAs. Both types of IRAs have rules governing eligibility to contribute, and all IRA contributions are subject to an annual limit. For example, eligibility to deduct (from taxable income) contributions to a traditional IRA and to contribute to a Roth IRA depends on taxpayer income and filing status, while coverage by an employer-sponsored retirement plan only affects eligibility for deductible contributions to a traditional IRA. Tax rules for distributions diverge for traditional and Roth IRAs, but both types are generally subject to a 10 percent early withdrawal penalty, with some exceptions. Further, traditional IRA owners over age 70? must take minimum distributions or face a 50 percent penalty on the required distribution amount. Rollovers, where a taxpayer moves money from one account into an IRA account, must be completed within 60 days, or the amounts are taxable and subject to penalty. To assist taxpayers in voluntarily complying with IRA rules, IRS offers special publications and telephone assistance for taxpayers with IRA questions. Even with IRS's service efforts, IRS data show that some taxpayers fail to comply with rules for reporting contribution deductions and taxable distributions from traditional IRAs. IRS's National Research Program showed that nearly 15 percent of taxpayers who took traditional IRA contribution deductions as well as 15 percent of those who took taxable distributions misreported on them on their tax returns in 2001 (the most recent data available). IRS has automated enforcement programs--matching tax returns with information reported by IRA custodians--to detect and correct these types of IRA misreporting. For tax year 2004, IRS assessed additional taxes of $23.2 million for ineligible traditional IRA contribution deductions or exceeding the deduction limits and $61.1 million in taxes and penalties for early withdrawals from traditional IRAs. As partly shown by taxpayer misreporting to IRS, taxpayers face challenges in figuring how much they can contribute, navigating the various distribution rules, and rolling over their IRAs between custodians. For example, according to representatives of financial firms and advisors GAO interviewed, taxpayers may not understand that the annual contribution limit applies across traditional IRAs and Roth IRAs in combination. On the distribution side, interviewees said that older taxpayers make mistakes in determining when they must start distributions and calculating the correct amount. Interviewees identified some options for IRS to clarify guidance, such as for the combined contribution limit rule, or develop tools to help taxpayers, such as a Webbased calculator for required minimum distributions. IRS could explore actions such as requiring additional reporting by custodians or simplifying the required minimum distribution rule to strengthen compliance with this complicated rule. Other options to reduce the complexity of IRA rules, such as eliminating income limits on eligibility, pose trade-offs and could be considered in the context of broader tax reform

gao_GAO-07-1022T

gao_GAO-07-1022T_0

If these Medicare beneficiaries did not sign up for a Part D plan on their own, they have no drug coverage until they are enrolled in a PDP by CMS. CMS’s Enrollment Process Takes Time and Can Create Difficulties for Some Dual-Eligible Beneficiaries Given the number of entities, information systems, and administrative steps involved, it takes a minimum of 5 weeks for CMS to identify and enroll a new dual-eligible beneficiary in a PDP. As a result, two out of three new dual-eligible beneficiaries—generally those who are Medicare eligible and then become Medicaid eligible—may experience difficulties obtaining their prescription drugs under Part D during this interval. For other new dual-eligible beneficiaries—those switching from Medicaid to Medicare drug coverage—CMS instituted a prospective enrollment process in late 2006 that enrolls these individuals before their date of Medicare eligibility and offers a seamless transition to Part D coverage. During this interval, pharmacies may not have up-to-date PDP enrollment information on new dual-eligible individuals. This may result in beneficiaries having difficulty obtaining Part D-covered drugs at their pharmacies. However, we found that these measures have not always worked effectively. Because states can predict and notify CMS which Medicaid beneficiaries will become new dual-eligible beneficiaries and when, CMS begins the enrollment process for these individuals 2 months before the their anticipated dual-eligible status is attained. Fully implemented in November 2006, prospective enrollment applies to about one-third of the new dual-eligible beneficiaries enrolled in PDPs by CMS. CMS Made Drug Coverage Retroactive, but Did Not Inform Beneficiaries of Their Right to Reimbursement For the majority of new dual-eligible beneficiaries, CMS requires PDPs to provide drug coverage retroactively, typically by several months. However, we found that CMS did not fully implement or monitor the impact of this policy. CMS made the effective date of Part D drug coverage for Medicare beneficiaries who become Medicaid eligible coincide with the effective date of their Medicaid eligibility. Under this policy, Part D coverage for these beneficiaries is effective the first day of the month that Medicaid eligibility is effective, which generally occurs 3 months prior to the date an individual’s Medicaid application was submitted to the state, if the individual was eligible for Medicaid during this time. Medicare makes payments to the PDPs for providing drug coverage retroactively. Given the vulnerability of this population, it seems unlikely that many dual-eligible beneficiaries would have contacted their PDPs for reimbursement if they were not clearly informed of their right to do so and given information about how to file for reimbursement, neither would they likely have retained proof of their drug expenditures. In addition, CMS’s incomplete implementation of its retroactive coverage policy in 2006 means that CMS paid PDPs millions of dollars for coverage during periods for which dual-eligible beneficiaries may not have sought reimbursement for their drug costs. As of March 2007, CMS has modified its letters to dual- eligible beneficiaries to include language informing them of their right to reimbursement for drug costs incurred during retroactive coverage periods and required PDP sponsors to do the same.

Why GAO Did This Study Under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), dual-eligible beneficiaries--individuals with both Medicare and Medicaid coverage--have their drug costs covered under Medicare Part D rather than under state Medicaid programs. The MMA requires the Centers for Medicare & Medicaid Services (CMS) to enroll these beneficiaries in a Medicare prescription drug plan (PDP) if they do not select a plan on their own. CMS enrolled about 5.5 million dual-eligible beneficiaries in late 2005 and about 634,000 who became dually eligible during 2006. GAO was asked to testify on (1) CMS's process for enrolling new dual-eligible beneficiaries into PDPs and its effect on access to drugs and (2) how CMS set the effective coverage date for certain dual-eligible beneficiaries and its implementation of this policy. This testimony is based on the GAO report, Medicare Part D: Challenges in Enrolling New Dual-Eligible Beneficiaries (GAO-07-272). What GAO Found CMS's process for enrolling new dual-eligible beneficiaries who have not yet signed up for a PDP involves many parties, information systems, and administrative steps, and takes a minimum of 5 weeks to complete. For about two-thirds of these individuals--generally Medicare beneficiaries who subsequently qualify for Medicaid--pharmacies may not have up-to-date PDP enrollment information needed to bill PDPs appropriately until the beneficiaries' data are completely processed. As a result, these beneficiaries may have difficulty obtaining their Part D-covered prescription drugs during this interval. CMS has created contingency measures to help individuals obtain their new Medicare benefit, but these measures have not always worked effectively. For the other one-third of new dual-eligible beneficiaries--Medicaid enrollees who become Medicare-eligible because of age or disability--CMS eliminated the impact of processing time by enrolling them in PDPs just prior to their attaining Medicare eligibility. This prospective enrollment, implemented in late 2006, offers these dual-eligible beneficiaries a seamless transition to Medicare Part D coverage. CMS set the effective Part D coverage date for Medicare eligible beneficiaries who subsequently become eligible for Medicaid to coincide with the date their Medicaid coverage becomes effective. Under this policy, which was designed to provide drug coverage for dual-eligible beneficiaries as soon as they attain dual-eligible status, the start of the Part D coverage can extend retroactively for several months before the date beneficiaries are notified of their PDP enrollment. GAO found that CMS did not fully implement or monitor the impact of this policy. Although beneficiaries are entitled to reimbursement for covered drug costs incurred during this retroactive period, CMS did not begin informing them of this right until March 2007. Given their vulnerability, it is unlikely that these beneficiaries would have sought reimbursement or retained proof of their drug purchases if they were not informed for their right to do so. Also, CMS made monthly payments to PDPs for providing drug coverage during retroactive periods, but did not monitor PDPs' reimbursements to beneficiaries during that period. GAO estimated that in 2006, Medicare paid PDPs millions of dollars for coverage during periods for which dual-eligible beneficiaries may not have sought reimbursement for their drugs.

gao_GAO-02-712T

gao_GAO-02-712T_0

Most Tanks Have Been Upgraded, but Many Are Not Properly Operated and Maintained Based on state responses to our survey, we estimated that nearly 617,000, or about 89 percent of the approximately 693,000 regulated tanks, had been upgraded with the federally required equipment by the end of fiscal year 2000. However, another five states reported that at least half of their non-upgraded tanks were still in use. EPA and states assume that the tanks are empty or inactive and therefore pose less risk. According to our survey results, some states and EPA regions would need additional staff to conduct more frequent inspections. Some Tanks Continue to Leak Even After They Have Been Upgraded, Although the Extent of this Problem is Unknown In fiscal year 2000, EPA and the states confirmed a total of more than 14,500 leaks or releases from regulated tanks, although the Agency and many of the states could not verify whether the releases had occurred before or after the tanks had been upgraded. EPA, as one of its program initiatives, is working with the states to gather data on leaks from upgraded tanks in order to determine whether equipment requirements need to be strengthened, such as requiring double-walled tanks. In closing, the states and EPA cannot ensure that all regulated tanks have the required equipment to prevent health risks from fuel leaks, spills, and overfills or that tanks are safely operated and maintained.

Why GAO Did This Study Hazardous substances that leak from underground storage tanks can contaminate the soil and water and pose continuing health risks. Leaks of methyl tertiary butyl ether--a fuel additive--have forced several communities to close their wells. GAO surveyed all 50 states and the District of Columbia to determine whether tanks are compliant with the Environmental Protection Agency's (EPA) underground storage tank (UST) requirements. What GAO Found About 1.5 million tanks have been closed since the program was created, leaving about 693,000 tanks subject to UST requirements. Eighty-nine percent of these tanks had the required protective equipment installed, but nearly 30 percent of them were not properly operated and maintained. EPA estimates that the rest were inactive and empty. More than half of the states do not meet the minimum rate recommended by EPA for inspections. State officials said that they lacked the money, staff, and authority to conduct more inspections or more strongly enforce tank compliance. States reported that even tanks with the required leak prevention and detection equipment continue to leak, although the full extent of the problem is unknown. EPA is seeking better data on leaks from upgraded tanks and is considering whether it needs to set new tank requirements, such as double-walled tanks, to prevent future leaks.

gao_GAO-08-32

gao_GAO-08-32_0

Measuring the Costs and Benefits of Regulation Has Been Difficult, Complicating Efforts to Reduce Regulatory Burden Measuring the costs and benefits of financial regulation has posed a challenge to regulators and the financial services industry. We recently recommended several steps that agencies should take to ensure they conduct effective and transparent reviews of regulations, including consideration of whether and how to measure the performance of regulation during the process of promulgating the regulation and steps to improve the communication of regulatory reviews to the public. For instance, bank capital adequacy regulation provides an example of the inherent difficulty of assessing the value of regulation. U.S. Regulators Have Reviewed Existing Regulations U.S. regulatory agencies have undertaken several efforts to lessen regulatory burden and cost of existing regulations. Another outcome of the EGRPRA process was the development of proposals that were incorporated into the Financial Services Regulatory Relief Act of 2006. Others noted the importance of considering legislation’s contribution to regulatory burden. Further, increased convergence in product offerings and increased concentration of assets in large, complex firms pose a challenge for regulatory agencies to act consistently in responding to risks that cut across the functional lines that define the regulatory structure. While the regulatory agencies have taken action to work collaboratively in response to the industry’s trends, we have noted in the past that it is difficult to collaborate within the fragmented U.S. regulatory system and concluded that the structure of the federal regulatory system should be reexamined. 2.). 3). Recent Legislative Changes Have Affected the Financial Services Industry The financial services industry and the manner in which it is regulated have changed in recent decades as a result of legislative action. The legislation both responded and contributed to the industry trends. In turn, regulatory competition has prompted changes to modernize the regulatory structure and allow financial institutions to offer a diverse range of products and services to meet the needs of their customers. A representative of state banking authorities was added to this council as a full voting member by the Financial Services Regulatory Relief Act of 2006. In particular, the fact that different agencies have jurisdiction over large, complex firms that offer similar services to their customers creates the potential for inconsistent and inequitable treatment. Further, despite the changes posed by the industry’s dynamic environment, clear accountability for addressing issues that span agencies’ jurisdiction is not clearly assigned in the current system. These issues have led us to suggest that modernizing the federal financial regulatory system is a key challenge facing the United States in the 21st century. Forum participants and others have suggested that some lessons could be learned from the principles-based approach to regulation of the United Kingdom’s Financial Services Authority (FSA). Defining clear and consistent goals for regulatory agencies would be a significant step toward modernizing the regulatory structure. Each of these options would provide potential improvements, as well as some risks and costs. A number of participants in the Forum believed that lessons can be learned from the FSA’s single regulator model. Clear, Consistent Regulatory Goals Are Important Steps to Improve Regulatory Effectiveness In addition to suggesting options to modernize the federal financial regulatory structure, our prior work also has identified the importance of clear and consistent goals for financial regulation. Enhanced efficiency and reduced regulatory burden. Commitment to consumer and investor protection. We are sending copies of this report to other interested congressional committees and to the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve System, the Chairman of the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Chairman of the Securities Exchange Commission, the Chairman of the Commodities and Futures Trading Commission, the Director of the Office of Thrift Supervision, and the Chairman of the National Credit Union Administration.

Why GAO Did This Study As the financial services industry has become increasingly concentrated in a number of large, internationally active firms offering an array of products and services, the adequacy of the U.S. financial regulatory system has been questioned. GAO has identified the need to modernize the financial regulatory system as a challenge to be addressed in the 21st century. This report, mandated by the Financial Services Regulatory Relief Act of 2006, discusses (1) measurements of regulatory costs and benefits and efforts to avoid excessive regulatory burden, (2) the challenges posed to financial regulators by trends in the industry, and (3) options to enhance the efficiency and effectiveness of the federal financial regulatory structure. GAO convened a Comptroller General's Forum (Forum) with supervisors and leading industry experts, reviewed regulatory agency policies, and summarized prior reports to meet these objectives. What GAO Found The inherent problems of measuring the costs and benefits of regulation make it difficult to assess the extent to which regulations may be unduly burdensome to U.S. financial services firms, particularly in comparison to firms in other countries. Additionally, it is difficult to separate the costs of complying with regulation from other costs and thus determine regulatory burden. Regulatory agencies, however, have undertaken several initiatives to reduce regulatory burden; these efforts contributed to the Financial Services Regulatory Relief Act of 2006. While noting that regulation contributes to confidence in financial institutions and markets, participants in the Forum agreed regulators have opportunities to further reduce regulatory burden and suggested regulators better measure the results of implemented regulations. GAO also recently recommended regulatory agencies consider whether and how to measure the performance of regulation during the process of promulgating the regulation and improving the communication of regulatory reviews to the public. The current regulatory structure, with multiple agencies that oversee segments of the financial services industry, is challenged by a number of industry trends. The development of large, complex, internationally active firms whose product offerings span the jurisdiction of several agencies creates the potential for inconsistent regulatory treatment of similar products, gaps in consumer and investor protection, or duplication among regulators. Regulatory agencies have made efforts to collaborate in responding to these trends and avoid inconsistencies, gaps, and duplication. However, challenges remain; until recently, the Office of Thrift Supervision and the Securities and Exchange Commission, for instance, had not sought to resolve potentially duplicative and inconsistent regulation of several financial services conglomerates for which both agencies have jurisdiction. Finally, despite the challenges posed by the industry's dynamic environment, accountability for addressing issues that span agencies' jurisdiction is not clearly assigned. These issues have led GAO to suggest in prior work that the federal regulatory structure should be modernized. GAO and others have recommended several options to accomplish modernization of the federal financial regulatory structure; these include consolidating certain regulatory functions as well as having a single regulator for large, complex firms. There also are potential lessons that can be learned from the experience of other nations that have restructured their financial regulators. Several Forum participants, for instance, suggested that one important lesson the United States could learn from the United Kingdom's Financial Services Authority was the value of setting principles or goals for regulators. The Department of the Treasury's recently announced plan to propose a restructured regulatory system provides an opportunity to take the first step toward modernization by providing clear and consistent goals for the regulatory agencies.

gao_GAO-12-544

gao_GAO-12-544_0

For example, many states with uranium deposits require that an operator provide a financial assurance for the full cost of reclamation for a mining site. Agencies Differ in Their Oversight of Uranium Operations on Federal Land BLM, the Forest Service, and DOE all oversee uranium exploration and extraction operations on the federal land they manage, but we identified three areas where their processes differ: (1) notification of exploration or extraction operations, (2) oversight of financial assurances, and (3) royalties and rents earned. DOE has collected approximately $64 million in royalties since the beginning of the lease program in the 1940s. Over 200 Uranium Operations Are on Federal Land, but Few Are Actively Extracting Uranium As of January 2012, a total of 221 uranium operations were on federally managed land, but only 7 of these operations were actively extracting uranium and these were all on BLM land. An additional 29 uranium operations were awaiting federal approval. Most of the operations—202— were on BLM land; another 3 were on Forest Service land, and the remaining 16 were on DOE lease tracts. Agency Data Indicate That Financial Assurances Adequately Cover Nearly All Operations, but BLM and NRC Do Not Coordinate in Establishing Some Assurances As of January 2012, BLM, the Forest Service, and DOE reported $249.1 million in financial assurances, and these assurances appear to be generally adequate to cover the estimated reclamation costs for uranium operations on federal land, according to our analysis of agency data. The remaining $1.5 million in financial assurances is for authorized operations on land managed by the Forest Service and for DOE lease tracts. BLM and NRC Do Not Coordinate when Establishing and Reviewing Assurances for ISR Operations We found that two ISR operations—the Smith Ranch and Highland operations in Wyoming—account for $213 million in financial assurances, or 86 percent of the total financial assurances held for uranium operations on land managed by BLM. Federal Agencies Do Not Have Reliable Data on the Number and Location of Abandoned Uranium Mines or Their Associated Cleanup Costs Federal agencies do not have reliable data on the number and location of abandoned uranium mine sites on federal lands and the potential cleanup costs associated with these sites, according to our review of agencies’ databases and discussions with agency staff. According to agency officials, the cost to clean up these sites varies according to site-specific conditions, including the amount and type of work required at each site, and the total number of sites needing cleanup. Federal Data on Abandoned Uranium Mines Are Unreliable There are likely thousands of abandoned uranium mine sites on federal land where either exploration or extraction may have taken place, but the available federal data on these sites are generally unreliable. Agencies do not have a consistent definition of an abandoned mine site. Cleanup Costs for Abandoned Uranium Mines Vary Greatly, Depending on Site-Specific Conditions In addition to not knowing how many abandoned uranium mines are on federal land, BLM, the Forest Service, EPA, and the National Park Service do not have information on the total cost of cleaning up abandoned uranium mines. However, we found some limitations in agencies’ oversight of uranium operations’ financial assurances, which raise some concerns about these financial assurances. To enhance data collection efforts on abandoned mines, we recommend that the Secretaries of the Interior and of Agriculture and the Administrator of the Environmental Protection Agency work to develop a consistent definition of abandoned mine sites for use in data-gathering efforts. All of these agencies concurred with our recommendations. EPA and the Department of the Interior also provided us with technical comments, which we have incorporated as appropriate. Appendix I: Objectives, Scope, and Methodology Our objectives were to (1) compare Bureau of Land Management (BLM), Forest Service, and Department of Energy (DOE) oversight of uranium exploration and extraction operations on federal land; (2) determine the number and status of uranium operations on federal land; (3) examine the coverage and amounts of financial assurances in place for reclaiming current uranium operations on federal land; and (4) examine what is known about the number and location of abandoned uranium mines on federal land and their potential cleanup costs.

Why GAO Did This Study From 2005 through 2007, uranium prices increased from about $20 a pound to over $140 a pound, leading to renewed interest in uranium mining on federal land. This interest has raised concerns about the potential impacts that more uranium operations could have on the environment. GAO was asked to (1) compare key agencies’ oversight of uranium exploration and extraction operations on federal land, (2) determine the number and status of uranium operations on federal land, (3) identify the coverage and amounts of financial assurances for reclaiming current uranium operations on federal land, and (4) examine what is known about the number and location of abandoned uranium mine sites on federal land and their potential cleanup costs. GAO reviewed agency reports and regulations, surveyed relevant agency field staff on the status of these operations, and examined federal data on uranium operations, financial assurances, and abandoned uranium mine sites. What GAO Found The Bureau of Land Management (BLM), the Forest Service, and the Department of Energy (DOE) are the key agencies that oversee uranium exploration and extraction on federal land, but GAO identified three areas where their oversight processes differ. First, these agencies have different processes for notification of uranium exploration or extraction activities on federal land. Second, the agencies require operators to have in place financial assurances to cover the full estimated cost of reclaiming a uranium operation, but they differ in who estimates the value of the financial assurance and the frequency of their reviews of the assurances. Third, under existing authorities, DOE can collect royalties or rents for uranium extraction, but BLM and the Forest Service cannot. DOE has collected about $64 million in rents and royalties from its leasing program since the 1940s. As of January 2012, a total of 221 uranium operations were on federally managed land, but only 7 were actively extracting uranium and all of these were on BLM land. An additional 29 uranium operations were awaiting federal approval. Of the 202 operations on BLM land, the majority were engaged in either reclamation or exploration activities, according to BLM field officials. In addition, 3 uranium operations were on Forest Service land, and 16 operations were on lease tracts that DOE manages, none of which were actively extracting uranium. As of January 2012, BLM, the Forest Service, and DOE reported having $249.1 million in financial assurances, and these assurances were generally adequate to cover the estimated reclamation costs for uranium operations on federal land. Nearly all of these assurances ($247.6 million) were for authorized uranium operations on BLM-managed land, with the remaining $1.5 million for authorized operations on Forest Service land and for DOE’s lease tracts. BLM and the Nuclear Regulatory Commission (NRC), which is responsible for overseeing some aspects of uranium operations on federal land, do not coordinate efforts to establish and review financial assurances for in situ recovery operations, which use a series of wells to extract uranium. Such operations account for a large percentage of the total financial assurances held by the agencies. Federal agencies do not have reliable data on the number and location of abandoned uranium mine sites on federal land or a definitive cost for their cleanup. There are likely thousands of abandoned uranium mine sites on federal land, but GAO identified significant limitations in agencies’ data that make their databases generally unreliable. For example, these databases do not have complete data and do not use a consistent definition of an abandoned mine site. Agencies do not know how many sites will need cleanup, and they do not have information on the total cost to clean up these sites. Based on agencies’ experiences with cleanup at some sites, cleanup costs could vary significantly from thousands to hundreds of millions of dollars, depending on site-specific conditions and the amount and type of work required at each site. What GAO Recommends GAO recommends, among other things, that federal agencies better coordinate their efforts when establishing financial assurances and develop a consistent definition for abandoned mine sites. The Departments of the Interior, Agriculture, and Energy, along with NRC and the Environmental Protection Agency (EPA), concurred with these recommendations. In addition, Interior and EPA provided technical comments, which GAO incorporated as appropriate.

gao_GAO-08-221

gao_GAO-08-221_0

ACF monitors the success of local agencies that receive Head Start grants in meeting Head Start program goals and complying with program requirements by conducting on-site monitoring reviews of grantee programs every 3 years; administering an extensive, annual PIR survey of grantees; and reviewing required financial reports and annual audit reports. We made a number of recommendations to address the problems that we identified, including: 1. producing a comprehensive risk assessment of the Head Start 2. strengthening on-site reviewer training and certification procedures; 3. developing a more consistent approach to conducting on-site reviews 4. implementing a quality assurance process that ensures on-site reviews are conducted within established guidelines and ACF managers are held accountable for the quality of on-site reviews; 5. ensuring the accuracy of PIR survey data by independently verifying key data submitted by grantees, or ensuring that grantees have systems in place to collect and report accurate, verifiable data; 6. making greater use of available information on the status and use of 7. taking steps to obtain competition for grants that are being refunded if it is determined that current grantees have failed to meet program, financial management, or other requirements. 1.) ACF Has Not Undertaken a Comprehensive Risk Assessment, and Data Reliability and Other Challenges Remain ACF has not undertaken a comprehensive assessment of risks to the federal Head Start program, despite our 2005 recommendation, and little progress has been made in ensuring that the data from its annual PIR survey of grantees, which could facilitate such an assessment, are reliable. Further, both systems depend to some extent on unreliable data from the annual PIR survey of grantees. New Systems Could Facilitate Comprehensive Risk Assessment but Limitations Exist ACF is in the process of developing two systems that may help it assess programwide risks; however, significant limitations or uncertainty exist with respect to each that could constrain ACF’s ability to use them to conduct a meaningful risk assessment. Although the refunding analysis system allows grantees that are considered high risk to be brought to the attention of Head Start program managers, it does not allow for a broader assessment of other sources of risk, such as those we previously identified. ACF Improved On-site Monitoring by Strengthening Review Processes and Is Working to Establish a System to Evaluate Reviews ACF has implemented several changes aimed at improving the quality and consistency of its on-site reviews of Head Start grantees, in response to our 2005 recommendations. Specifically, ACF has implemented a more rigorous process for certifying reviewers and new processes to improve the consistency of reviews, and is working to establish a system for evaluating reviews on an ongoing basis. The draft report is then forwarded to the grantee’s home region and to the review team leader’s region for review and comment. ACF is currently working to establish an ongoing system for evaluating its on-site review process that would address this new requirement. ACF Uses Data to Identify Grantees in Need of Assistance, but Weaknesses Have Hindered Efforts to Improve Grantee Performance To improve Head Start grantee performance, ACF uses data from multiple sources to identify underperforming Head Start grantees. For example, ACF does not have clear criteria for determining which grantees need additional oversight. These decisions are typically made on an ad-hoc basis, which may result in grantees with similar problems receiving inconsistent levels of oversight. This will give ACF the ability to open competition for Head Start grants to additional grantees, thereby enhancing ACF’s ability to remove severely underperforming grantees from the program, on a regular basis. To obtain grantees’ opinions on ACF’s oversight of the Head Start program, we administered a Web-based survey to a nationally- representative sample of Head Start and Early Head Start program directors. We reviewed ACF studies from 1995 and 2007 on the validity and accuracy of PIR data, the results of which are discussed in this report. Managing for Results: Efforts to Strengthen the Link between Resources and Results at the Administration for Children and Families.

Why GAO Did This Study In February 2005, GAO issued a report that raised concerns about the effectiveness of the Department of Health and Human Services (HHS) Administration for Children and Families' (ACF) oversight of about 1,600 local organizations that receive nearly $7 billion in Head Start grants. GAO was asked to report on (1) ACF's progress in conducting a risk assessment of the Head Start program and ensuring the accuracy and reliability of data from its annual Program Information Report (PIR) survey of grantees, (2) efforts to improve on-site monitoring of grantees, and (3) how data are used to improve oversight and help grantees meet program standards. For this report, GAO surveyed a nationally representative sample of Head Start program directors and interviewed ACF officials. GAO also reviewed ACF studies on the validity of PIR data and conducted tests of data from the 2006 PIR database. What GAO Found ACF has not undertaken a comprehensive assessment of risks that may limit Head Start's ability to meet federal program objectives, despite GAO's 2005 recommendation, and little progress has been made to ensure that the data from its annual PIR survey of grantees, which could facilitate such an assessment, are reliable. To conduct a comprehensive risk assessment, ACF needs to identify external and internal risks, estimate their significance, and decide how to best manage them. While ACF says it is working to establish two systems to address programwide risk, our analysis suggests that these systems fall short of that goal. The first system, by which ACF assesses grantees before providing new funds each year, only assesses risk posed to the program by poorly performing grantees and does not allow for a broader assessment of other sources of risk, such as improper payments to contractors. The second system, a new, integrated management information system, has been in development for over 4 years and it is not clear how it will facilitate a more comprehensive risk assessment for the Head Start program. Both initiatives depend, in part, on data from the annual PIR survey of grantees, which have been found to be unreliable. ACF has taken steps to improve oversight of Head Start grantees by implementing a more rigorous process for certifying reviewers who conduct on-site monitoring visits, implementing new processes to improve the consistency of reviews, and working to establish a system for evaluating reviews on an ongoing basis. Now, ACF verifies reviewers' qualifications and requires them to pass online tests in writing and computer literacy. Reviewers must also complete ongoing training and are evaluated by their peers at the end of each review. ACF has also taken a number of steps to improve the consistency and objectivity of reviews, including developing a Web-based data collection tool to facilitate information gathering, assigning review team leaders from outside the grantee's home region to increase independence, and centralizing the review and preparation of monitoring reports. ACF is also working to establish an ongoing system for evaluating its on-site review process. ACF uses data to track grantee performance and target assistance to underperforming grantees, but weaknesses may have hindered these efforts to improve grantee performance. For example, ACF does not have clear criteria for determining which grantees need additional oversight as part of its refunding analysis. Such decisions are made on an ad-hoc basis, which may result in grantees with similar problems receiving different levels of oversight. Moreover, prior to the December 2007 reauthorization of Head Start, ACF was limited in its ability to increase competition for grants to replace underperforming grantees. Under the new law, ACF will have more flexibility to open competition for Head Start grants to other prospective grantees when current grantees fail to deliver high-quality, comprehensive Head Start programs.

gao_GAO-15-432

gao_GAO-15-432_0

Selected Agencies Have Awarded About $12.1 Billion for ESPCs for a Variety of Projects, and Their Plans for Continued Use Vary In fiscal years 1995 through 2014, the seven selected agencies in our review awarded approximately $12.1 billion in ESPCs for a variety of projects, such as constructing biomass facilities to heat federal buildings. According to agency officials and documents, agencies plan to continue using ESPCs to meet federal energy directives and initiatives, but some agency officials said they are hesitant to use ESPCs to consolidate data centers. For example, in response to federal energy goals, Army officials said they plan to aggressively pursue using ESPCs, among other financing options, to improve energy efficiency. Reported Savings Generally Exceeded Expectations, but Some Savings for Selected ESPC Projects Were Overstated The cost and energy savings that contractors reported for most ESPCs met or exceeded expected savings, according to studies by DOE’s Oak Ridge National Laboratory, but some of these savings may be overstated. Our review of a nongeneralizable sample of 20 projects found that contractors overstated cost and energy savings for 14 projects by reporting some savings that, due to agency actions, were not achieved. Contractors must calculate and report savings in accordance with plans agreed to in their contracts with agencies. They also include assumptions about factors that are beyond contractors’ control, such as agencies’ use of energy-saving equipment and utility prices, which may change over the life of the contract. If changes in such factors reduce savings, contractors generally are not required to reduce the amount of savings they report or measure the effects of such changes. In contrast, the Air Force’s removal of equipment associated with a sewer system upgrade resulted in over $104,000 in annual savings that were reported but not achieved— about 40 percent of the annual savings reported for the project. Agencies Were Not Always Aware of How Much Expected Savings Were Not Achieved Agencies were not always aware of the amount of expected savings that were not achieved, in part because contractors generally did not—and were not required to—report this information when savings were not achieved due to agency actions. FEMP guidance states that when reviewing measurement and verification reports, agencies should understand changes in project performance and savings levels from year to year, and what corrective actions should be taken to address deficiencies resulting in savings that are not achieved. Agencies’ Oversight and Evaluation of ESPC Projects Is Limited The seven agencies in our review have conducted limited oversight and evaluation of their ESPC projects. Moreover, most of the agencies in our review have not systematically evaluated their ESPC portfolios to determine the effects of changing circumstances—such as facility use, utility prices, or interest rates—on project performance because they do not have processes in place to do so. Without this information, agencies may not be able to determine what, if any, corrective actions they should take. Without ensuring that training provides officials with the information needed to understand how to perform their oversight responsibilities, agencies may continue to inconsistently perform their oversight responsibilities. If agencies do not systematically review the performance of ESPC projects agency-wide compared with the assumptions developed when the contract was signed, agency officials may be unaware of how changing circumstances have affected the performance of their ESPCs and cannot make fully-informed decisions about how to best strategically manage their ESPC portfolios. Additionally, DOE may wish to consider periodically analyzing data on other factors that may affect savings, such as utility prices, to provide information on how savings achieved by ESPCs awarded through its contract vehicle have been affected by changing utility prices since its prior study in 2007. the Secretaries of Defense, Energy, and Veterans Affairs; the Attorney General; and the Administrator of the General Services Administration work with contractors to determine the best way to obtain estimates of cost and energy savings that are not achieved because of agency actions in order to include these estimates in future measurement and verification reports for existing contracts, in accordance with DOE guidance, and where economically feasible. To help ensure that agencies have sufficient information on the effects of changing circumstances on the performance of their ESPC portfolios, we recommend that the Secretaries of Defense, Energy, and Veterans Affairs; the Attorney General; and the Administrator of the General Services Administration establish a process to systematically evaluate their ESPC projects—including baseline assumptions about facilities’ energy use, utility prices, and interest rates—to determine how their ESPC portfolios are performing and the extent to which they are achieving expected savings. DOE partially concurred with the recommendation. This report examines the extent to which (1) selected agencies have used ESPCs and plan to use them in the future, (2) selected agencies’ ESPC projects have achieved their expected cost and energy savings, and (3) selected agencies have overseen and evaluated their ESPC projects. To determine which federal agencies to include in our review, we selected agencies with the highest energy usage and greatest facility square footage, based on government-wide data collected by the Federal Energy Management Program (FEMP). We selected projects that reflected a range of award dates, contract values, and other characteristics.

Why GAO Did This Study Constrained budgets and increasing energy efficiency goals have led federal agencies to explore innovative ways to fund energy improvements, including ESPCs. An expected increase in the use of ESPCs has raised questions about agencies' ability to ensure that the government's interests are protected. ESPCs can span up to 25 years and be valued at millions of dollars each. GAO was asked to review federal use of ESPCs since 2005. This report examines the extent to which (1) agencies have used ESPCs and plan to use them; (2) projects have achieved their expected cost and energy savings; and (3) agencies have overseen and evaluated such projects. GAO compiled data on awarded ESPCs; reviewed agency guidance and files for a nongeneralizable sample of 20 ESPC projects that reflected a range of contract award dates, contract values, and other characteristics; and interviewed officials from the seven agencies with the highest energy usage and greatest facility square footage—the Air Force, Army, and Navy within the Department of Defense; the Departments of Energy, Justice, and Veterans Affairs; and the General Services Administration. What GAO Found The seven selected agencies in GAO's review awarded approximately $12.1 billion in energy savings performance contracts (ESPC) in fiscal years 1995 through 2014 and plan to continue using them to help meet federal energy directives and initiatives. Under ESPCs, private contractors finance the up-front costs of energy improvements. Agencies then repay contractors from the savings, such as those resulting from lower utility bills. The seven agencies GAO reviewed have used more than 500 ESPCs for projects, such as installing energy-efficient lighting or power generation projects. Agencies' plans to use ESPCs vary, particularly for data center consolidation projects, which could reduce a significant amount of energy. Cost and energy savings that contractors reported to agencies for most ESPCs met or exceeded expectations, but some of these savings may be overstated. GAO's review of a nongeneralizable sample of 20 projects found that contractors' reports overstated cost and energy savings for 14 projects. Contractors calculate and report savings annually in accordance with plans agreed to in their contracts with agencies. These plans include assumptions about agencies' use of equipment, which may change over the life of the contract. If changes reduce project savings, such as when an agency does not operate or maintain the equipment as agreed, contractors are not required to reduce the amount of savings they report or measure the changes' effects. GAO evaluated the extent to which changes in agency operations or other factors within agencies' control may have reduced energy savings for a nongeneralizable sample of projects. Estimates agencies provided to GAO of savings that were reported but not achieved ranged from negligible to nearly half of a project's reported annual savings. For example, one agency removed equipment for a sewer system upgrade, which resulted in over $104,000 in annual savings that were reported but not achieved, or about 40 percent of the project's reported savings. Federal guidance states that when reviewing contractor reports, agencies should understand changes in project performance and savings levels, and what actions should be taken to address deficiencies. However, agencies were not always aware of how much savings were not achieved due to agency actions because contractors were not required to report this information. Without clearer reporting of savings that are not achieved, agencies may be unable to determine what, if any, corrective actions should be taken. The seven agencies in GAO's review have conducted limited oversight and evaluation of their ESPC projects. In GAO's sample of 20 projects, agency representatives did not perform some oversight activities included in guidance because they were unaware of these duties or how to perform them, among other reasons. Without ensuring that training provides officials with the information needed to understand how to perform their oversight responsibilities, agencies may continue to inconsistently perform oversight. Moreover, most of the agencies in GAO's review have not systematically evaluated their ESPC portfolios to determine the effects of changing circumstances—such as facility use—on project performance because they do not have processes to do so. Without such oversight and evaluation, agency officials cannot make fully informed decisions about how best to strategically manage their ESPCs. What GAO Recommends GAO is making recommendations to improve oversight of ESPC projects through clearer reporting of savings, improved training, and systematic evaluations of portfolios, among other things. In general, the agencies partially concurred with GAO's recommendations. GAO has modified the report, as appropriate, to address the agencies' comments.

gao_GAO-02-162T

gao_GAO-02-162T_0

The uncertainty has increased because the attacks on the World Trade Center and the Pentagon were conducted by a large group of conspirators rather than one individual. This approach would include a threat assessment to determine which chemical or biological agents are of most concern. To provide such assistance, the federal government has a variety of programs to prepare for and respond to chemical and biological terrorism, including response teams, support laboratories, training and equipment programs, and research efforts, as follows. Problems Identified in Preparing for Chemical and Biological Terrorism We have identified a number of problems that require solutions in order to improve preparedness for chemical and biological terrorism. Despite this uncertainty, preparing for all possible contingencies is not practical because vulnerabilities are unlimited, so a risk management approach is needed to help focus resource investments. Given the uncertainty of the chemical and biological terrorist threat and continued fiscal concerns, the Congress may want to initially invest resources in efforts with broad applicability rather than those that are only applicable under a specific type of chemical or biological attack.

What GAO Found Since the attacks against the World Trade Center and the Pentagon, the terrorist threat has risen to the top of the national agenda. Preparing for all possible contingencies is impractical, so a risk management approach should be used. This would include a threat assessment to determine which chemical or biological agents are of greatest concern. The federal government has various programs to prepare for and respond to chemical and biological terrorism, including response teams, support laboratories, training and equipment programs, and research efforts. Evaluations of chemical and biological preparedness have identified several problems and their solutions. Congress faces competing demands for spending as it seeks to invest resources to better prepare our nation for chemical and biological terrorism. Given the uncertainty of the chemical and biological threat, Congress may want to initially invest resources in efforts with broad applicability rather than in those that are applicable to a specific type of chemical or biological attack.

gao_GAO-08-615

gao_GAO-08-615_0

Servicemembers are also exposed to events such as blasts that increase their risk of experiencing a TBI. Specifically, DOD requires three health assessments during the deployment cycle: the pre- deployment health assessment, the PDHA, and the PDHRA. 1). AHLTA does not have this capability. DOD Has Taken Steps to Implement Pre- Deployment Mental Health Screening, but Policies for Medical Record Reviews Are Inconsistent DOD has taken steps to meet the 2007 NDAA requirements for pre- deployment mental health standards and screening. As required by the 2007 NDAA, which was enacted in October 2006, DOD issued minimum mental health standards that servicemembers must meet in order to be deployed. Finally, the policy identified the pre-deployment health assessment as a mechanism for screening servicemembers for mental health conditions and for ensuring that the standards are utilized in making deployment determinations. Because of DOD’s inconsistent policies, providers determining if OEF and OIF servicemembers meet DOD’s minimum mental health deployment standards may not have complete medical information. Health Care Providers at Installations Visited Manually Track Mental Health Referrals from the PDHA Health care providers at Fort Campbell and Camp Lejeune manually track whether servicemembers who receive mental heath referrals from the PDHA make or keep appointments for evaluations with mental health providers. As a result, PDHA mental health referral tracking is challenging for Guard and Reserve units due to their reliance on servicemembers to disclose mental health encounters with civilian providers, which Guard and Reserve officials told us they may be reluctant to do because of stigma concerns. To help health care providers screen servicemembers for mild TBI and issue referrals, DOD has issued guidance and provided various forms of training. DOD Is Implementing Mild TBI Screening in Its PDHA and Prior to Deployment; Several Installation- Specific Mild TBI Screening Initiatives Are in Place In response to the 2007 NDAA requirement for pre-and post-deployment screening for TBI, DOD has added TBI screening questions to the PDHA, and plans to require screening of all servicemembers beginning in July 2008 for mild TBI prior to deployment. These screening questions are similar to the screening questions on the PDHA. Prior to DOD’s plans to screen all servicemembers on the PDHA and prior to deployment, several installations had implemented, as early as 2000, initiatives for mild TBI screening to be used before or after units from those locations deployed. A DVBIC official told us that these initiatives would probably be replaced by the DOD-wide screening. Furthermore, the installations we visited had developed manual systems for tracking those servicemembers who were referred from the PDHA to ensure that they made or completed their appointments. Referral tracking is difficult for the Guard and Reserves because their servicemembers generally receive civilian care. A health care provider following DOD’s Instruction on Deployment Health, which is silent on whether medical record review is required during the pre-deployment health assessment, may not conduct the medical record review required by DOD’s policy on minimum mental health standards for deployment. Recommendation for Executive Action In order to address the inconsistency in DOD’s policies related to the review of medical record information and to assure that health care providers have reviewed the medical record when screening servicemembers prior to deployment, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Personnel and Readiness to revise DOD’s Instruction on Deployment Health to require a review of medical records as part of the pre-deployment health assessment.

Why GAO Did This Study The John Warner National Defense Authorization Act for Fiscal Year 2007 included provisions regarding mental health concerns and traumatic brain injury (TBI). GAO addressed these issues as required by the Act. In this report GAO discusses (1) DOD efforts to implement pre-deployment mental health screening; (2) how post-deployment mental health referrals are tracked; and (3) screening requirements for mild TBI. GAO selected the Army, Marine Corps, and Army National Guard for the review. GAO reviewed documents and interviewed DOD officials and conducted site visits to three military installations where the pre-deployment health assessment was being conducted. What GAO Found DOD has taken positive steps to implement mental health standards for deployment and pre-deployment mental health screening. However, DOD's policies for providers to review medical records are inconsistent. DOD issued minimum mental health standards that servicemembers must meet in order to be deployed to a combat theater and identified the pre-deployment health assessment as a mechanism for ensuring their use in making deployment decisions. DOD's November 2006 policy implementing these deployment standards requires a review of servicemember medical records during the pre-deployment health assessment. However, DOD's August 2006 Instruction on Deployment Health, which implements policy and prescribes procedures for conducting pre-deployment health assessments, is silent on whether such a review is required. Because of this inconsistency, providers determining if Operation Enduring Freedom and Operation Iraqi Freedom servicemembers meet DOD's mental health deployment standards may not have complete medical information. Health care providers at the installations GAO visited where the post-deployment health assessment (PDHA) is conducted manually track whether servicemembers who receive mental health referrals from the PDHA make or complete appointments with mental heath providers. Because health care providers conducting the PDHA and making referrals from the PDHA may not have an ongoing relationship with referred servicemembers, health care providers responsible for tracking referrals at these installations have developed manual systems to track servicemembers to ensure that they made or kept their appointments for evaluations. Tracking is more challenging for Guard and Reserve units because their servicemembers generally receive civilian care. Guard and Reserve units do not know if servicemembers used civilian care to complete their PDHA referrals unless disclosed by the servicemembers, which they may be reluctant to do because of stigma concerns. DOD is addressing the TBI requirement through implementing screening for mild TBI in its PDHA and prior to deployment. DOD has also provided guidance and training for health care providers. DOD in January 2008 added TBI screening to the PDHA, and plans to require screening of all servicemembers for mild TBI prior to deployment beginning in July 2008. The TBI screening questions on the PDHA assess the servicemember's exposure to events that may have increased the risk of a TBI and the servicemember's symptoms. The TBI screening questions to be used prior to deployment are similar to those on the PDHA. Prior to DOD's screening efforts, several installations had been screening servicemembers for mild TBI before or after deployment. An official from the Defense and Veterans Brain Injury Center told GAO that these initiatives would probably be replaced by the DOD-wide screening.

gao_GAO-16-599

gao_GAO-16-599_0

When coordination of federal response activities is required, the Department of Homeland Security— through the Federal Emergency Management Agency—is generally responsible for coordinating such federal assistance, including assistance provided by DOD. DOD often is expected to play a prominent role supporting civil authorities and, in accordance with DOD guidance, must be prepared to provide rapid response when called upon. Table 1 identifies the respective response in statuses between National Guard and federal forces for a CBRN incident. National Guard Has Measured and Determined That the 10 HRFs Are Maintaining Capabilities and Readiness to Conduct Their Mission The National Guard has determined, through established capabilities and readiness measures, that the 10 HRFs are maintaining their capabilities and are ready to conduct the HRF mission. Commanders Measure and Report in the Defense Readiness Reporting System That the HRF Is Ready to Meet Its Mission The HRF Commanders use the Defense Readiness Reporting System as a primary tool for tracking and reporting the status of HRF readiness and report through this system that their HRF is ready to conduct the necessary tasks and actions to meet its mission. In 2014, the Region X (Washington) HRF demonstrated its capabilities and readiness by deploying fatality search and recovery responders and logistics and operations personnel in support of civil authorities after a mudslide occurred. However, until an entire HRF is deployed in response to a CBRN incident, the HRF capabilities and mission readiness of the HRF will not be entirely known. Six HRF Commanders told us that they have a goal to maintain or are maintaining between 10 percent and 30 percent additional, trained National Guard personnel with prior HRF or similar mission experience. According to some HRF Commanders, the additional personnel can mitigate the loss of personnel through turnover and other deployment disqualification factors, such as medical and personal factors. National Guard Bureau and Services Have Issued Guidance to Support the Incorporation of the HRF into DOD’s CBRN Response Enterprise Since the issuance of the 2010 Quadrennial Defense Review Report and the National Guard Bureau’s Implementation Base Plan, the National Guard Bureau has made progress in supporting the inclusion of the HRF into DOD’s CBRN Response Enterprise by issuing a HRF/CERFP Concept of Operation and drafted an instruction and corresponding manual. DOD Is Increasing the Opportunity for the HRF to Exercise with Other Enterprise Members DOD is making progress in incorporating the HRF into the CBRN Response Enterprise by synchronizing National Guard Bureau- and U.S. Northern Command-sponsored exercise schedules, thereby increasing the opportunity for the HRF to exercise with the other National Guard and Title 10 CBRN Response Enterprise forces. Figure 6 shows the Region X (Washington) HRF participating in a CBRN exercise. Agency Comments We are not making any recommendations in this report. Appendix I: Scope and Methodology To describe the current status of the Homeland Response Force (HRF) capabilities, we examined evaluations of capabilities and surveyed all 10 HRF Commanders. We reviewed readiness ratings for each HRF as recorded in DOD’s Defense Readiness Reporting System for fiscal year 2012, the first year all 10 HRFs were established, through March 2016. GAO-15-686T. GAO-12-114.

Why GAO Did This Study DOD is expected to play a prominent role supporting civil authorities in a CBRN incident. By 2012, DOD had established the HRF, comprising 10 geographically dispersed National Guard forces. Each of the 10 HRFs consists of 583 authorized Army National Guard and Air National Guard personnel who, as part of the HRF, are to respond within 6 to 12 hours of a request for assistance. The HRF, as part of DOD's CBRN Response Enterprise, is intended to bridge the gap between the National Guard's initial response to a CBRN incident and any need for additional capabilities that the DOD military services' active-duty personnel can provide, if requested. The HRF is to provide command and control, search and extraction, medical triage, decontamination, fatality search and recovery, and assistance and support capabilities. House Report 114-102 included a provision that GAO review matters related to the HRF. This report (1) describes the current status of HRF capabilities and readiness and (2) assesses DOD's progress incorporating the HRF into the CBRN Response Enterprise. GAO examined National Guard fiscal year 2013-15 evaluation reports and fiscal year 2012 through March 2016 readiness information; reviewed combatant command plans and DOD guidance; and surveyed all 10 HRF Commanders about HRF readiness. What GAO Found The National Guard has determined, through established capabilities and readiness measures, that the Homeland Response Force (HRF) is ready to conduct the HRF mission if called upon. The Department of Defense's (DOD) National Guard Bureau uses an evaluation of necessary tasks and actions as a primary measure of HRF capabilities and DOD's Defense Readiness Reporting System as a primary measure of readiness status. Six HRF Commanders told GAO that they have a goal to train between 10 percent and 30 percent additional National Guard personnel with prior HRF or similar mission experience. According to the HRF Commanders, these additional personnel, over the 583 authorized personnel, can mitigate the loss of personnel through turnover and other deployment disqualification factors, such as medical and personal factors. The capability and readiness measures indicate that the 10 HRFs are prepared for their mission. However, while the Federal Emergency Management Agency Region X (Washington) HRF partially deployed to support civil authorities after a mudslide occurred, until an entire HRF is deployed in response to a chemical, biological, radiological, or nuclear (CBRN) incident, the HRF capabilities and mission readiness will not be entirely known. DOD has made progress in incorporating the HRF into the CBRN Response Enterprise by updating plans, guidance, and exercises. For example, GAO found that DOD is synchronizing major exercise schedules, thereby increasing the opportunity for the HRF to exercise with the other CBRN Response Enterprise National Guard and federal response forces. The figure below shows the plan for DOD's response to a CBRN incident. What GAO Recommends GAO is not making any recommendations. DOD's technical comments on a draft of this report were incorporated in the final product.

gao_HEHS-96-178

gao_HEHS-96-178_0

Education and Labor Field Offices Are Located Throughout the United States In fiscal year 1995, the Department of Education had 72 field offices and the Department of Labor had 1,074. 2). About 21 percent (229 offices) of Labor’s field offices and 42 percent of on-board field staff were located in the 10 federal region cities; together these offices were supported by 4,486 staff. The concentration of Labor’s staff in its field offices reflects the primary mission of these components’ responsibilities. 5). Education’s and Labor’s Largest Field Office Costs Were Staff Salaries and Benefits Together Education and Labor spent about 1.3 percent ($867 million) of their combined budget of approximately $66 billion in support of their field operations; more than three quarters of this amount was for staff salaries and benefits. 6). Scope and Methodology We designed our study to gather information on the Departments of Education and Labor field office structures. In addition, each profile provides the following information about the field offices: (1) staffing, (2) space occupied, (3) costs to operate, and (4) field office restructuring activities or plans.

Why GAO Did This Study Pursuant to a congressional request, GAO provided information about the field offices supporting the Departments of Education and Labor, focusing on the field offices': (1) locations; (2) functions, staffing, space and operating costs; and (3) proposed structural changes. What GAO Found GAO found that: (1) in fiscal year 1995, the Department of Education had 72 field offices and the Department of Labor had 1,074 field offices; (2) Labor and Education spent a total of $867 million dollars in support of their field office operations; (3) about 94 percent of Education's field staff and 42 percent of Labor's field staff were located in ten regional cities; (4) Labor had a high concentration of staff in its field offices, reflecting the agency's general responsibilities; (5) the majority of the amount spent in supporting field offices operations was for staff salaries and benefits; and (6) Labor and Education are planning to make changes in their field office structures to improve efficiency and contain administrative costs.

gao_GAO-16-561

gao_GAO-16-561_0

Active-Duty Servicemembers Have Access to Various Government and Charitable Food Assistance Programs, but Their Eligibility for Some Government Programs Can Vary Active-duty servicemembers and their families have access to food assistance through various government and charitable programs, but their eligibility for some government food assistance programs can vary based on the programs’ income criteria and servicemembers’ location. Specifically, we found that it might be easier for servicemembers to qualify for WIC than SNAP or FSSA because WIC allows state agencies to choose to exclude BAH from income. DOD Does Not Know the Extent to Which Servicemembers Use Food Assistance Programs DOD has some data on servicemembers’ use of food assistance programs that it administers, but DOD does not know the extent to which servicemembers use food assistance programs because (1) its officials are not fully collecting or analyzing such information within the department, and (2) DOD officials we spoke with were not aware of efforts to coordinate with USDA to access data on servicemembers’ use of the respective programs. In addition, DODEA officials provided data for September 2015—the start of the 2015-2016 school year—that showed that 24 percent of the 18,228 (4,427) children enrolled in DODEA schools in the continental United States were eligible for free meals and 21 percent (3,909) were eligible for reduced-price meals. Standards for Internal Control in the Federal Government state that management should communicate with external parties regarding quality information needed to achieve objectives. While DOD could benefit from more complete information on servicemembers’ use of food assistance, none of the DOD officials we met were aware of any efforts by the department to coordinate with agencies, such as the USDA, to collect and share relevant data on food assistance. A provision in the NDAA for fiscal year 2016 addressed DOD’s access to information on SNAP usage by servicemembers. According to results from the 2013 U.S. Census Bureau’s annual American Community Survey (ACS), about 23,000 active-duty servicemembers received SNAP benefits in the previous 12 months. Without coordination with USDA, and considering outreach to other organizations that have data on servicemembers’ use of food assistance, DOD will miss the opportunity to collect more complete data and information on the needs of its servicemembers. Without collecting more data and determining whether DOD should assign department-level responsibility for monitoring servicemembers’ use of food assistance programs, DOD will not have a good understanding of the prevalence of need among servicemembers. For example, a program such as SNAP counts the amount a servicemember receives in BAH as part of one’s income when determining eligibility for benefits, while other programs, such as WIC, do not count BAH as income. However, the survey is of limited usefulness because it does not address all the food assistance programs that servicemembers use. Recommendations for Executive Action To more fully understand the food assistance needs that exist for active- duty servicemembers and their families, and to help ensure that DOD effectively targets its support to those in need of assistance, we recommend that the Secretary of Defense direct the Office of the Under Secretary of Defense for Personnel and Readiness to take the following two actions: Revise, as appropriate, any existing data-collection mechanisms, such as periodic surveys, to collect and analyze more complete data on the use of food assistance programs by servicemembers and their families and use the data to determine if any further actions are needed, such as assigning responsibilities at the department-level for monitoring the use of food assistance programs by active-duty servicemembers; and, Coordinate with USDA to leverage its access to data on active- duty servicemembers and their families who use its programs and services and consider outreaching to other organizations that have data on servicemembers’ use of food assistance. In its written comments, reproduced in appendix IV, DOD concurred with our first recommendation and partially concurred with our second recommendation. We interviewed officials from United States Department of Agriculture (USDA) and Department of Defense (DOD) to identify food assistance programs available to active-duty servicemembers and their families. Specifically, we conducted an analysis to show what a servicemember in the paygrade of E-4 needs to meet the income eligibility requirements for Family Subsistence Supplemental Allowance (FSSA), Supplemental Nutrition Assistance Program (SNAP), Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), National School Lunch Program (NSLP), and School Breakfast Program (SBP) at the four military installations we visited. Also, we compared the data collection and communications processes for DOD with Standards for Internal Control in the Federal Government, which state that management should obtain quality information to achieve its objectives and that it should communicate with external parties regarding the information that is needed to achieve its objectives. a.

Why GAO Did This Study According to the Defense Commissary Agency, servicemembers on active duty spent over $21 million in SNAP benefits at commissaries from September 2014 through August 2015. This suggests that people serving our country may be having difficulty making ends meet. House Report 114-102 includes a provision that GAO review food assistance programs available to servicemembers. This report assesses, among other things, the extent to which (1) active-duty servicemembers and their families have access to food assistance programs and any variations in eligibility for these programs, and (2) DOD has identified the servicemembers' use of these programs. GAO reviewed information on government and charitable food assistance programs and policies. GAO also interviewed DOD and service officials at four installations that were selected based on size, cost of living, and presence of food assistance programs. What GAO Found Active-duty servicemembers and their families have access to food assistance through various government and charitable programs, but use of these programs varies, in part, on their ability to meet specific eligibility criteria. In an April 2010 report, GAO identified 18 government programs that provide food assistance to low-income households. Servicemembers may apply for and, if they qualify, receive benefits from any of these programs. However, servicemembers' eligibility for these programs can vary by program and location. For example, GAO found that it might be easier for servicemembers to qualify for Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) than Supplemental Nutrition Assistance Program (SNAP) because WIC allows state agencies to exclude portions of a servicemember's pay when determining eligibility and SNAP does not. Also, charitable organizations, such as food pantries, are available to servicemembers in need of food assistance. The Department of Defense (DOD) has some data on servicemembers' use of food assistance programs it administers, but it does not know the extent that servicemembers use such programs because (1) it is not fully collecting or analyzing such information within the department, and (2) it has not coordinated with organizations such as U.S. Department of Agriculture (USDA) to access their data on servicemembers' use of their programs. Standards for Internal Control in the Federal Government state that management should use quality information to achieve its objectives. DOD has data on the number of servicemembers' children receiving free and reduced-price school meals at DOD Education Activity (DODEA) schools in the United States. For example, DODEA data for September 2015 showed that 24 percent of children in DODEA schools in the continental U.S. were eligible for free meals and 21 percent were eligible for reduced-price meals. A DOD survey also provides some information on servicemembers' use of food assistance programs such as SNAP. However, this survey is of limited usefulness in part because it does not inquire about other food assistance programs used by servicemembers such as National School Lunch Program; also no office within DOD is monitoring food assistance needs such as through survey data. Without more complete survey data, DOD will not understand the prevalence of need among servicemembers to effectively target its support and determine if it should assign department-level responsibility for monitoring food assistance needs. Standards for Internal Control in the Federal Government also state that management should communicate with external parties to obtain needed information. USDA has access to data on servicemembers' use of food assistance programs, but none of the DOD officials with whom GAO spoke were aware of efforts by the department to coordinate with USDA to access these data. For example, USDA administers SNAP benefits that, according to a 2013 U.S. Census Bureau survey, were used by about 23,000 active-duty servicemembers in the previous 12 months. The National Defense Authorization Act for Fiscal Year 2016 included a provision to address the sharing of SNAP data between USDA and DOD; however, DOD does not have a coordination effort underway to access such data. Without such coordination, DOD will miss the opportunity to collect data on the needs of its servicemembers. What GAO Recommends GAO recommends that DOD (1) revise surveys of servicemembers to collect and analyze more complete data and, if warranted, implement actions such as assigning department-level responsibilities for monitoring food assistance; and (2) coordinate with USDA to access its usage information. DOD concurred with the first recommendation and partially concurred with the second, stating that it has tried to coordinate with USDA. GAO continues to believe the recommendation is valid, as discussed in this report.

gao_GAO-03-141

gao_GAO-03-141_0

As part of its personnel reform, FAA delegated the authority to determine eligibility for and the amount of PCS benefits to each line of business and provided three PCS funding options: (1) full PCS reimbursement, (2) fixed relocation payments, and (3) unfunded moves. According to FAA, the average agencywide PCS cost for fully reimbursed PCS moves in fiscal year 2001 was about $54,000 (based on a sample of 100 fully funded PCS moves in that fiscal year.) Under its personnel reform, FAA may offer a fixed relocation payment if it determines that the agency will derive some benefit from a move, even though the move is not in the interest of the government. If a move is not in the interest of the government and FAA does not determine that it will derive some benefit from the move, there is no basis for offering PCS funding. Air Traffic Controllers Were Less Likely than Managers to Receive Funding for PCS Moves Air traffic controllers were less likely than air traffic managers to receive funding for their moving expenses when moving between facilities. As shown in figure 2, 94 percent of controllers’ lateral moves (236 of 250) were unfunded, compared with 66 percent of managers’ lateral moves (27 of 41). Possible Impacts of FAA’s New PCS Policies Although FAA officials said that PCS costs have decreased and FAA’s ability to quickly fill vacant controller positions has improved since the new PCS policies took effect, they did not have the data to determine to what extent the annual decreases or improvement in the agency’s ability to fill vacancies in field facilities are attributable to the new PCS policies implemented in 1998. Appendix I: Details on GAO’s Data Analyses We obtained and analyzed data on trends in funding for permanent change of station (PCS) moves in the Federal Aviation Administration’s (FAA’s) Air Traffic Services line of business (the FAA line of business for air traffic controllers and air traffic managers) since fiscal year 1996 and analyzed data on the type of funding (fully funded, fixed payments, or unfunded) and purpose (promotion, lateral transfer, or downgrade) of controllers’ and managers’ PCS moves between field offices from 1999 through 2001, the only years for which these data were available.

What GAO Found In fiscal year 2001, the Federal Aviation Administration (FAA) spent more than $15 million to move air traffic controllers and their managers to new permanent duty locations. FAA classifies the funds that it spends for these moves as permanent change of station (PCS) benefits. In 1998, as part of a broader effort to reform its personnel policies, FAA changed its policies on PCS benefits. Instead of fully reimbursing the costs of all PCS moves and prohibiting unfunded PCS moves, as it once did, FAA now determines the amount of PCS benefits to be offered on a position-by-position basis and allows employees and managers to move at their own expense. Under its new polices, FAA can fully reimburse the costs of a move if it determines that he move is in the interest of the government, or it can offer partial fixed relocation benefits if it determines that the agency will derive some benefit from the move. FAA's policies on eligibility for PCS benefits are the same for air traffic controllers and their managers, but the amounts of the benefits vary. According to these policies, eligibility depends on a determining official's decision about how critical a position is and/or whether FAA will benefit from the move. Air traffic controllers have been less likely than air traffic managers to be offered PCS benefits when they move between facilities. Between fiscal year 1999 and 2001, Air Traffic Services funded 16 percent of moves involving a promotion and 6 percent of lateral moves between field facilities for controllers, compared with 38 percent of promotional moves and 34 percent of lateral moves for managers. According to FAA officials, PCS costs have decreased and FAA's ability to quickly fill vacant controller positions has improved since the new PCS policies took effect.

gao_GGD-98-147

gao_GGD-98-147_0

Fewer respondents who were members of general advisory committees said “no”—about 77 percent of them said their committees were never asked by agency officials to give advice or make recommendations on the basis of inadequate data or analysis. About 92 percent of the respondents said that to their knowledge, no agency official had ever asked their committees to give advice or make a recommendation that was contrary to the general consensus of the committees. Of these nine agencies, seven considered the requirements about as burdensome as useful, and two said the requirements were somewhat more burdensome than useful. In comparison to the number of FACA requirements considered as useful, far fewer requirements were considered as especially burdensome by a majority of the agencies. However, some agencies have been involved in litigation over their compliance with FACA. Twelve of the 19 agencies said the ceilings did not deter them from seeking to establish any new advisory committees. These three agencies were among the six agencies that identified committees that they believed should be eliminated. According to the agencies, Congress terminated one of those committees. Their opinions were mixed. We asked the advisory committee members and the agencies that we surveyed a series of different questions about public participation. About 27 percent of the respondents said that all of their committee meetings were open to the public, and 37 percent said that all meetings were closed to the public. Views of the 19 Agencies In general terms, most of the agencies—16 of the 19—said FACA had not prohibited them from receiving or soliciting input from public task forces, public working groups, or public forums on issues or concerns of the agency. Moreover, six agencies, including five of the previous eight agencies, said there were at least eight instances over the fiscal year 1995 through 1997 period when they decided not to solicit or receive outside input because of their concern about the possibility of future litigation. Our objectives in this review were to obtain (1) federal advisory committee members’ perceptions on the extent to which their advisory committees were providing balanced and independent advice and recommendations as required by FACA; (2) federal agencies’ views on the extent to which they found compliance with FACA useful or burdensome, the impact of Executive Order 12838 on their ability to accomplish their missions, and whether any of their advisory committees mandated by Congress should be terminated; and (3) advisory committee members’ and federal agencies’ views on the extent to which they believed the public was afforded access to advisory committee proceedings and a means to express their views to agencies and their advisory committees.

Why GAO Did This Study Pursuant to a congressional request, GAO provided information on the views of federal advisory committees and federal agencies on Federal Advisory Committee Act (FACA) requirements. What GAO Found GAO noted that: (1) overall, the views presented by both the committee members and agencies GAO surveyed provided useful insights into the general operation of FACA as Congress explores possible improvements to FACA; (2) the responses of committee members to a series of questions, when taken together, conveyed a generally shared perception that advisory committees were providing balanced and independent advice and recommendations; (3) although the percentage differed by question, 85 percent to 93 percent of the respondents said their committees were balanced in membership, had access to the information necessary to make informed decisions, and were never asked by agency officials to give advice or make recommendations based on inadequate data or analysis or contrary to the general consensus among committee members; (4) FACA requirements were considered to be more useful than burdensome by 10 of the 19 agencies; (5) for the other nine agencies, the requirements were considered either as burdensome as they were useful or somewhat more burdensome than useful; (6) the ceilings on discretionary advisory committees imposed by Executive Order 12838 did not deter a majority--12 of 19--of the agencies from seeking to establish such committees, according to their responses; (7) agencies identified a total of 26 advisory committees mandated by Congress that they believed should be terminated; (8) this number represented about 6 percent of congressionally mandated advisory committees in existence during fiscal year (FY) 1997; (9) the overall responses GAO received from committee members on the issue of public participation were mixed; (10) about 27 percent of the respondents said that all of their committee meetings were open to the public, and 37 percent said that all of their committee meetings were closed to the public; (10) advisory committee meetings can be closed to the public to protect such things as trade secrets or information of a personal nature; (11) most of the agencies--16 of the 19--did not believe that FACA had prohibited them from soliciting or receiving input from the public on issues or concerns of the agency independent of the FACA process; (12) still, some agencies were reluctant to get input from parties that were not chartered as FACA advisory committees because of concern that this could lead to possible litigation over compliance with FACA requirements; and (13) more explicitly, six agencies reported that they decided not to obtain outside input at least eight times during FY 1995 through FY 1997 because of the possibility of future litigation over compliance with FACA.

gao_GAO-05-331

gao_GAO-05-331_0

The ATO was formed in February 2004 to, among other things, improve the provision of air traffic services and accelerate modernization efforts. FAA Has Had Difficulty Meeting Cost, Schedule, and/or Performance Targets for Major System Acquisitions, but Made Progress in Fiscal Year 2004 For more than two decades, FAA has experienced cost growth, schedule extensions, and/or performance problems in acquiring major systems under its ATC modernization program and has been on our list of high-risk programs since 1995. For example, 13 of the 16 major system acquisitions we reviewed in detail continue to experience cost, schedule, and/or performance shortfalls when assessed against their original baselines. These major system acquisitions had total cost growth ranging from $1.1 million to about $1.5 billion over their original cost targets. (2) The system acquisition experienced requirements growth and/or unplanned work. Three of the Major ATC System Acquisitions We Reviewed in Detail Currently Operate within Their Original Cost, Schedule, and Performance Targets, Despite Challenges Three of the 16 major ATC system acquisitions we reviewed in detail are currently operating within their original cost, schedule, and performance targets; however they have experienced challenges, including symptoms of one or more of the four factors cited earlier, such as requirements growth. In our opinion, having and meeting such performance goals is commendable, but it is important to note that these goals are updated program milestones and cost targets, not those set at the program’s inception. Consequently, they do not provide a consistent benchmark for assessing progress over time. Moreover, as indicators of annual progress, they cannot be used in isolation to measure progress in meeting cost and schedule targets over the life of an acquisition. FAA Has Taken Some Positive Steps to Address Key Legacy Challenges, but Additional Steps Are Warranted to Reduce Risk and Strengthen Oversight FAA has taken a number of positive steps, primarily through the ATO, to address key legacy challenges in acquiring major systems under its ATC modernization program; however, we have identified additional steps that are warranted to reduce risk and strengthen oversight. The ATO is currently reviewing all of its capital projects to reassess priorities. However, ATO did not mandate the use of the process improvement model for all software-intensive acquisition projects. For example, while AMS provides some discipline for acquiring major ATC systems, it does not use a knowledge-based approach to acquisitions, characteristic of best commercial and DOD practices. This type of information can be used to improve future estimates of cost for these acquisitions. To fund its major system acquisitions while remaining within the administration’s budget targets, the ATO has eliminated planned funding to start new projects and substantially reduced planned funding for other areas. As part of our research, we sought the perspective of an international group of experts, who also suggested that the ATO should provide the administration and Congress with detailed information in its budget submissions about the impact of reduced budgets on both ATC and NAS modernization. Recommendation for Executive Action To help ensure that key administration and congressional decision-makers have more complete information to assess the potential impact of annual budget submissions on individual ATC system acquisitions, the overall ATC modernization program, and related larger-scale NAS modernization activities funded through the facilities and equipment budget, we recommend that the Secretary of Transportation direct FAA to identify which activities under the ATC modernization program have had funding deferred, reduced, or eliminated and to provide detailed information about the impact of those decisions on FAA’s ability to modernize the ATC system and related components of the NAS in the near, mid, and longer term. Objectives, Scope, and Methodology We examined (1) FAA’s experience in meeting cost, schedule, and/or performance targets for major system acquisitions under its ATC modernization program, (2) the steps FAA has taken to address long- standing challenges with the ATC modernization program and additional steps that are needed, and (3) the potential effects of the constrained budget environment on FAA’s ability to modernize the ATC system.

Why GAO Did This Study The Federal Aviation Administration's (FAA) multibillion-dollar effort to modernize the nation's air traffic control (ATC) system has suffered from cost, schedule, and/or performance shortfalls in its system acquisitions for more than two decades and has been on our list of high risk programs since 1995. FAA's performance-based Air Traffic Organization (ATO) was created in February 2004, in part, to address these legacy challenges. In this report, GAO examined (1) FAA's experience in meeting cost, schedule, and performance targets for major ATC system acquisitions; (2) steps taken to address legacy problems with the program and additional steps needed; and (3) the potential impact of the constrained federal budget on this program. What GAO Found The ATO met its acquisition goal for fiscal year 2004. However, prior to the establishment of the ATO, FAA had experienced more than two decades of cost, schedule, and/or performance shortfalls in acquiring major systems under its ATC modernization program. For example, 13 of the 16 major system acquisitions that we reviewed in detail have experienced cost, schedule, and/or performance shortfalls when assessed against their original milestones. These 13 system acquisitions experienced total cost growth from $1.1 million to about $1.5 billion; schedule extensions ranging from 1 to 13 years; and performance shortfalls, including safety problems. We found that one or more of four factors--funding, requirements growth and/or unplanned work, stakeholder involvement, and software complexity--have contributed to these legacy challenges. While FAA met its recent acquisition goal, it is important to note that this goal is based on updated program milestones and cost targets for system acquisitions, not those set at their inception. Consequently, they do not provide a consistent benchmark for assessing progress over time. Also, as indicators of annual progress, they cannot be used in isolation to measure progress over the life of an acquisition. Although additional steps are warranted, FAA has taken some positive steps to address key legacy challenges it has had with acquiring major systems under the modernization program. For example, the ATO has cut funding for some major systems that were not meeting their goals and is reassessing all capital investments to help ensure that priority systems receive needed funding. The ATO has improved its management of software-intensive acquisitions and information technology investments and begun to more actively involve stakeholders. As we recommended, the ATO plans to establish an overall policy to apply its process improvement model to all software-intensive acquisitions. However, additional steps could be taken to improve its management of system acquisitions. For example, the ATO could use a knowledge-based approach to managing system acquisitions, characteristic of best commercial practices, to help avoid cost, schedule, and performance problems. The ATO will also be challenged to modernize the ATC system under constrained budget targets, which would provide FAA with about $2 billion less than it planned to spend through 2009. To fund its major system acquisitions and remain within these targets, the ATO has eliminated planned funding to start new projects and substantially reduced planned funding for other areas. However, when forwarding its budget submission for review by senior officials at FAA, DOT, the Office of Management and Budget, and Congress, the ATO provides no detail on the impact of the planned funding reductions on ATC modernization and related activities to modernize the NAS. Our work shows that the ATO should provide these decision-makers with detailed information in its budget submissions about the impact of funding decisions on modernization efforts. Without this type of information, decision-makers lack important details when considering FAA's annual budget submissions.

gao_GAO-09-5

gao_GAO-09-5_0

The military services, Industrial Policy, and other DOD components collect information about the health and viability of certain defense supplier-base sectors. To better target its monitoring resources, Industrial Policy recently established criteria for supplier-base characteristics that could be indicators of supply concerns. These criteria have primarily been applied to the missile and space defense sectors and have not been used to guide the identification and monitoring of supplier-base concerns for all sectors departmentwide. In addition, DOD has also developed lists of items deemed critical at a point in time as part of its supplier-base monitoring efforts. DOD Uses an Informal Approach to Identify Supplier-Base Concerns, with No Departmentwide Reporting Requirement on When to Elevate These Concerns DOD often relies on the military services, program offices, or prime contractors to identify supplier-base concerns, including gaps and potential gaps, with no departmentwide requirement for when to report these gaps to higher-level offices. Further, program officials reported that they generally use their discretion in determining when to report identified gaps and planned actions to higher DOD levels. As a result, DOD’s ability to know when a departmentwide approach is needed to mitigate these concerns may be limited. DOD Often Relied on Program Offices and Prime Contractors to Identify Supplier-Base Concerns in the Last 5 Years DOD often relies on its individual program offices to ensure that their respective supplier bases are sufficient. Specifically, 16 of the 20 program officials we surveyed reported facing supplier gaps or potential gaps, including obsolescence of component parts or technologies, diminishing manufacturing sources for components, and production challenges. A framework for programs to report supplier-gap information could assist Industrial Policy’s decisions on when to activate available tools to mitigate supplier-base concerns, such as the authorities under the Defense Production Act. Conclusions While DOD has a number of efforts to monitor its supplier base, these efforts lack a framework and set of characteristics to identify and track supplier-base concerns and allow for consistent reporting to higher levels within DOD, such as Industrial Policy. 2. Appendix I: Scope and Methodology To assess Department of Defense (DOD) efforts to monitor its defense supplier base and identify and address gaps that might exist in its supplier base, we reviewed relevant laws and regulations, such as sections of Title 10, U.S. Code, the DOD 5000 series, National Security Space Acquisition Policy 03-01, and the Defense Production Act of 1950, as amended. We met with officials from DOD’s Office of the Deputy Under Secretary of Defense for Industrial Policy (Industrial Policy) to review its processes and actions for monitoring the defense supplier base. Defense Acquisitions: Assessments of Selected Weapon Programs.

Why GAO Did This Study The Department of Defense (DOD) relies on thousands of suppliers to provide weapons, equipment, and raw materials to meet U.S. national security objectives. Yet, increased globalization in the defense industry and consolidation of the defense supplier base into a few prime contractors has reduced competition and single-source suppliers have become more common for components and subsystems. For this report, GAO (1) assessed DOD's efforts to monitor the health of its defense supplier base, and (2) determined how DOD identifies and addresses gaps that might exist in its supplier base. To conduct its work, GAO reviewed supplier-base-related laws, regulations, and guidelines; met with officials from DOD's Office of Industrial Policy, defense contractors, and other DOD officials; and surveyed 20 major DOD weapon acquisition program officials on potential supplier-base gaps. What GAO Found DOD's efforts to monitor its supplier base lack a departmentwide framework and consistent approach. Its monitoring efforts generally respond to individual program supplier-base concerns or are broader assessments of selected sectors. As part of its supplier-base monitoring efforts, DOD has also previously identified lists of critical items--which according to DOD's Office of Industrial Policy (Industrial Policy) do not reflect the dynamic changes that occur in industry, technology, and DOD requirements. While DOD recently established criteria for identifying supplier-base characteristics that could be problem indicators--such as sole-source suppliers and obsolete or emerging technologies--these criteria have primarily been applied to the missile and space sectors and have not been used to guide the identification and monitoring of supplier-base concerns for all sectors departmentwide. DOD uses an informal approach to identify supplier-base concerns, often relying on the military services, program offices, or prime contractors to identify and report these concerns, including gaps or potential gaps. As no requirement for when to report such gaps to higher-level offices exist, knowledge of defense supplier-base gaps across DOD may be limited. While 16 of the 20 program officials GAO surveyed reported that they identified supplier gaps or potential gaps over the past 5 years, only 4 reported sharing this information with Industrial Policy. These gaps included obsolescence of components and items with only one available supplier. Program offices often relied on the prime contractor to identify and help address supplier-base gaps, and prime contractors and programs generally used their discretion as to when to report gaps to higher levels. As a result, Industrial Policy may not be receiving information to help it activate available tools, such as the authorities under the Defense Production Act, to mitigate supplier-base gaps.

gao_GAO-03-871T

gao_GAO-03-871T_0

USDA’s Financial Management In the past, USDA had several persistent weaknesses in internal control and in accounting and financial reporting that contributed to the OIG’s inability to render an opinion on the department’s consolidated financial statements. The OIG reported, among other things, that USDA was unable to: provide sufficient, competent evidential matter to support numerous material line items on its financial statements including accounts receivable, fund balance with the Department of the Treasury (Treasury), and property, plant, and equipment; and estimate and reestimate loan subsidy costs for its net credit program receivables, rendering it unable to implement the Federal Credit Reform Act of 1990 and related accounting standards. These are some of the factors that required extraordinary effort to derive reliable financial information. USDA has taken actions over the last several years to improve its financial management and to address the weaknesses identified by its OIG and us. For example, in fiscal year 2000, Food and Nutrition Service was, for the first time, able to estimate its gross accounts receivable and related estimate of uncollectible amounts resulting from over-issued benefits in its Food Stamp Program. Further, for the first time since credit reform reporting requirements were implemented in 1994, USDA’s lending agencies were able to estimate and reestimate loan subsidy costs for the department’s net credit program receivables, which totaled about $74 billion as of September 30, 2001. Because of USDA’s achievement in this area, along with that of other key lending agencies, this item was no longer a factor contributing to our disclaimer of opinion on the financial statements of the U.S. government. In its fiscal year 2002 audit report, the OIG stated that USDA made significant improvements in its overall financial management, such as implementation of a departmentwide standard accounting system, the Foundation Financial Information System (FFIS). They also significantly accelerated financial statement reporting to improve timeliness for decision making and to discourage costly efforts designed to obtain unqualified opinions on financial statements without addressing underlying systems challenges. Another financial management challenge for USDA is federal nontax delinquent debt collection. In 1999, we first designated financial management at the Forest Service to be “high risk” on the basis of serious financial and accounting weaknesses that had been identified, but not corrected, in the agency’s financial statements for a number of years. The Forest Service received its first-ever unqualified opinion on its fiscal year 2002 financial statements, which represents noteworthy progress from prior years when the OIG was unable to express an opinion. At the same time, before USDA is able to sustain financial accountability and produce relevant, reliable, and timely information to effectively manage the department, it and its component agencies, particularly the Forest Service, must resolve some very difficult issues.

Why GAO Did This Study In January, we issued our Performance and Accountability Series on management challenges and program risks at major agencies, including the U.S. Department of Agriculture (USDA). The report for USDA focused on a number of major management challenges, including enhancing financial management, and continued the high risk designation for Forest Service financial management. For many years, USDA struggled to improve its financial management activities, but inadequate accounting systems and related procedures and controls hampered its ability to get a clean opinion on its financial statements. After eight consecutive disclaimers of opinion, USDA's Office of Inspector General issued an unqualified opinion on USDA's fiscal year 2002 financial statements and reported that significant progress had been made in improving overall financial management. For each of USDA's agencies that prepared separate financial statements for fiscal year 2002, the audit opinions were also positive. Specifically, unqualified audit opinions were issued on the financial statements of the Forest Service, Federal Crop Insurance Corporation/Risk Management Agency, Commodity Credit Corporation, the Rural Development mission area, and the Rural Telephone Bank. While we consider these clean opinions a positive step, some of these could not have been rendered without extraordinary efforts by the department and its auditors. Achieving financial accountability will require more than heroic efforts to obtain year-end numbers for financial statement purposes. Without reliable financial systems and sound internal controls, it is not possible to have sound data on a timely basis for decision making. Before USDA can achieve and sustain financial accountability, and thus be in a position to have reliable system-generated data as needed, it and its component agencies, particularly the Forest Service, must address a number of serious problems that USDA's Office of the Inspector General (OIG) or we have reported. What GAO Found In the past, USDA had several persistent weaknesses in internal control and in accounting and financial reporting that contributed to the OIG's inability to render an opinion on the department's consolidated financial statements. The OIG reported, among other things, that USDA was unable to provide sufficient, competent evidential matter to support numerous material line items on its financial statements including accounts receivable, fund balance with the Department of the Treasury and property, plant, and equipment. The OIG also reported that USDA was unable to estimate and reestimate loan subsidy costs for its net credit program receivables, rendering it unable to implement the Federal Credit Reform Act of 1990, and related accounting standards. USDA has taken actions over the last several years to improve its financial management and to address the weaknesses identified by its OIG and us. For example, in fiscal year 2000, Food and Nutrition Service was, for the first time, able to estimate its gross accounts receivable and related estimate of uncollectible amounts resulting from over-issued benefits in its Food Stamp Program. Further, for the first time since credit reform agencies were able to estimate and reestimate loan subsidy costs for the department's net credit program receivables, which totaled about $74 billion as of September 30, 2001. Because of USDA's achievement in this area, along with that of other key lending agencies, this item was no longer a factor contributing to our disclaimer of opinion on the financial statements of the U.S. government.